This article is part of a larger series on Accounting Software.
In this tutorial, we’ll cover how to set up your products and services list in QuickBooks Online. We’ll walk you through the steps on how to create products and services manually and then teach you how to import them from an Excel or a comma-separated values (CSV) file.
QuickBooks Online is our best overall pick for small business accounting software. You’ll get the most out of this tutorial if you follow along in your own QuickBooks Online account. New subscribers can choose from a 30-day free trial or 50% off for three months.
This tutorial is one of our Free QuickBooks Tutorials. You can either watch the video below, read through the step-by-step instructions, or do both.
Step 1: Prepare the Necessary Information
First, you’ll need to gather the necessary information for your products and services.
Information for Products You Buy or Sell
Include all products you buy and/or sell, even if you don’t need to keep track of exact quantities, such as nuts and bolts. Be as detailed as possible. For example, don’t have one item for “sinks.” Instead, have separate items for each model of sink you buy and sell.
Collect the following information on your products:
- Name of product
- Description of product to print on sales forms
- Description of product to print on purchasing forms
- Stock keeping unit (SKU) number (optional)
- Price at which you wish to sell the product
- Current price at which you can buy the product
- Preferred vendor for purchasing the product
- Whether the sale of the product is subject to sales tax
- If you wish to keep track of the quantity of this item, you need:
- Initial quantity on hand prior to starting to use QuickBooks
- Quantity at which you wish to reorder the product
Information for Services You Sell
You’ll need the following information for all services that you sell:
- Name of service
- Description of the service to print on sales forms
- Sales price or rate you wish to charge customers
- Whether the sale of this service is subject to sales tax
- If you purchase the service from a subcontractor:
- Description of service to print on purchase forms
- Cost charged to you by the subcontractor
- Name of preferred subcontractor
Step 2: Navigate To the Products and Services List
After you sign in to your QuickBooks Online account, select Sales in the left menu bar and click on Products and Services, as shown below.
Step 3: Create New Item
Let’s first learn to enter a new item by hand to better understand the information requested. Then, we’ll show you how to import multiple items from your spreadsheet. From the products and services screen, click the green New button in the upper right corner to create a new product or service item.
Step 4: Select Item Type
The Product/Service information screen that appears after clicking New provides the four types of items that can be created for products and services.
A. Setting Up an Inventory Item
Select this option if you need to track the cost and quantity of items that you buy and sell. Inventory items allow you to keep an eye on stock levels as items are sold so that you know when to place an order with the supplier.
After clicking on Inventory (A), you’ll be able to provide the inventory details below:
- Name: Give the item a name for your internal use that will help distinguish this item from others.
- Picture of item: You can upload a picture of the item.
- SKU: You can record the product’s SKU number.
- Sub-product: You can organize inventory items into groups of similar products. For instance, you might create a parent inventory item for “Sinks.” Each different type of sink would then be a separate inventory item and designated as a Sub-product of Sinks. You wouldn’t use the parent inventory item of Sinks for any purchase or sales transactions, and it wouldn’t have any quantity information. It would only be used to group the Sub-product items together.
- Class: You can separate your business activity into several different classes that allow you to evaluate profit and loss separately. For instance, a plumbing company might create classes for new construction and repairs. You should leave the Class field blank if the inventory item you are setting up might be sold in multiple classes. In that case, you’ll need to identify the Class separately on each invoice. If the inventory is used only in one Class of the business, you can designate that class here, and it will auto-populate on invoices.
Enable class tracking:
If the class field doesn’t appear in your QuickBooks Online, you need to enable class tracking when setting your advanced options.
- Initial quantity on-hand: Report the number of units on-hand for this inventory item. Only report units here where the purchase of the inventory won’t be recorded in QuickBooks, such as if you’re moving to QuickBooks from another bookkeeping software. This is a required entry, so if you don’t have any units on hand, you must enter zero. You’re also required to enter the date you measured the units on hand.
- Reorder point: Specify the number of units on-hand that should trigger the ordering of additional inventory.
- Inventory asset account: Specify the balance sheet account you would like to use to track the cost of this inventory item. Most businesses use only one inventory asset account. I recommend using “Inventory Asset” for all your inventory items, which is the default balance sheet inventory account created by QuickBooks Online.
Don’t change asset account:
Don’t change the inventory asset account for an inventory item after it has been created, as this can cause inaccurate inventory cost calculations.
- Description (sales forms): Enter a default description of the product that you would like to appear on sales forms like estimates and invoices.
- Sales price/rate: Enter the standard sales price for this product. If needed, you can change the sales price when creating an invoice.
- Income account: Specify the income statement account to record the revenue from this inventory item. I recommend that all inventory items use the “Sales of Product Income” account, which is the QuickBooks default. There’s no need to create additional income statement accounts for each product because you can print reports that show income by product item.
- Sales tax category: Specify whether sales of this product are subject to sales tax.
- Purchasing information: Enter a description of the product that should appear on purchasing forms like purchase orders.
- Cost: Input the standard purchase price per unit for this product. You can change the purchase price when you input bills or purchase orders.
- Expense account: This is the income statement account to report the expense from the purchase of this product. I recommend all inventory items use the QuickBooks default account, “Cost of Goods Sold.”
- Preferred vendor: You can specify a preferred vendor for purchasing this product. This will auto-populate any purchase orders for this product but can be changed if the purchase order is to a different vendor.
B. Setting Up a Non-inventory Item
Select the Non-inventory option from the product/service information screen if you need to track the cost, but not the quantity for items that you buy or sell. Noninventory items include things like supplies and special order products.
After clicking on Non-inventory (B), you’ll be able to provide details for the noninventory item. The information collected is the same as for inventory items (discussed in the previous section), with the following exceptions:
- Noninventory items don’t require any quantity information
- They aren’t assigned an inventory asset account
- They are assigned to a variety of expense accounts, not only cost of goods sold (COGS)
- While products sold to customers should go to the COGS account, other products, like office supplies, should be assigned to other expense accounts
C. Setting Up a Service Item
Select Service (C) for services that you sell to customers. Plumbing, bookkeeping, and housekeeping services are examples of service items.
The fields that should be completed for a service item are described below:
- Name: Enter the name of the service for your internal use.
- Picture: Attach a picture if you wish.
- Subservice: As with inventory items, you can create sub-services grouped under a parent service. If this is a subservice, select the parent service here.
- Class: If your company separates income and expense by class, designate the class for this service item. Leave the field blank if this service can be assigned to multiple classes.
- Description: Enter a description of the service that you would like to appear on sales forms, such as invoices.
- Rate: Input the rate you charge customers for this service. This can be either an hourly rate or a flat rate charged per engagement. The actual amount charged can always be changed on an invoice.
- Income account: Select the income statement account that you want to use to track income for this service. It’s not necessary to create an income account for each service since you can easily view income by service items.
- Sales tax category: Indicate whether this service is subject to sales tax.
- Purchasing information: Leave this area blank if employees perform the services. If you purchase the services from a subcontractor, check the box and provide a description, cost, expense account, and preferred vendor.
D. Setting Up a Bundle
A bundle is a combination of products and services that often are sold together. Bundles have no quantity on hand. They are a convenient way to record the sale of multiple products and services at once. Prior to setting up a bundle, you must create all the inventory, noninventory, and service items that will be part of the bundle.
After clicking Bundle (D) on the product/service information screen, you can enter the following information:
- Name: Provide a name for your bundle of products and services for your internal use.
- Description: Provide a description of the bundle to appear on invoices to customers.
- Display components: Check the box if you wish to display the detail of the products and services composing the bundle on invoices to customers.
- Product/Service: Choose the product and service items, along with their quantity, to include in the bundle. All product and service items must be created prior to assigning them to a bundle.
How To Import Product and Service Items
It is much quicker to enter product and service details into a spreadsheet than to use the data input screens in QuickBooks Online. I recommend doing the first few items manually, as shown above, to become familiar with the requested fields. However, if you have many items, it’ll be much faster to enter the data in an Excel spreadsheet and import the spreadsheet following these instructions.
Step 1: Prepare Your Spreadsheet
Your spreadsheet should have one row for each product or service item you wish to import. Each column represents a field to be imported into QuickBooks Online. The first row of your spreadsheet should contain labels for each column, but the labels don’t have to match the field names from QuickBooks Online. You’ll be able to map each column to a particular field in QuickBooks during the import process.
Below are the fields that can be imported for products and services. You can review a more detailed description of the fields in the section on how to enter product and service items manually.
- Product/Service name
- Sales description
- Type (Inventory, Noninventory, or Service)
- Sales price/rate
- Taxable (Yes/No)
- Income account (must be set up in chart of accounts prior to import)
- Purchase description
- Purchase cost
- Expense account (must be set up in chart of accounts prior to import)
- Quantity on hand (inventory items only)
- Reorder point (inventory items only)
- Inventory asset account (inventory items only and must be set up in chart of accounts prior to import)
- Quantity as-of date: (inventory items only)
You only need to include columns for which you want to import information. It’s fine for some columns to be missing. Your spreadsheet should look something like this:
Use the first tab:
Only the first worksheet (or tab) within an Excel workbook will be imported. Ensure your worksheet is located on the first tab in the lower-left corner of your Excel file.
Step 2: Upload Your Excel or CSV File
From the Products and Services screen, click on the drop-down arrow next to New in the upper right corner, and select Import.
From the Import screen, click Browse and select the Excel or CSV file you wish to import.
After selecting your file, click on the green Next button in the bottom right corner of the screen (not shown).
Step 3: Map Your Columns to QuickBooks Fields
This screen allows you to decide which of your columns will import to each field collected by QuickBooks Online.
In the left column are the fields available for import into QuickBooks. The right column tells QuickBooks which column in your spreadsheet holds the information for that field. If one of the QuickBooks fields on the left isn’t in your spreadsheet, indicate No Match—as done for the Income Account in the example above.
Once you have mapped all of your columns to QuickBooks fields, click the green Next button in the bottom right corner of the screen.
Step 4: Review and Import the Data
The final screen allows you to review the data that will be imported into QuickBooks Online. You can make any last-minute changes directly on this screen. The number of products and services to be imported should equal the number of rows in your spreadsheet, minus one for your header row.
After reviewing your information, click the green Import button in the bottom-right corner of the screen to complete the import. You should receive a message that the import was successful, and the new items will appear on the Products and Services screen.
How To Run a Products and Services List Report
Once you have added all of your products and services, you can run a report to see the entire list. From QuickBooks Online’s Products and Services screen, select the drop-down menu next to More in the upper-right corner, then click on Run Report as indicated below.
A report similar to the one below should display on your screen and must be reviewed for accuracy.
How To Modify a Product or Service on the List
You can modify a product or service that you previously set up. Locate the product or service you want to edit on the Product and Services screen. Click the Edit option on the far right side of the item’s information and make any necessary changes.
How To Delete a Product or Service from the List
You cannot delete a product or service from QuickBooks once you have used it in a transaction, like having created an invoice for a customer. However, you can inactivate an item that you no longer need. Inactive items will no longer appear on the products and services list but will still appear in financial reports if used in a transaction.
To inactivate an item, click the drop-down arrow next to the Edit option and select Make Inactive. This item will no longer appear on the products and services list.
You now know how to set up product and service items in QuickBooks Online. The next tutorial in our QuickBooks Online Training Course is How To Set Up Customers in QuickBooks Online. In that tutorial, you’ll learn how to set up contact and payment information for your customers.