How to Create Products and Services in QuickBooks Online
Jan 29, 2022
How to Create Products and Services in QuickBooks Online
The Products and Services list contains the products and services appearing on your purchase and sales transactions. Each product or service must be mapped to an account in the Chart of Accounts. Each time a product or service is used in a transaction, an accounting entry is made behind the scenes using the mapping information associated with the product or service.
To get to the Products and Services list, use the gear icon in the top navigation bar and click Products and services. (It is also available by clicking the gear icon -> All lists.)
As discussed earlier, the Products and Services list can also be accessed by clicking Sales in the left navigation bar, then clicking the Products and Services sub-tab.
To create a new product or service:
1. Click the New button at the top right of your Products and Services list.
2. Select which type of product or service you are creating:
- Inventory – Items you buy and/or sell and track quantities
- Non-Inventory – Items you buy and/or sell but don’t need to (or can’t) track quantities
- Service – Services you provide to customers
- Bundle – Collection of products and services you sell together (e.g., a gift basket)
NOTE: Inventory items are available only in QuickBooks Online Plus and Advanced subscriptions, and inventory tracking has to be turned on in the Account and Settings as well. We will cover turning on inventory tracking later in this training.
3. Choose a Name for your product or service. If you are using stock keeping units (SKUs), enter one in the SKU field.
4. Use the Category field, if desired, to segregate this product or service into a particular Product Category.
5. If applicable, you can add a picture of the product or service here.
6. If this product or service is going to appear on sales forms (as the vast majority of products and services will), make sure you check the box next to I sell this product/service to my customers. This ensures various fields related to this product or service appear on sales forms.
7. Enter a default description to pop up on sales forms for this product or service, if desired. Default descriptions can be overwritten or wiped out on an individual sales form.
8. Enter the Sales price/rate. Choose the appropriate Income account. Check the box if the item is subject to sales tax. If the price changes, leave it blank. You will fill in the price on the individual sales receipts or invoices.
9. Notice there are two sections to consider when creating a product or service: one for Sales information (the fields you filled in up until now) and one for Purchasing information. Check both boxes if you want to track profitability of your product or service. Once the box I purchase this product/service from a vendor is checked, a description box appears for purchases along with fields for the cost and expense account. This “two-sided” feature is available in the Plus and Advanced subscriptions only. Create two-sided items (each one is mapped to an income account when selling and expense accounts when buying), so one item name for both purchases and sales of a particular product or service.
Product Categories In QuickBooks Online
Product Categories serve two purposes:
- All product/services of the same category are totaled on your reports
- Using Categories makes data entry easier. If a category name for the parent is chosen (for example Candles), then add a product/service for each type of candle you sell and choose the category name in the sales form. The product/service will be listed below it. This can make finding items faster, especially if you have a lot of them! This method results in a much cleaner and more concise product and services list and allows for more robust reporting capabilities.
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