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Set up initial cost for inventory items

by Intuit• Updated about 19 hours ago

Learn how to set up an initial cost for your inventory items in QuickBooks Online. 

When creating a new product or importing from a sales channel into QuickBooks, you’ll need to add in the initial cost for each product. Initial cost is the total amount you paid to get the product and may include shipping, freight, sales tax, and customs. Adding initial cost helps you keep an accurate cost of goods sold and accurately track your profit margins.

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Initial cost is the buy price plus any additional fees, costs, or discounts it takes to get the item from a supplier to you. This can include shipping costs, manufacturing costs, sales tax, discounts, and so on. Adding the initial cost of a product is important for tracking the health of your business. It gives you a better picture of your business by providing accurate cost tracking and better profit accounting. Here are some ways knowing the initial cost can help your business:

  • Correct profit margin reporting: Tracking the cost of an item will help you calculate the profit you get from that item, called the profit margin. 
  • Calculate the correct sales tax for your business: Adding the initial cost contributes to the Cost of Goods Sold (COGS). This is what you need to know to calculate the correct sales tax for your business. 

Add initial cost

QuickBooks will prompt you if some of your inventory doesn't have an initial cost added. You’ll see this on your Products & services list.

  1. Go to All apps A bunch of numbers and letters on a tile wall., select Sales & Get Paid, then select Products & services (Take me there).
  2. In the Initial cost missing section, select Add now.
  3. Select Add Initial Cost.
    Note: If you select Don’t show this to me again, this option won’t appear the next time you visit.
  4. In the Initial Cost column, add the initial cost in the field for each product listed.
  5. Select Finalize, then select Save. 

Note: If you need to adjust the initial cost later, edit the starting value.Â