Note: Be sure that your inventory function is active in QuickBooks Online. Go to Gear Icon>Account and Settings>Sales tab>Products and services area>Checkmark the following at the minimum:

• Show Product/Service column on sales forms
• Track quantity and price/rate
• Track inventory quantity on hand

Click Save then click Done.

1. Go to Gear Icon> Lists menu>Products and services.
   1. You will notice giant “Low Stock” and “Out of Stock” icons at the very top of your items list; this is an indicator that your inventory function in QuickBooks Online is indeed activated.
2. Click New at the top right.
3. Choose Inventory
   1. Note: Inventory Assembly items are not discussed here. This is only for inventory Parts.
4. Type in your Item Name or some other identifier for the item name
   1. Note: Be sure to think about what your vendors and customers will see on your documents you submit to them.
   2. Note: Be sure to think ahead if you will be creating a lot of different items for your inventory repertoire as you want to have an item naming/identifier structure/system you can build on/add to in the future.
5. Click on Category only if you want this item to be within (like a sub-item) a particular category identifier.
   1. This is useful only if you want to separate out groups of different items to make them easier to see and find in your items list.
6. Initial quantity on hand and As of date – I typically skip these fields because this is just in case you ALREADY have booked this inventory item in stock in your warehouse prior to actually creating this item in your bookkeeping platform. I always like to use the typical bookkeeping functions (such as entering in a vendor bill) to receive inventory in my bookkeeping system.
7. Reorder Point
   1. The minimum stock status of this item you want to have on hand (at least) before QuickBooks triggers a warning for you to reorder more.
8. Inventory Asset Account
   1. This account is typically preset by QuickBooks when you activate the inventory function. This is where the accumulated on-hand value of this inventory item will be kept.
9. Sales Information
   1. Description – What you type in here will show on all customer invoices when you use this item.
   2. Sales Price – What you type in here will show on all customer invoices when you use this item. This is not necessary as you can fill this in during the course of creating a customer invoice.
   3. Income Account – Choose this account carefully. This is the account that will be affected every time you use this item in a customer invoice.
10. Sales tax category
    1. Be careful here as your items may or may not be taxable depending on where you are located and where you ship to.
11. Purchase Information
    1. Description – What you type in here will show on all purchase orders and vendor bills you create when you use this item.
    2. Cost – What you type in here will show on all purchase orders and vendor bills you create when you use this item. This is not necessary as you can fill this in during the course of creating a purchase order or vendor bill.
       1. This is not the same as average Cost of Goods Sold.
    3. Expense (COGS) Account – Choose this account carefully. This is the account that will be affected every time you use this item in a vendor bill, check payment, etc. (NOT a purchase order as purchase orders do not affect your financials).
    4. Preferred Vendor – This helps in remembering who you typically order this item from.
12. Click Save and close.