QuickBooks Inventory Tracking: Setup, Manage & Monitor Stock

If you sell physical products, keeping track of how much inventory you have on hand is important. QuickBooks Online can track your product quantities, inventory value, purchase costs, and sales as you work. You can also set reorder points to know when stock is running low and use inventory reports to review what you have on hand and what is selling.

QuickBooks Online inventory tracking is available with QuickBooks Online Plus and Advanced. If you use Simple Start or Essentials, Intuit also offers an inventory add-on for eligible accounts.

Table of Contents

What is Inventory Tracking in QuickBooks?

Inventory tracking in QuickBooks is used to monitor the products you buy and sell, along with the quantity you have available. When you receive inventory, QuickBooks increases the quantity on hand. When you sell inventory through an invoice or sales receipt, QuickBooks reduces the quantity accordingly.

You can use QuickBooks inventory tracking to:

Track quantity on hand
Monitor inventory costs
Set reorder points
Identify products that are running low
Track purchases and sales
Monitor inventory value
Review cost of goods sold
Run inventory and sales reports

Which QuickBooks Online Plans Support Inventory Tracking?

QuickBooks Online Plus and Advanced include built-in inventory tracking. If you use Simple Start or Essentials, you can add inventory tracking to your subscription instead of moving to another plan.

Before setting up inventory, check your QuickBooks subscription and make sure inventory tracking is available and enabled.

How to Turn On Inventory Tracking in QuickBooks Online

Before adding inventory products, turn on the inventory settings in QuickBooks.

Go to the Settings menu.
Choose Account and settings from the dropdown.
Select Sales.
In the Products and services section, select Edit.
Turn on Show Product/Service column on sales forms.
Turn on Track quantity and price/rate.
Also, enable Track inventory quantity on hand.
Select Save.
Click Done.

Once these settings are enabled, you can start adding products that you want QuickBooks to track as inventory.

How to Add an Inventory Product in QuickBooks Online

After enabling inventory tracking, add each product you want to monitor.

Go to Settings.
Select Products and services.
Select New.
Choose Inventory.
Enter the product Name and SKU.
Enter the Initial quantity on hand.
Enter the As of date.
Enter the Reorder point if you want QuickBooks to notify you when stock reaches a certain level.
Select Inventory Asset from the inventory asset account dropdown.
Enter the sales description.
Add the Sales price/rate.
Select the appropriate Income account.
Enter the purchase description.
Enter the Purchase cost.
Select Cost of Goods Sold as the expense account.
Choose a preferred vendor if applicable.
Select Save and close.

After you add the item, QuickBooks can automatically update the quantity and inventory value as you purchase and sell the product.

How to Track Inventory When You Purchase Products

When you purchase inventory, you need to record the transaction correctly so QuickBooks can increase the quantity on hand.

You can use a purchase order when ordering products from a vendor and then record what you actually receive. QuickBooks updates the quantity on hand based on the inventory you receive.

When receiving inventory, check the product, quantity, purchase cost, and vendor information before saving the transaction. This helps keep your inventory count closer to the actual stock you have.

How QuickBooks Updates Inventory When You Make a Sale

When you add an inventory product to an invoice or sales receipt, QuickBooks reduces the quantity available by the number of units sold.

For example, if you have 50 units of a product and sell 5 units, QuickBooks reduces the quantity on hand to 45.

You can also check what is currently on hand and what is still on order while working on sales transactions.

How to Set a Reorder Point for Inventory

A reorder point helps you know when it is time to purchase more stock. When setting up an inventory product, enter the quantity at which you want QuickBooks to alert you to reorder.

For example, if you normally want at least 10 units available, you can set the reorder point to 10. When the stock reaches that level, QuickBooks can notify you that it is time to restock.

Set reorder points based on how quickly you sell the product and how long your vendors normally take to deliver new stock.

How to Check Inventory Quantity on Hand

You can check your inventory levels while working on sales transactions or through inventory-related reports.

QuickBooks lets you see how much of an item is on hand and what is still on order. If you have set reorder points or low-stock alerts, QuickBooks can also notify you when inventory is running low.

Regularly checking quantity on hand can help you avoid ordering too much or running out of products that sell frequently.

How to Adjust Inventory Quantity in QuickBooks Online

Sometimes the quantity shown in QuickBooks may not match the physical stock you have. This can happen because of damaged products, shrinkage, counting mistakes, or other inventory changes.

You can make an inventory quantity adjustment without recording a purchase or sale.

Select + Create.
Select Inventory qty adjustment.
Enter the Adjustment date.
Select the appropriate Inventory adjustment account.
Choose the inventory product.
Enter the new quantity or the change in quantity.
Add a note in the Memo field explaining the adjustment.
Select Save and close.

For multiple products, QuickBooks also provides batch actions from the Products and services section.

How to Track Inventory Using QuickBooks Reports

Inventory reports can help you check stock levels, product sales, inventory value, and cost of goods.

Go to Reports > Standard reports to access the available reports. Intuit recommends using inventory and sales reports to review what is on hand, identify best-selling products, and understand your inventory performance.

Some useful reports include:

Sales by Product/Service Summary: Shows total sales for each product or service.
Inventory Valuation Summary: Helps you review the value of inventory on hand.
Inventory Valuation Detail: Provides more detailed information about inventory transactions.
Physical Inventory Worksheet: Helps compare your physical stock with the quantities recorded in QuickBooks.

The reports available can vary depending on your QuickBooks subscription and setup.

How QuickBooks Handles Inventory Costing

QuickBooks Online uses First-In, First-Out (FIFO) for inventory. This means QuickBooks treats the first inventory items purchased as the first items sold when calculating inventory costs.

Because inventory costing affects your inventory asset and cost of goods sold, make sure your product costs are entered correctly when setting up inventory items.

If you are changing from another inventory costing method, consult your accountant or tax professional before making changes that could affect your financial statements or tax reporting.

How to Import Inventory Products

If you already maintain your inventory list in a spreadsheet, QuickBooks can help you import products instead of entering every item manually.

Before importing, review your spreadsheet and make sure product names, SKUs, quantities, costs, and other required information are accurate. Intuit also recommends checking your inventory settings before importing products so QuickBooks can properly track the items.

After importing, review the products and quantities to make sure the information transferred correctly.

How to Keep QuickBooks Inventory Accurate

QuickBooks can update inventory automatically, but your records are only as accurate as the transactions entered into the system.

Follow these practices to keep your inventory records in order:

Record purchases promptly: Enter received inventory as soon as possible.
Check quantities: Compare QuickBooks quantities with your actual stock regularly.
Use correct SKUs: Keep product names and SKUs consistent.
Enter purchase costs accurately: Incorrect costs can affect inventory valuation and cost of goods sold.
Review sales transactions: Make sure the correct inventory product and quantity are used.
Adjust damaged or missing stock: Use inventory quantity adjustments when your physical count differs from QuickBooks.
Set reorder points: Use them for products that need regular restocking.
Review inventory reports: Check inventory valuation and sales reports regularly.
Avoid duplicate products: Creating the same product more than once can make inventory tracking difficult.

QuickBooks Inventory Tracking for Multiple Locations

If you need to track inventory across multiple warehouses, stores, or other locations, the available features depend on your QuickBooks product.

For QuickBooks Desktop Enterprise, Advanced Inventory can provide multiple-location inventory tracking along with features such as barcode scanning, bin or lot tracking, serial or lot numbers, and FIFO or Moving Average Cost options.

This can be useful for businesses that keep stock at more than one physical location and need more detailed inventory management.

QuickBooks Inventory Tracking vs. Non-Inventory Products

Not every product or service you sell needs to be tracked as physical inventory.

Use an inventory product when you need QuickBooks to track the quantity you have available. Use a non-inventory product when you sell or purchase an item but don’t need to track its quantity as stock.

Services can also be added to QuickBooks as products and services, but they don’t represent physical inventory.

Choosing the correct product type from the beginning makes your records easier to manage and prevents unnecessary inventory adjustments later.

Benefits of QuickBooks Inventory Tracking

Using QuickBooks to track inventory can help you:

Monitor the quantity of products on hand.
Know when inventory needs to be reordered.
Track product purchase costs.
Keep inventory values updated.
Monitor cost of goods sold.
Identify your best-selling products.
Reduce manual inventory calculations.
Compare physical stock with QuickBooks records.
Review inventory information through reports.

Common QuickBooks Inventory Tracking Mistakes

Even with automatic inventory updates, a few common mistakes can create inaccurate stock levels.

Entering the wrong initial quantity

When creating an inventory product, the initial quantity should match the actual stock you have as of the date you begin tracking it.

Using the wrong product type

If you create a product as a non-inventory item when you actually need to track its quantity, QuickBooks won’t manage its stock level as expected.

Forgetting to record received inventory

If you order products but don’t record what you actually received, the quantity in QuickBooks may not match your physical stock.

Not Adjusting Damaged or Missing Products

Damaged, lost, or missing products can cause a difference between your physical count and QuickBooks. Record an inventory adjustment when appropriate.

Ignoring Low-Stock Alerts

Reorder points are useful only when you act on them. Review low-stock items regularly and place purchase orders before you run out.

Conclusion

QuickBooks inventory tracking can help you keep an eye on products, quantities, costs, and stock levels without maintaining everything separately. Start by turning on inventory tracking, add your products with the correct quantities and costs, and make sure purchases and sales are recorded properly.

You should also review your inventory reports and compare the quantities in QuickBooks with your actual stock from time to time. If your inventory records are not matching or you need help setting up inventory correctly, Call Us : +1-866-408-0444 can help you review and manage your QuickBooks inventory.

Frequently Asked Questions

What is QuickBooks inventory tracking?

QuickBooks inventory tracking is a feature that helps you monitor products, quantities on hand, inventory costs, and sales within QuickBooks.

Which QuickBooks Online plans support inventory tracking?

Built-in inventory tracking is available in QuickBooks Online Plus and Advanced. Intuit also offers an inventory add-on for eligible Simple Start and Essentials subscriptions.

How do I turn on inventory tracking in QuickBooks Online?

Go to Settings > Account and settings > Sales, edit Products and services, and turn on Track quantity and price/rate and Track inventory quantity on hand.

How do I add an inventory item in QuickBooks?

Go to Settings > Products and services > New > Inventory, then enter the product name, SKU, initial quantity, cost, sales price, accounts, and other required information.

Does QuickBooks automatically reduce inventory when I make a sale?

Yes, when an inventory product is included on an invoice or sales receipt, QuickBooks reduces the quantity on hand by the number of units sold.

Can QuickBooks alert me when inventory is low?

Yes, you can set a reorder point for an inventory product, and QuickBooks can notify you when the stock reaches the specified level.

Can I adjust inventory quantities in QuickBooks?

Yes, if your physical stock doesn’t match the quantity in QuickBooks, you can create an Inventory qty adjustment and enter the correct quantity or change in quantity.

About The Author

Jonathan Browns

Jonathan Brown is a trained QuickBooks professional with 10 years of experience in the accounting sector. Moreover, he is passionate about helping businesses reduce the stress of managing accounts. Also, he is proficient in assisting entrepreneurs and small business owners to use QuickBooks and enhance their accounting experience.