How to Create an Inventory Product

[0:00] If you have QuickBooks Online Plus or Advanced, you can track exactly how much of each product you have in stock. In this video, we'll cover how to turn on inventory tracking, add a new inventory product, and fill in the details QuickBooks needs. Before you add any inventory products, you'll need to turn on inventory tracking in your account settings.

[0:22] We cover this in our video on how to track inventory in QuickBooks Online. It's also a good idea to set up sales tax first if you sell taxable items. Once inventory tracking is on, go to Settings, then select Products and services. From here, select New Product/Service, then select Inventory to open the new inventory item form. Enter a name for your product so you can find it quickly later.

[0:47] There's also a field for SKU, the stock keeping unit you use to identify the product. To add a photo, select the image box and upload one. A photo makes the product easier to spot in your list. Next, enter your initial quantity on hand. This is how many of this product you have in stock right now.

[1:08] It's worth doing a quick physical count first, since changing the quantity later can throw off your accounting. In the as of date field, enter when you counted that quantity. This date becomes your starting point. QuickBooks won't count any sales or purchases from before it. If you're adding a brand-new product from a vendor, enter zero as the initial quantity.

[1:29] Then track each shipment as it comes in. Set a reorder point, which is the lowest stock level you want before QuickBooks reminds you to order more. Then select the inventory asset account dropdown and choose inventory asset. This account tracks the value of all the inventory you have on hand. Now add your sales info. Enter a description that customers will see on invoices and sales receipts.

[1:55] Then enter the sales price or rate you charge. Select the income account dropdown and pick the account you use to track sales income. If you need a new one, select Add new. If you need to change how this product is taxed, select Edit Sales Tax. From there, pick the product type that matches what you're selling or mark it as non-taxable.

[2:17] If you don't see this option, you'll need to set up sales tax first. Last, add your purchasing info. Enter a description for bills and purchase orders, then enter the purchase cost you usually pay. Select the expense account dropdown and choose cost of goods sold. This account tracks what your sold products cost you. Pick a preferred vendor if you have one, then select Save and close.

[2:43] Now you're ready to add inventory products in QuickBooks Online. If you have a lot of products, check out our video on how to import them from a spreadsheet.