Tracking inventory is an important step in QuickBooks Online. It requires an added level of tracking and it has several ramifications for bookkeeping and tax purposes. Also, not every situation fits how inventory currently works in QuickBooks Online. For full blog post click here: http://5minutebookkeeping.com/how-to-set-up-inventory-on-quickbooks-online/

1. How to Set Up Inventory in
QuickBooks Online
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2. WHAT IS INVENTORY?

3. Inventory in QuickBooks
Online consists of the
items that you buy and
sell and that you want to
track as “inventory” for
accounting purposes.

4. For accounting (and tax
purposes), inventory
reflects the items that
you have purchased but
have not yet sold.

5. For US taxes, you
normally don’t get a tax
deduction for inventory
that you haven’t sold
yet.

6. Should you track
inventory in QBO?

7. Tracking inventory is an
important step in
QuickBooks Online.

8. It requires an added level
of tracking and it has
several ramifications for
bookkeeping and tax
purposes.

9. Also, not every situation
fits how inventory
currently works in
QuickBooks Online.

10. For QBO purposes, you
buy inventory via
Purchase Orders and
Vendor bills and you sell
inventory via invoices or
sales receipts.

11. You should not track
inventory if you do not
have time to continually
and properly track
inventory when you
receive it and when you
sell it.

12. Otherwise, QuickBooks
Online will show
negative or incorrect
inventory quantities –
which is incorrect.

13. If you have very specific or
more sophisticated inventory
needs, you need to look for
an app at apps.intuit.com to
find an integrated app that
tracks inventory and/or
manufacturing.

14. Getting started with
inventory tracking in
QuickBooks Online

15. First, click on the Gear Icon
on the upper right hand
side and select Company
Settings.

17. The Company Settings
window will open. Click
Sales on the left.

19. You need to make sure that
inventory settings are
turned on, as I’ll show you
next.

21. • Show Products/Service
column on sales forms -

22. Adds a Product/Service
column on sales forms so
you can choose from a list
of products and services to
include.

23. Be sure this feature is
turned on.

24. • Track quantity and
price/rate -

25. Adds Quantity and Rate
fields to sales forms so you
can track this information
for products and services.

26. Be sure this feature is
turned on.

27. • Track quantity on hand -

28. Lets you track available
stock for each product you
sell and its related
inventory costs. Be sure
this feature is turned on.

29. Click Save when you are
done.

30. How to find the products
and services list in QBO

31. Click on the Gear Icon on
the upper right and click on
Products and Services

33. The products and services
window will open.

34. How to add a new
inventory item to QBO

35. From the products and
services window, click New
on the upper right.

37. From the Select a Product
Type – click on Item.

39. The Product or Service
Information window will
open.

41. 1. Enter the name of the
item – such as widgets,
etc. The name has to be
a unique name. It can be
a combination of letters
and characters.

42. 2. Enter the SKU number if
you will use SKU’s.
Otherwise, leave it blank.

43. 3. Upload a picture of the
item. This is a new feature
that you can use to include
pictures of your items in
your inventory list.

44. 4. Track Quantity on Hand –
click the box indicating that
you track inventory for this
item.

45. 5. Initial Quantity of Hand –
If you have existing
inventory, enter the
quantity of inventory you
have on hand.

46. It’s a good idea to check
with your accountant first
to make sure that you set
up your starting inventory
quantities correctly.

47. 6. As of Date – If you have
existing inventory, and you
entered the quantity of
inventory you have on
hand,

48. enter the initial start date of
the starting inventory
quantities.

49. 7. Inventory Asset Account
– Select Inventory Asset.

50. 8. Description on Sales
Forms - enter the
description of the item.
This will show up on.

51. 9. Description on Purchase
Forms - enter the
description of the item.
This will show up on
purchase orders and
vendor bills.

52. 10. Price/Rate – enter the
sales price for each unit.

53. 11. Cost – enter the amount
that it costs you to
purchase each unit.

54. 12. Income account – very
important! Make sure that
you choose an “Income”
account type – make sure
you select the correct
account.

55. 13. Expense account – also
very important! Make sure
that you choose a “Cost of
Goods Sold” account type.

56. 14. Is taxable – click this
field if you collect sales tax.
Otherwise, leave this field
blank.

57. Click Save and Close.

58. How to edit inventory
items in QuickBooks
Online

59. From the products and
services list, find the item
you want to edit and click
Edit on the right side.

61. Edit the fields as needed.
You cannot change an
inventory item to a service
item.

62. You can also edit the
description, price/rate,
income account, cost of
goods sold account, or
whether the item is subject
to sales tax.

63. You can update the current
inventory quantity on hand
but I recommend that you
talk to your accountant
before doing this.

64. Click Save and Close.

65. How to delete inventory
items in QuickBooks
Online

66. From the products and
services list, find the item
you want to delete and
click the down arrow on
the right side.

67. Click Delete.

69. Be careful not to delete any
inventory items that show
quantities on hand.

70. You should edit the quantity
on hand first to zero out
the quantity on hand.

71. How to filter the inventory
item list and find inventory
items in QuickBooks
Online

72. If you want to see only
inventory items on the
products and services list,
simply click on Filter and
select Item under Type.
Click Apply.

74. To easily find an inventory
item without scrolling
down the list, simply enter
the inventory name in the
Find Inventory box.

76. How to view inventory
quantities in stock in
QuickBooks Online

77. Do you want to see what
inventory quantities you
have in stock? Look under
the “Quantity” column.

79. How to import inventory
items into QuickBooks
Online

80. If you have a lot of inventory
items to set up you can
save time by importing
your item list.

81. Click on the down arrow
next to the New button on
the upper right.

82. Click Import.

84. Click on Download a sample
file to view a sample Excel
file so you can see how to
format the file and what
fields you need.

87. Once you set up the import
file in Excel, upload the
Excel file, map the data to
the data fields in QBO, and
then import the data.

89. That concludes my tutorial
on how to set up inventory
in QuickBooks Online.

90. I hope the instructions are
clear and you have learned
a lot  For more tutorials
please visit
http://www.5MinuteBookkeeping.com