Create Inventory Items in QuickBooks Online – Instructions

How to Create Inventory Items in QuickBooks Online: Video

            This video lesson, titled “Learn How to Create Inventory Items in QuickBooks Online: A Training Tutorial,” shows you how to create inventory items in QuickBooks Online. This video lesson is from our complete QuickBooks Online tutorial, titled “Mastering QuickBooks Online Made Easy.”

Overview of How to Create Inventory Items in QuickBooks Online:

            To create inventory items in QuickBooks Online Plus, click the “Settings” button in the QuickBooks Online toolbar. Then click the “Products and services” link under the “Lists” heading to open the “Products and Services” page. To add your first new product or service, click the “Add an item” button in the “Products and Services” page to open the “Product/Service information” pane at the right side of a new window. Alternatively, after creating your first product or service, you instead click the “New” button that appears in the upper-right corner of the page to open the same “Product/Service information” pane.

            First, select the type of product or service to create. The choices are “Inventory,” “Non-inventory,” “Service,” or “Bundle.” An “Inventory” item is a product you buy and/or sell directly and for which you track quantities. To create an inventory item, click the “Inventory” choice.

            After choosing the type of item to create, a new set of fields appears in this pane. You must enter the name of the item into the “Name” field. Optionally, if you use SKU numbers, enter the item’s SKU into the “SKU” field. Optionally, to upload a picture of the item, click either the “Picture” button or “Edit” button, which looks like a pencil, to the right to open a system dialog box. Use this dialog box to navigate to the picture of the item and click it to select it. Then click the “Open” button in the dialog box to upload it. To delete the picture of the item, if needed, click the “Delete” button below it, which looks like a trash can icon.

A picture showing how to create inventory items in QuickBooks Online within the “Product/Service information” pane.

            If you use product and service categories to organize your items, select the desired category for the item from the “Category” drop-down. To create a new product or service category, select the “Add new” choice from the drop-down menu, type the new category name into the “New category” window that opens, and then click the “Save” button.

How to Enter Inventory Quantities for New Inventory Items:

            The next section in this pane only appears for “Inventory” items. To track the quantity on hand, enter the initial quantity on hand into the “Initial quantity on hand” field as of the date you then select from the adjacent “As of date” calendar drop-down. For new items not yet purchased, this value is often zero. If entering inventory on hand when creating a new QuickBooks company file, enter the amount of the inventory item you had on hand as of the “start date” of your company file for accurate accounting.

            Enter the quantity at which to reorder more of this item into the “Reorder point” field. This is the minimum quantity of this item to have on hand. Then use the “Inventory asset account” drop-down to select the inventory asset account used to track the value of these items when held in inventory. A basic “Inventory Asset” account is automatically created when you create your company file. You can also create an account in your chart of accounts to use a specific “Inventory” asset account. However, if you create a new inventory asset account, it must be of the “Inventory” account “Detail type” or “Tax form section.”

How to Enter Sales Information for Inventory Items:

            The next section contains fields for the item’s sales information. Type the description to show on your sales forms into the “Description” field. You can enter the item’s default sales price into the “Sales price/rate” field. Select the income account you use to track sales of this item from the “Income account” drop-down. This income account must be a “Sales of Product Income” account “Detail type” or “Tax form section” for inventory tracking to work.

            If needed, to edit the item’s sales tax setting, click the “Edit sales tax” link in the “Sales tax” section of the pane. At the bottom of the pane that appears, then select either the “Taxable – based on location only” option button for standard taxable items, the “Nontaxable” option button for nontaxable items, or click to expand the matching category selections for specialized products within the “Browse all” section above those two option buttons, and then select the corresponding specialized product sales tax category option button if the item’s taxable status is more specific. Then click the “Done” button at the bottom of the pane to return to the main “Product/Service information” pane.

How to Enter Purchasing Information for Inventory Items:

            The next section contains fields for the item’s purchasing information. Type the description to show on your purchasing forms into the “Purchasing information” field. You can enter the default purchase price into the “Cost” field. This lets QuickBooks Online Plus enter this amount as the default price when buying this item. You can leave it blank if the cost of the item varies greatly and just enter the cost at the time you buy it within purchase forms, if desired.

            Use the “Expense account” drop-down to select the account to which you attribute purchases of this inventory item. This account must be a “Supplies & Materials – COGS” account “Detail type” or “Tax form section” for inventory tracking to function properly. If you have a preferred vendor from whom you buy the item, you can select them from the “Preferred Vendor” drop-down.

How to Finish and Save the Inventory Item:

            To save the inventory item and close the pane, click the “Save and close” button in the lower-right corner of the pane. To instead save the inventory item and open another new “Product/Service information” pane to continue entering items, click the drop-down part of this button and then click the “Save and new” command. To cancel creating the inventory item, instead, click the “X” in the upper-right corner of the pane.

            Once you enable inventory tracking for an item, you cannot turn it off for that item. If you want to disable inventory tracking for an item, you can inactivate the item and create a new one. Inactivating an item will not affect previous transactions. Additionally, you cannot change historical account usage of inventory items if quantity on hand tracking is enabled.

Instructions on How to Create Inventory Items in QuickBooks Online:

1. To create inventory items in QuickBooks Online Plus, click the “Settings” button in the QuickBooks Online toolbar.
2. Then click the “Products and services” link under the “Lists” heading to open the “Products and Services” page.
3. To add your first new product or service, click the “Add an item” button in the “Products and Services” page to open the “Product/Service information” pane at the right side of a new window.
4. Alternatively, after creating your first product or service, instead click the “New” button that appears in the upper-right corner of the page to open the same “Product/Service information” pane.
5. First, click to select the type of product or service to create. The choices are “Inventory,” “Non-inventory,” “Service,” or “Bundle.”
6. To create an inventory item, click the “Inventory” choice.
7. After choosing the type of item to create, a new set of fields appears in this pane.
8. Type the name of the item into the “Name” field.
9. Optionally, if you use SKU numbers, enter the item’s SKU into the “SKU” field.
10. Optionally, to upload a picture of the item, click either the “Picture” button or “Edit” button, which looks like a pencil, to the right to open a system dialog box.
11. Use this dialog box to navigate to the picture of the item and click it to select it.
12. Then click the “Open” button in the dialog box to upload it.
13. To delete the picture of the item, if needed, click the “Delete” button below it, which looks like a trash can icon.
14. If you use product and service categories to organize your items, select the desired category for the item from the “Category” drop-down.
15. To create a new product or service category, select the “Add new” choice from the drop-down menu, type the new category name into the “New category” window that opens, and then click the “Save” button.
16. The next section in this pane only appears for “Inventory” items.
17. To track the quantity on hand, enter the initial quantity on hand into the “Initial quantity on hand” field as of the date you then select from the adjacent “As of date” calendar drop-down. For new items not yet purchased, this value is often zero.
18. If entering inventory on hand when creating a new QuickBooks company file, enter the amount of the inventory item you had on hand as of the “start date” of your company file for accurate accounting.
19. Enter the quantity at which to reorder more of this item into the “Reorder point” field. This is the minimum quantity of this item to have on hand.
20. Then use the “Inventory asset account” drop-down to select the inventory asset account used to track the value of these items when held in inventory.
21. The next section contains fields for the item’s sales information.
22. Type the description to show on your sales forms into the “Description” field.
23. You can enter the item’s default sales price into the “Sales price/rate” field.
24. Select the income account you use to track sales of this item from the “Income account” drop-down.
25. If needed, to edit the item’s sales tax setting, click the “Edit sales tax” link in the “Sales tax” section of the pane.
26. At the bottom of the pane that appears, then select either the “Taxable – based on location only” option button for standard taxable items, the “Nontaxable” option button for nontaxable items, or click to expand the matching category selections for specialized products within the “Browse all” section above those two option buttons, and then select the corresponding specialized product sales tax category option button if the item’s taxable status is more specific.
27. Then click the “Done” button at the bottom of the pane to return to the main “Product/Service information” pane.
28. The next section contains fields for the item’s purchasing information.
29. Type the description to show on your purchasing forms into the “Purchasing information” field.
30. You can enter the default purchase price into the “Cost” field. This lets QuickBooks Online Plus enter this amount as the default price when buying this item. You can leave it blank if the cost of the item varies greatly and just enter the cost at the time you buy it within purchase forms, if desired.
31. Use the “Expense account” drop-down to select the account to which you attribute purchases of this inventory item.
32. If you have a preferred vendor from whom you buy the item, you can select them from the “Preferred Vendor” drop-down.
33. To save the inventory item and close the pane, click the “Save and close” button in the lower-right corner of the pane.
34. To instead save the inventory item and open another new “Product/Service information” pane to continue entering items, click the drop-down part of this button and then click the “Save and new” command.
35. To cancel creating the inventory item, instead, click the “X” in the upper-right corner of the pane.