Skip to main content

How to Set Up and Track Stock in QuickBooks Online

· 5 min read
Debits

Introduction​

Effectively managing inventory is crucial for businesses that sell physical goods. QuickBooks Online provides robust tools for setting up and tracking stock, ensuring you can monitor inventory levels, manage costs, and fulfill orders efficiently. This guide walks you through the process of setting up and tracking inventory in QuickBooks Online.

Step 1: Enable Inventory Tracking​

1.1: Turn On Inventory Tracking​

  1. Log in to QuickBooks Online: Start by logging into your QuickBooks Online account.
  2. Go to Account and Settings: Click the Gear icon in the upper right corner and select Account and Settings.
  3. Access the Sales Tab: In the left-hand menu, click on Sales.
  4. Enable Inventory Tracking: Under the Products and services section, find the option labeled Track inventory quantity on hand and toggle it on.
  5. Save Settings: Click Save and then Done to apply the changes.

Step 2: Set Up Inventory Items​

2.1: Add a New Inventory Item​

  1. Navigate to Products and Services: Go to Sales > Products and Services.

  2. Create a New Item: Click on New in the top right corner and select Inventory item.

  3. Enter Product Details: Fill in the necessary details for the inventory item:

    • Name: The name of the product.
    • SKU: A unique stock-keeping unit identifier (optional).
    • Category: Assign the item to a category (optional).
    • Initial Quantity on Hand: Enter the number of units currently in stock.
    • As of Date: Specify the date as of which the initial quantity on hand is accurate.
    • Reorder Point: Set the minimum quantity at which you should reorder the item to avoid running out of stock.

  4. Enter Sales and Purchasing Information:

    • Sales Information: Specify the sales price and the income account that will track sales revenue.
    • Purchasing Information: Enter the cost of purchasing the item and the expense account to track purchasing costs.
    • Vendor Information: If applicable, add the preferred vendor for this item.

  5. Save the Item: Once all the details are entered, click Save and close.

2.2: Repeat for All Inventory Items​

  1. Continue Adding Items: Repeat the process for each inventory item you need to track in QuickBooks Online.

Step 3: Track Inventory in QuickBooks Online​

3.1: Monitor Inventory Levels​

  1. View Inventory Status: Go to Sales > Products and Services to see a list of your inventory items along with their current stock levels, sales prices, and reorder points.
  2. Check Inventory Alerts: QuickBooks Online will notify you when stock levels fall below the reorder point, helping you maintain sufficient inventory.

3.2: Record Sales and Purchases​

  1. Sales Transactions: When you sell an inventory item, QuickBooks Online automatically updates the quantity on hand. Simply create an invoice or sales receipt, select the inventory item, and QuickBooks will adjust your inventory levels accordingly.
  2. Purchases and Stock Adjustments: When you receive new stock, record the purchase by creating a bill or expense. Choose the appropriate inventory items, and QuickBooks will update the stock levels.

3.3: Perform Regular Stock Takes​

  1. Physical Inventory Counts: Periodically conduct physical counts of your inventory and compare them to the quantities listed in QuickBooks Online.
  2. Adjust Inventory Levels: If discrepancies are found during a stock take, use the Adjust quantity on hand feature under Sales > Products and Services to correct the inventory levels in QuickBooks.

Step 4: Generate Inventory Reports​

4.1: Access Inventory Reports​

  1. Navigate to Reports: Go to the Reports menu in QuickBooks Online.
  2. Find Inventory Reports: In the search bar, type "Inventory" to find related reports such as the Inventory Valuation Summary and Inventory Valuation Detail.

4.2: Analyze Inventory Data​

  1. Inventory Valuation Summary: This report provides an overview of the quantity on hand, the value of the inventory, and the average cost of each item.
  2. Inventory Valuation Detail: Offers a more detailed breakdown of inventory transactions, including purchases, sales, and adjustments for each item.

4.3: Make Data-Driven Decisions​

  1. Review Stock Levels: Use these reports to monitor inventory levels and make informed decisions about reordering, discontinuing items, or managing excess stock.
  2. Manage Costs: Analyze the cost of goods sold (COGS) and inventory value to understand the financial impact of your inventory on your business.

Best Practices for Managing Inventory in QuickBooks Online​

  • Regular Reconciliation: Frequently reconcile your physical inventory with the quantities in QuickBooks to catch discrepancies early.
  • Set Reorder Points: Use reorder points to avoid stockouts and overstock situations.
  • Use Accurate Descriptions: Ensure all product descriptions, SKUs, and other details are accurate to streamline inventory management.
  • Leverage Reports: Regularly review inventory reports to identify trends and optimize your stock levels.

Conclusion​

Setting up and tracking inventory in QuickBooks Online is essential for businesses that deal with physical products. By following the steps outlined in this guide, you can effectively manage your stock levels, monitor costs, and ensure that your inventory is accurately reflected in your financial records. Implementing these best practices will help you optimize inventory management and support your business’s overall financial health.