Part 2 of a two-part series on managing inventory with QBO. Read part 1 here.
Do you have inventory for your business?
When you first started your business, you might have been able to keep track of your merchandise by counting manually. But as you and your product list grew, this became impractical. You might have recorded it all in a spreadsheet, or even a box full of notecards. These methods can quickly become hard to manage.
QuickBooks Online has a much better way. In part 1, we covered creating inventory records and establishing a reorder point. What’s next?
Completing Inventory Records
- Each item needs to be assigned to an inventory asset account for tracking and reporting purposes. This field should default to Inventory Asset.
- Enter a description of the item in the sales information This description will appear on sales forms.
- What will your customers be charged for it? This is the Sales price/rate.
- The income account should automatically display Sales of Product Income, and you should click in the box in front of is taxable if that’s the case.
- If you buy the item to resell, enter a description in the purchasing information box, and provide your cost, the price you pay when you buy the item from another source. The expense account should default to Cost of Goods Sold.
When you’re done, save the record.
Viewing Your Records
You don’t have to create records for absolutely every product or service you sell before you start using them. When you create an invoice, for example, and you open the drop-down list under Product/Service, the option at the top of the list will be + Add new. Select that, and the product/service information pane opens. You can create a record on the fly.
To get to the list of the product and service records you’ve created, click the gear icon in the upper right and select Products and Services, like we did early on here. You’ll see a screen similar to the one pictured above. You’ll also notice that you can link to several action screens from each entry.
If you maintain careful item records, you’ll be able to create a number of reports that can advise you on the state of your inventory. Click on Reports in the toolbar, and then All Reports | Manage Products and Inventory.
These reports are fairly self-explanatory, but by customizing them, you can get even more focused insight. We can help you with this. We’d also be happy to go over any other aspect of inventory-tracking and management. Just let us know when you want to get started.
Joe Gibbons, CPA is managing partner of Gibbons & Gibbons, P.C., a Northern Virginia-based accounting and business advisory firm that specializes in working with law firms and other professional service providers.