Inventory management software helps businesses track the products they buy, store, and sell. It gives you real-time visibility into stock levels, automatically updates quantities when you make a sale or receive a shipment, and helps prevent the two most costly inventory problems:

• Stockouts: Running out of stock and losing sales.
• Overstocking: Tying up cash in goods that aren't moving.

QuickBooks Online includes built-in inventory tracking that connects directly with your sales, purchases, and accounting. When you sell an item, QuickBooks Online updates your inventory count and records the cost of goods sold automatically.

An inventory tracking system monitors the movement of products through your business—from the moment you order from a supplier to the moment a customer receives their purchase. Every transaction that affects your stock (receiving goods, making a sale, adjusting for damage or shrinkage) is recorded, so your inventory count is always current.

Online systems like QuickBooks Online update inventory in real time across all your connected sales channels, giving you an accurate picture of your inventory at any point—without manual counts or spreadsheet updates.

Managing inventory manually—whether by spreadsheet or pen and paper—introduces risk at every step. Inventory management software reduces that risk in several concrete ways:

• Prevent stockouts: Get alerted before you run out of best-selling products.
• Reduce overstocking: Avoid tying up cash in slow-moving goods.
• Save time: Stock levels update automatically when you sell or receive goods, with no manual reconciliation.
• Improve accuracy: Eliminate counting errors and double-selling.
• Know your margins: Track cost of goods sold (COGS) in real time to understand actual profitability.
• Stay tax-ready: Accurate inventory values flow directly into your financial reports.

Yes. When you record a sale or receive inventory against a purchase order in QuickBooks Online, your stock levels update immediately. You can check current inventory for any item at any time from your inventory dashboard or reports.

QuickBooks Online calculates your cost of goods sold automatically using the FIFO (first-in, first-out) method—so each time you make a sale, the cost of the oldest stock is applied, and your inventory value and profit margins stay accurate without any manual calculation.

Yes. You can set a reorder point for each inventory item—the minimum quantity at which QuickBooks Online flags the item for reordering. When stock drops to or below that threshold, QuickBooks Online surfaces it on your dashboard so you can create a purchase order before you run out.

This is especially useful for fast-moving products or items with long supplier lead times, where running out of stock means lost sales or service delays.

Yes. QuickBooks Online lets you create and send purchase orders to suppliers directly from the platform. When the goods arrive, you receive them against the purchase order, and QuickBooks Online automatically updates your inventory and records the cost.

The full purchase order workflow—create, send, receive, and match to a bill—is available in QuickBooks Online Plus and Advanced.

Yes. QuickBooks Online supports bundles—groups of individual products sold together as a single unit. When you sell a bundle, QuickBooks Online automatically deducts each component from your inventory, keeping individual item counts accurate without manual adjustments.

Bundles are useful for businesses that frequently group products together, such as:

• Gift sets
• Starter kits
• Service packages with physical components

QuickBooks Online doesn't include a built-in barcode scanner, but it integrates with barcode scanning apps available in the QuickBooks App Store. These apps integrate with QuickBooks Online, letting you:

• Receive shipments
• Pick orders
• Update inventory by scanning barcodes or QR codes with a mobile device or dedicated scanner

For businesses with higher volume or warehouse-style operations, a barcode scanning integration is one of the most effective ways to maintain inventory accuracy and cut down on manual data entry errors.

QuickBooks Online Plus supports inventory tracking and is well suited to businesses operating from a single location or warehouse. For medium-sized and growing businesses that stock products across multiple warehouses, retail locations, or storage sites, QuickBooks Online Advanced offers more robust capabilities—and the QuickBooks App Store includes dedicated inventory apps that extend multi-location tracking further.

If you're managing inventory across multiple sites, the pricing page has a full comparison of QuickBooks Online Plus and Advanced features to help you find the right fit.

Yes. QuickBooks Online integrates with a wide range of sales platforms and business tools through the QuickBooks App Store, including:

• Shopify
• BigCommerce
• WooCommerce
• Square
• PayPal

When you connect an e-commerce platform like Shopify or WooCommerce to QuickBooks Online through the QuickBooks App Store, inventory levels, orders, and payments sync between the two systems automatically. When a customer places an order in your store, QuickBooks Online records the sale and deducts it from your inventory—no manual entry required.

This two-way sync helps prevent overselling, keeps your books accurate in real time, and eliminates the month-end reconciliation work that comes from running sales and accounting in separate systems.

These methods determine how you calculate the cost of goods sold (COGS) when you sell inventory:

• FIFO (first-in, first-out): Assumes the oldest stock is sold first. This most accurately reflects the actual flow of physical goods and is required under IFRS, which most Canadian businesses follow.
• LIFO (last-in, first-out): Assumes the newest stock is sold first. Generally not permitted under IFRS, so it is rarely used by Canadian businesses.
• Average cost: Applies the average cost of all units in stock to each sale, smoothing out price fluctuations over time.

QuickBooks Online uses the FIFO method for inventory valuation, which aligns with Canadian accounting standards.

• Perpetual inventory: Updates stock levels in real time with every transaction. Every sale, purchase, and adjustment is recorded immediately, giving you accurate inventory at any moment. This is how QuickBooks Online tracks inventory.
• Periodic inventory: Counts stock manually at set intervals (weekly, monthly, quarterly) and adjusts records accordingly. More common in operations with limited software, but prone to errors and gaps between counts.

For most small businesses, a perpetual system is the better choice. Preventing stockouts and overstocking is much harder when your counts are only accurate immediately after a physical count.

For most product-based businesses, yes. A spreadsheet requires every sale, return, and receipt to be entered manually. One missed entry throws off every downstream number. There's no connection to your sales channels, no automatic COGS calculation, and no alerts when stock runs low.

QuickBooks Online updates inventory automatically as you sell and receive goods, connects to your e-commerce and point-of-sale platforms, and calculates COGS and inventory value in real time. It also lets you run reports like inventory valuation summaries and sales by product.

As your product catalogue or sales volume grows, the accuracy gap between the two approaches becomes significant.

Yes. QuickBooks Online works well for retail businesses selling physical products—whether in-store, online, or both. You can track inventory by product, set reorder points, create purchase orders, and connect your point-of-sale or e-commerce platform to keep inventory and sales data in sync.

For retail businesses with more complex needs, the QuickBooks App Store includes specialized inventory apps that integrate directly with QuickBooks.

Yes. QuickBooks Online connects to major e-commerce platforms including Shopify, BigCommerce, and WooCommerce, so orders, inventory updates, and payments import into your books automatically. You can track which products are selling, monitor inventory, and see your profitability all from one platform.

For growing e-commerce businesses, having your inventory, expenses, and invoicing in the same system eliminates the need to reconcile data between separate tools at month end.

Setting up inventory in QuickBooks Online involves a few key steps:

• Enable inventory tracking: Go to Settings and turn on Track inventory quantity on hand.
• Add your products: Create inventory items with a name, description, cost, selling price, and opening inventory.
• Set reorder points: Add a minimum inventory threshold to each item so QuickBooks Online alerts you before you run out.
• Connect your sales channels: Link Shopify, Square, or other platforms so sales automatically update your inventory.
• Create purchase orders: Use QuickBooks Online purchase orders to track incoming inventory when restocking.

Inventory tracking is available in QuickBooks Online Plus and Advanced. Once set up, inventory and COGS update automatically with every transaction.

Yes. QuickBooks Online lets you import a product list from a CSV or spreadsheet file, so you don't have to add items one by one if you're switching from another system. You can include product names, descriptions, costs, selling prices, and opening inventory in the import.

For businesses migrating from another accounting or inventory platform, a QuickBooks ProAdvisor can assist with data migration to ensure your opening balances and historical records are set up correctly from day one.

Which QuickBooks Online plan includes inventory tracking?

Inventory tracking is available in QuickBooks Online Plus and Advanced. It isn't included in QuickBooks Online EasyStart or Essentials.

With QuickBooks Online Plus and Advanced, you can:

• Track inventory for your items.
• Set reorder points and receive low-stock alerts.
• Create and manage purchase orders.
• Receive incoming inventory against purchase orders.
• Track inventory value and COGS automatically using the FIFO method.
• Create and sell product bundles.

QuickBooks Online calculates cost of goods sold (COGS) using the FIFO method as you sell inventory, and this updates your profit and loss report automatically. This gives you an accurate view of your margins and ensures your income and deductible costs are reported correctly for the CRA.

For GST/HST, QuickBooks Online tracks the tax collected on sales and the input tax credits (ITCs) from inventory purchases separately so your GST/HST filing is straightforward whether you file monthly, quarterly, or annually.

Inventory adjustments for shrinkage, damage, or write-offs can also be recorded and categorized properly, keeping your deductible losses documented for tax time.