Set up inventory after converting from QuickBooks Desktop to QuickBooks Online

Learn how to set up inventory after converting from QuickBooks Desktop to QuickBooks Online.

Buying and selling products after you move from QuickBooks Desktop to QuickBooks Online impacts inventory numbers. So it’s important to set up your inventory right after conversion. In this article, we’ll show you the fouristep process to do that.

In this article, you'll learn how to:

• Know what to do before you get started
• Print an Inventory Valuation Summary report
• Print a Balance Sheet report
• Set up your products and services
• Offset the old inventory asset account

Before you get started

There are a few things to know before you get started.

• This guide is only for importing your inventory into QuickBooks Online, not selling/tracking inventory in QuickBooks Online. If you use a third party app that manages your inventory under an accounting method other than FIFO, you'll want to check that app's solution.
• Using QuickBooks Desktop for Windows 2015 or earlier? Before converting to QuickBooks Online, first download and install a trial version of QuickBooks Desktop for Windows 2016 or later. If you attempt to import using QuickBooks Desktop 2015 or earlier, your inventory data will not be converted.
• Using QuickBooks Desktop for Mac? If so, your inventory information will not import into QuickBooks Online. You'll need to set up your inventory from scratch in QuickBooks Online.

Step 1: Print an Inventory Valuation Summary report

You can use the Inventory Valuation Summary report to set up everything properly.

1. Go to Reports (Take me there).
2. Select the Inventory Valuation Summary report.
3. From the Dates drop-down, select All.
4. Select Print.

Step 2: Print a Balance Sheet report

Printing a balance sheet report gives you an account balance before you make the changes.

1. Go to Reports (Take me there).
2. Select Balance Sheet.

Step 3: Set up your products and services

Your inventory items will be imported to the Products and Services list. You may notice that your imported items will each have Inventory Asset and COGS as sub-products. This is because QuickBooks Online tries to preserve accurate accounting of asset value and Cost of Goods Sold.

First, turn on inventory tracking.

1. Go to Settings , then select Account and settings.
2. Select Sales.
3. Select edit ✎ in Products and Services.
4. Make sure all the boxes are checked, including Track inventory quantity on hand.
5. Select Save, then select Done.

Next, update the quantity and cost of the items.

1. Select Settings ⚙, then Products and services.
2. Find the product you need to edit. Then select Edit in the "Action" column.
3. If the item is not set up as an inventory, select Change type. Then choose Inventory.
4. In the "Initial quantity on hand" field, enter the exact quantity from the Inventory Valuation report (from Desktop).
5. In the "As of date" field, enter the date the quantity on hand is effective.
   (Note: After the inventory quantity and as of date are entered, no transactions prior to that date can be created.)
6. In the "Cost" field, enter the product’s exact cost based on the Inventory Valuation report (from Desktop).
7. Select Save and close.

Lastly, delete Inventory Asset and COGS sub-products.

1. Select Settings ⚙, then Products and services.
2. Find the product you just edited.
3. Under it select the sub-products Inventory Asset Account and COGS.
4. Select Batch Actions. Then Make inactive.
5. On the prompt that appears, select Yes.

Step 4: Offset the old inventory asset account

After editing the products and services, a new account called "Inventory Asset-1" will be created in QuickBooks Online as its default account. An account adjustment will need to be entered because of this. Use the Opening Balance Equity account as the offsetting account.

1. Select + New.
2. Select Journal Entry.
3. In the first line, choose the old inventory account.
4. Enter its balance under Credit.
5. In the second line, choose Opening Balance Equity.
6. Enter an equal amount under Debit.
7. Select Save and close.