The most important thing to be aware of when moving from QuickBooks Desktop to QuickBooks Online is that desktop versions of QuickBooks use average cost to calculate your inventory costs. QuickBooks Online uses FIFO.
For most businesses, first-in-first-out (FIFO) produces the biggest gross profit and highest ending inventory value on the balance sheet. It also shows how inventory flows through your business more accurately.
|Note: If you prefer not to use FIFO or enable inventory in QuickBooks Online, select No, don’t turn on inventory and don’t track quantity on hand. You can change these settings later, but if you do, you will need to set up new inventory items. We recommend that you reach out to a tax professional if you need help to make this decision.|
Set your inventory start date
QuickBooks Online calculates inventory costs from the inventory start date using FIFO. Any existing transactions on or after this date are also recalculated under FIFO. Because of this, we recommend using the first day following your company’s last tax filing period to avoid filing amended forms.
Once you set the inventory start date, you won’t be able to change it again, and any transactions prior to this date cannot be edited.