Inventory Management in Quickbooks Desktop

Index:

1. Introduction

2. Non-Inventory Items in QuickBooks

3. Creating an Inventory Item

4. Using QuickBooks for Inventory Management

5. Other QuickBooks Features

6. Conclusion

As a small business owner, managing inventory can be a challenging task. Keeping track of the items that you sell, how much you have on hand, and what you need to restock can be overwhelming. Fortunately, QuickBooks offers a solution for small businesses to manage their inventory with ease.

QuickBooks offers two types of inventory management: non-inventory parts and inventory parts. Non-inventory parts are items that are sold, but not tracked as part of inventory. These can be items like services or products that are purchased on an as-needed basis. Inventory parts, on the other hand, are items that are tracked as part of the inventory. These are items that you purchase and sell, and you need to keep track of how much you have on hand.

Inventory is one of the most important aspects of business. in this article, I will discuss everything about inventory in QuickBooks. we will discuss inventory in all the variants of QuickBooks but first, we will discuss the basic which is common in all variants and you will find these features in QuickBooks Pro, QuickBooks Premier, and QuickBooks Enterprise.

To understand it better we need to understand that QuickBooks have eleven types of items

Item In Quickbooks

but we will talk about two types. over here we want to discuss inventory but to understand inventory we need to understand non-inventory first. hence we will start with non-inventory

Non Inventory Item

This is the screen we get when we try to create a non-inventory item and you should notice that it has one option to choose an account which will be an income account. Rest we have the general options like name, part number subitem of, class, unit of measure, and description. this is self-explanatory but I will add an article to describe each option. but here the thing to notice is that we have the option of one account which will be income which means that if we will buy or sell this item then it will track income only and not the expense. then how our profit and loss will show the net income? To overcome this we have a box to check where it says that this item is used in assemblies or is purchased for a specific customer:job

Non Inventory Part

If you will put a checkmark in this box then you will get this option to choose another account, which can be an expense or your cost of goods sold account.

Non Inventory Item

when you will choose an expense account then it will affect your expense account when you purchase this item to sell. now QuickBooks will affect your expense account when you are purchasing this item and QuickBooks will affect your income account when you are selling this item.

So noninventory parts will be for those users who want to track part numbers in QuickBooks but don't want the purchases into the balance sheet or accumulate an asset balance over time.

I hope that I made some sense while explaining the non-inventory part. now I will show you how the inventory part works

Inventory Part

To create an Inventory item in QuickBooks we again have to create a new item and choose the inventory type. In this item type, few things are common as non-inventory type but the new thing that you will see is COGS Account and Asset Account in accounts. other new things are reorder point, On hand Total VAlue and as of. As these things are self-explanatory, reorder point will let you know when to reorder your inventory, On Hand will let you know the existing quantity and the Total value will give you the asset value of this inventory part as of the particular Date. if I talk about Cogs Account then how QuickBooks handles this is whenever you will sell this inventory item on an invoice then QuickBooks will calculate the cost of the item and will put that amount on profit and loss under the COGS section whereas the Asset account is used when you purchase this item on the bill in QuickBooks the QuickBooks move that entire purchase in asset account under balance sheet and you will not see that on profit and loss until you sell the item.

To use QuickBooks inventory management, you first need to set up your inventory items. This includes creating item names, descriptions, prices, and unit of measure. You can also set up reorder points, which will alert you when it's time to restock a particular item.

Once you have your inventory items set up, you can start using QuickBooks to manage your inventory. When you sell an item, you can select it from your inventory list, and QuickBooks will automatically deduct the item from your inventory count. You can also use QuickBooks to create purchase orders, receive items, and track inventory counts.

One important feature of QuickBooks inventory management is the ability to track cost of goods sold (COGS). This is the cost of the items that you sell, and it's important to keep track of this for accounting purposes. When you sell an item, QuickBooks will automatically calculate the cost of goods sold based on the inventory cost that you have set up for that item.

Another important aspect of QuickBooks inventory management is the ability to separate your inventory items into different categories. This can be useful if you sell different types of products and want to keep track of them separately. You can create different inventory asset accounts for each category, and QuickBooks will track the items separately.

In addition to inventory management, QuickBooks also offers features for managing vendors, customers, and accounting. This can make it a valuable tool for small businesses that want an all-in-one solution for managing their finances.

Overall, QuickBooks inventory management can be a useful tool for small businesses that need to keep track of their inventory. By setting up your inventory items and using QuickBooks to manage your inventory, you can save time and ensure that your accounting is accurate.