Welcome to the Fit Small Business QuickBooks Online training course! In this lesson, we’re going to cover how to set up products and services in QuickBooks Online. You can follow along on your own QuickBooks Online account. If you don’t have one already, click here to sign up for a free 30-day trial and follow along below.
To complete this lesson, you can either watch the video below, read through the step-by-step instructions, or do both. Let’s begin!
If you’d like to learn more about managing income, expenses and reporting in QuickBooks, download our free 39-course QuickBooks tutorial here.
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The Importance of Setting Up Products and Services
It is important to set up products and services in QuickBooks Online if you plan to provide your customers with an invoice or a sales receipt for products or services that you sold to them. These settings determine how much information is included on all invoices, sales receipts and estimates that you create in QuickBooks.
QuickBooks Online Products and Services Setup
The products and services setup determines what information appears on sales forms that you create like sales receipts, invoices and estimates. Your selections determine how much detail about the products and services you sell is shown on each sales form. There are a total of five fields that you can edit as indicated in the image below.
Set Up Products and Services in QuickBooks Online
Below you will find a brief description of each field along with how we would set this up for our fictitious company, Paul’s Plumbing:
1. Show Product/Service Column on Sales & Purchase Forms
By turning this feature on, QuickBooks will add a product/service column on all sales and purchase forms so you can include the details of the products and services you are billing a customer for or providing an estimate for goods and services for (e.g., plumbing services).
QuickBooks Online Products and Services Example: Paul provides a variety of different types of plumbing services, from your normal residential toilet clog to a brand-new restaurant that requires commercial kitchen sinks and the works. He needs to provide as much detail as possible when he creates an estimate for a customer whose business he is trying to get, or when he invoices a customer for work that has already been completed.
From a business perspective, this helps Paul to make sure that he has invoiced his customer for everything that the job entails. From the customer perspective, it should be clear what work they are being billed for.
2. Show SKU Column on QuickBooks Online Products & Services Forms
An SKU is a store or catalog product code, also known as a barcode, that is used for inventory tracking purposes. This feature will add a column for SKU/barcode to all sales forms created in QuickBooks. If you do not track inventory by SKU, then you can leave this feature off.
QuickBooks Online Products and Services Example: Paul keeps an inventory of the standard plumbing supplies he uses frequently, such as toilets, sinks and garbage disposals. Each of these items has a unique SKU number assigned to it. The SKU is included on purchase orders that Paul sends over to his suppliers to place orders as well as to record inventory purchases once they have been received.
3. Set up Price Rules (Beta) for QuickBooks Online Products & Services
Price rules allow you to provide discounts for specific products to certain customers for a specified period of time. Note: This feature is currently being tested and has not been rolled out to all QBO subscribers. As of this writing, there is no release date for this feature.
QuickBooks Online Products and Services Example: Paul would like to set up a price rule that gives a 10 percent discount on all kitchen sink installations for the month of October.
4. Turn on Quantity and Price Tracking in QuickBooks Online Product & Services Setup
If you need to track inventory, turn on this feature to add a quantity and rate field to all invoices, sales receipts and estimates created in QuickBooks. If you don’t track inventory in QuickBooks, leave this feature off. Later on, if you decide to track inventory in QuickBooks, you can always turn this feature on.
QuickBooks Online Products and Services Example: Since Paul does track inventory for the parts that he uses on most jobs like faucets and toilets we will turn this feature on.
5. Track Inventory Quantity On-hand in QuickBooks Online Products & Services Setup
This feature is only applicable to businesses that need to keep track of inventory. By turning this feature on, QuickBooks will track available stock for each product you sell and its related inventory costs. You should turn this feature on even if you don’t create invoices for your customers.
QuickBooks Online Products and Services Example: Since Paul does track inventory for parts like faucets and toilets, we need to turn the quantity on hand feature on so that QuickBooks will automatically track all quantity increases when purchases are made from a supplier, as well as the quantity decreases when an item is sold to a customer.
Wrap Up
That wraps up the lesson on QuickBooks Online products and services setup. The next lesson in our QuickBooks Online Training Course will be How to Set Up Messages. In this lesson, we will walk you through how to create custom messages for your customers on invoices and sales receipts.
If you’d like to learn more about managing income, expenses and reporting in QuickBooks, download our free 39-course QuickBooks tutorial here.
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