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Set up inventory after conversion

SOLVEDby QuickBooksQuickBooks Online51Updated 4 days ago

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 four step process to do that.

Note: Inventory tracking is only available in QuickBooks Online Plus and Advanced.

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. Here's how to print it:

  1. Go to Business overview then select Reports (Take me there), or 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. Here's how to print it:

  1. Go to Business overview then select Reports (Take me there), or 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.

Note: Repeat the steps in the second and third sections below for each item to set up its quantity and cost.

First, turn on inventory tracking.

  1. Go to Settings ⚙, then select Account and settings.
  2. Select Sales.
  3. Select the edit (pencil) icon in Products and Services.
  4. Ensure 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 ⚙ on the toolbar, then select 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 ⚙ on the toolbar, then select 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.

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