Inventory management is crucial for businesses that buy, sell, and track physical products. QuickBooks Online offers a robust inventory tracking feature that allows you to keep a close eye on your stock levels, streamline your purchasing and sales processes, and make informed business decisions. In this article, we'll guide you through the process of setting setup inventory tracking in QuickBooks Online.

Step 1: Enable Inventory Tracking

  1. Log In to QuickBooks Online: Access your QuickBooks Online account by entering your login credentials.

  2. Navigate to the Gear Icon: Click on the gear icon located in the upper-right corner of the dashboard to access the "Your Company" section.

  3. Choose Account and Settings: Under the "Your Company" section, select "Account and Settings."

  4. Click on Sales: From the left-hand menu, click on "Sales."

  5. Enable Inventory: In the "Sales form content" section, check the box that says "Track inventory quantity on hand." Click "Save" to apply the changes.

Step 2: Set Up Your Products and Services

  1. Access Products and Services List: To manage your inventory, go to the "Sales" tab and select "Products and Services."

  2. Add a Product/Service: Click the "New" button to add a new product or service. Choose "Inventory" as the product or service type.

  3. Complete Product/Service Details: Fill in the product or service details, including the name, description, SKU (Stock Keeping Unit), sales price, and cost. You can also set the initial quantity on hand.

  4. Save: Click "Save and close" to save the product or service information.

Step 3: Record Inventory

  1. Purchase Orders: When you purchase inventory items, create a purchase order to track what you're ordering from your suppliers.

  2. Receive Inventory: When you receive inventory items from your supplier, go to the "Sales" tab and select "Receive Inventory." Choose the supplier and the items received.

  3. Sales Transactions: When you sell products, create sales invoices, or sales receipts. QuickBooks Online will automatically adjust your inventory levels.

Step 4: Monitor Inventory Levels

  1. Inventory Valuation Report: To keep track of your inventory levels and values, run the "Inventory Valuation Summary" report. This report shows the current quantities on hand and the total value of your inventory.

  2. Inventory Asset Account: QuickBooks Online also maintains an "Inventory Asset" account that reflects the value of your inventory. You can find this account on your balance sheet.

Step 5: Handle Returns and Adjustments

  1. Returns: If you need to return items to your supplier or if customers return items, use the "Supplier Return" or "Customer Return" feature in QuickBooks Online.

  2. Adjustments: Occasionally, you may need to adjust your inventory for reasons such as damage or loss. Use the "Inventory Quantity Adjustment" feature to make these adjustments.

Step 6: Run Inventory Reports

  1. Inventory Reports: QuickBooks Online offers various reports to help you manage your inventory efficiently. Explore reports like "Inventory Valuation Summary," "Sales by Product/Service Detail," and "Inventory Stock Status by Item" to gain insights into your inventory.

Conclusion

Setting up inventory tracking in QuickBooks Online is a valuable step for businesses that deal with physical products. It allows you to maintain accurate stock levels, streamline your purchasing and sales processes, and make informed business decisions. By following the steps outlined in this article, you can efficiently manage your inventory within QuickBooks Online and ensure that your financial records are up-to-date and accurate.