Setting up and managing your Inventory in QuickBooks Online

Hello Community! When it comes to QuickBooks Online inventory, I want you to feel confident that you have everything you need to manage your products and services. I’m here to help you step by step through getting set up so you are more than ready to succeed.

Important things to note:

• The inventory feature is only included in the QuickBooks Plus and Advanced subscriptions. 
• If you don’t have Plus or Advanced, upgrade your QuickBooks plan to start tracking your inventory.  
• While adding and managing basic products and services is a fairly straightforward process, the full inventory experience is quite a bit more involved and requires some regular upkeep. No need to stress as I will go over this with you and provide you with some handy resources. 

If you are converting from QuickBooks Desktop with existing inventory, there is a different workflow (found here). Note that inventory should be set up immediately after conversion, not later. 

Let’s get started! 

To start, go to Settings, and then choose Account & Settings and select the Sales tab. From there you will want to choose edit in the Products and Services section. Here, you will want to turn on the following options by moving the slider to the right:  Show Product/Service column on sales forms ...., Track Quantity and price/rate... Track inventory quantity on hand...  Finally, click on Save and then Done. 

Congratulations! You are now ready to start adding inventory items! To create a new product or service item, navigate to the Invoicing tab, go to the Products and Services sub-tab across the top of the screen, and then select the New button in the upper right corner. You will then be able to add them as line items on any sales forms and save you some time. 

Next, go ahead and click on inventory, and start adding your product/service information!

Woohoo! Once you’re done setting up all of your inventory items, you can now keep track of them after they sell.   

As you’re working, you can check what’s in stock and what’s on order by hovering your pointer over the quantity you entered on any of your transactions. Keep in mind that after creating your invoice or sales receipts, QuickBooks will then decrease what’s on hand by the amount on the invoice or sales receipt.

Now that everything is entered, let’s explore some ways in which you can track your sales.

How to track what you’ve sold: Inventory, Summary Reports, & More

If you want to see your best sellers and get the totals for each product and service, you can run the Sales by Product/Service Summary Report! This is generally the same report you’d use to track overall sales, but in the case of inventory, this report will show you the Cost of Goods Sold and the Gross Margin for those items. The Gross Margin is the revenue made from the sale of the product minus the COGS expense.

It’s always a good idea to keep an eye on your Costs of Goods Sold numbers and the profit margin from those inventory items. Most importantly, make sure what you’re selling makes financial sense to your business!

Pro tip: To tailor or customize any of your reports, go to the top of any report to change the report date, grouping of info, and more. To see all changes you can make, select Customize. 

If you’re needing a bit more of a deep dive on using reports to see your sales and inventory status, check out this article here.    

Now that you’ve been tracking your inventory, you’ll be able to see if any items need to be restocked. Let’s take a look at how to go about creating a Purchase Order.  

How to record Purchase Orders in QuickBooks Online  

You can also learn how to reorder anything that’s running low or out of stock here. 

The great thing about using QuickBooks to track your inventory is that it'll let you know when it's time to restock since it automatically updates and tracks quantities for you. And don't forget that you can create purchase orders within your account!

Once you (or your customer) receive the inventory from the purchase order, you’ll then want to process the open Purchase Order. Select either an expense, check, or bill depending on when and how you pay your vendor. For all three options, all open purchase orders for the specified vendor will appear on the right after you select the vendor. You can add the transaction to the form or open it to make sure it’s the correct one.

For a more comprehensive understanding of how to handle inventory from vendors, feel free to check out this article on adding purchase orders to expenses, bills, or checks here.  

Lastly, if you ever need to make an adjustment to inventory quantity, you’ll need to do so manually. Learn about inventory quantity in QuickBooks Online here.  

Life does happen and items get lost but try not to make it a habit of using the inventory adjustment tool. The more changes you make, the more complicated your accounting and explanation of your business’ assets will become. 

You made it! If you need an overview of what we covered, check out this help video on managing your inventory: https://www.youtube.com/watch?v=xkTg6r61OEk&feature=emb_imp_woyt 
 

You now have all the necessary steps to be successful in setting up your inventory. If you still don’t feel like you’ve got the hang of it, give yourself some time to explore all the resources and help videos provided in this article. You’ll be an expert on inventory in no time!