The following tutorials focus on the items you add to lists and use on sales forms: products and services, customers, and vendors.
Every time you create a new customer, vendor, or product and service, you’re adding an item to a list. QuickBooks uses these structured data points to organize all of your transactions and accounts.
There are a few ways to create new customers, vendors, and products and services. We introduced what we’re calling the build-as-you-work (adding items directly from sales forms) and the build-all-at-once (creating items from scratch from list menus) methods in our introductory article, “Your first 15 minutes with QuickBooks.” Seeing them in action will help you decide how you want to build and organize your personal QuickBooks Online workflow.
QuickBooks Online has two basic sales items: products and services. Both represent something you sell to customers. Both are created using nearly identical workflows.
When you create a new product or service item, you have four types to choose from: non-inventory, service, bundle, and inventory. Unless you plan to track inventory quantities, you can create lists using non-inventory and service items.
Bundles and inventory tracking are available for the QuickBooks Online Plus. Bundles let you package and sell multiple items as a single product or service. Inventory tracking, as the name implies, tracks exact quantities of products on-hand.
While these advanced features can help you better manage your stock, they aren’t required for a basic set up. You can absolutely use non-inventory items for product sales, just know that QuickBooks will not track quantities. If you decide to enable inventory at a later date, you will have to reclassify qualified non-inventory items.
To create a new product or service item, navigate to the Sales Tab, go to the Products and Services sub-tab and select “New.” Alternatively, you can select “Add new” from a sales form. This will take you to the same module.
If you create new items directly from sales forms (i.e. the build-as-you-work method), go beyond the essentials. Enter all necessary information into QuickBooks before you start adding them to invoices.
Not everything on the creation module is an internal data point. Take extra care when crafting the customer-facing sections, such as the Sales Information. Including a detailed yet concise product/service description will make a great impression on your customers.
If you charge a variable rate for services, you can leave the sales price/rate data field blank and add the negotiated amount when you fill out the invoice.
Also, pay extra attention to the Income Account. The account you select is what QuickBooks will use to categorize income once a sale is complete.
Plan ahead with how you want to organize your various streams of income. A well-structured set of accounts and sub-accounts will make analyzing and extracting useful information from financial reports far easier and dare I say, enjoyable. To learn more about creating and organizing accounts, check out “Setting up for Success – Creating and Managing Accounts.”
Creating and organizing your customerlist is a very similar process. Moreover, just like creating product and service items, the information from customer profiles will automatically populate the data fields on invoices and sales forms.
In line with the build-as-you-work method, you can add customers directly from sales forms. When you use this method, we highly recommend clicking the (+ Details) button and filling out their complete customer profile before sending.
The Customer List in the Sales Tab has a few unique and useful features that can help you manage sales and historical data. When you land on Customer List, you will see all of your customers you've recently sold products and services to. Additionally, you can use the colorful boxes on the top to filter customers based on where they are in the sales cycle.
For instance, if I click on the orange and grey center section, I see a list of all my customers with open invoices. I can even receive payments from them (once I’ve been paid) directly from this page. I can also see that 10 of those 20 invoices are overdue - - might be time to send a reminder!
When you’re ready to create a new customer, click “New Customer” from the Customer List page. Here a few key points to keep in mind:
This "create a new customer" pop-up is exactly the same screen you see when you edit an existing customer profile to update their information.
You can personalize the Display name that appears on customer sales forms and emails. Utilizing this adds a personal touch to your business communications.
The “sub-customer” option is a less common but convenient feature that lets you invoice a customer with multiple businesses. This allows you to track income collectively and for specific businesses or locations, for instance, a particular store within a local chain (the chain becomes the parent account).
The tabs in the bottom left corner lend themselves to all sorts of great personalization. Besides the address, you can include notes about your customer, any attachments you’ve sent them, and tax information if they qualify for exemptions. You can also set custom sales terms and specify prefered invoice delivery and payment methods for specific customers, allowing you to further personalize the experience. These features help you take care of specific customers with particular requests, such as who still enjoy receiving physical paper invoices in the mail.
If you stop selling to a customer and don't want them to appear on the Customer List, you can go to their profile and select the “Make Inactive” button at the bottom of the screen. If you need to reactivate a customer account, simply click the small gear icon at the top of the Customer List, click "Include inactive," go back into the customer's profile and follow the above steps in reverse.
If you click on a customer from the Customer List page, you can see all of their historical transactions. Pay extra attention to the “status” column to see that you’ve sent and settled invoices and payments as needed.
By now, you’re an expert at managing lists. Once you have the process down, adding new customers, vendors, and products & services will feel second nature.
The Vendors List is virtually identical to the Customer List in basic functionality, so most of what you learned in the section above will apply here as well. You add new vendors and manage lists the same way you do for customers, directly on expense forms or from the Vendors sub-tab in the Expenses Tab. We’d also recommend checking you owe to vendors by using the Open Balance bar at the top of the Vendor list.
There is one very important distinction between the customer and vendor lists: you can elect to track a vendor for 1099s if they work for you as an independent contractor. This can be enabled when you create a new vendor account or edit an existing one.
If and when you decide to designate a vendor as an independent contractor for whom you plan to file a 1099-MISC, you’ll need to create a separate expense account to track payments associated with that labor. This is so you can clearly distinguish their expenses from your regular employees. This has important compliance implications, so when you’re ready to take this step, please read “How to Track a Vendor for 1099s in QuickBooks."
It’s important to briefly mention that a name can only appear once on any list. If you have a customer who is also a vendor, we have a few tricks for how to use their legal name on both accounts, stay compliant, and easily distinguish one account from the other at a glance.