How to Create a Basic Service Item in QuickBooks Online

If you need to create a basic service item to use to create a future customer invoice in QuickBooks Online, then here are the steps:

1. Click on the gear icon (upper right), the click on Products and Services under the Lists menu.
2. Click New
3. Choose “Service”
4. Fill in the appropriate fields to be able to create a basic service item.
   1. Name – this will be the official name of the item that shows on your invoices to your customers.
   2. SKU – this is not required
   3. Category – this is not required
   4. Class – this is not required
5. Checkmark “I sell this product/service to my customers.” Then fill in a description that will automatically show on your customer invoices.
6. Sale price/rate – this is not required as you can fill this in when creating the invoice.
7. Income Account – this is probably the most important field to choose carefully. Be sure to choose an actual income-type account and the one that will be affected when you utilize this item on your customer invoices.
8. Sales Tax – If you use Automatic Sales Tax, then QuickBooks Online defaults to “Taxable-standard rate” choice setting here. However, to alter or deactivate this, click on “Edit sales tax”. If you still want to completely make this item non-taxable, then scroll to the bottom and choose “Still don’t see what you’re looking for?”. Now scroll to the bottom and select Nontaxable and then click “Done”.
9. If you purchase this item from a supplier (before selling to your customers), or if you just want to make this service item double-sided so you can use it on vendor bills as well, then checkmark “I purchase this product/service from a vendor” and proceed with filling in the similar fields like you did on the income side of things (above). For the expense account, I would probably choose a Cost of Goods Sold type of account as you most likely are creating items in your books anyways for sales and direct costs purposes and NOT overhead or administrative expense purposes.
10. Click on Save and Close.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.