Items and inventory in QuickBooks Online

In QuickBooks Online, items are the products and services a business buys and sells. Users enter and track items in QuickBooks so they can quickly add them to invoices and other sales forms.

Items appear as lines on sales forms. Each unique item gets a line with its name, description, quantity, and cost per item. That’s why items are sometimes called “line items.”

Learn more about how QuickBooks Online users create and sell items.

Learn about item types in QuickBooks Online

The item type determines if and how an item is tracked in QuickBooks. There are four basic item types: inventory, non-inventory, services, and bundles.

Item type	Description
Inventory	Inventory items are products a business sells and wants to track the quantity of. Typically, a business creates or buys these items, holds them “in stock,” and then sells them to customers. QuickBooks tracks inventory so users can quickly check the quantity on hand, the cost of goods sold, and the inventory’s total value.
Non-inventory	Non-inventory items are products a business sells, but doesn’t track the quantity of. In general, businesses don’t need to track quantities for non-inventory items. For example, office supplies and materials for making products. Non-inventory items may be materials used for a specific job, or their cost is combined with other fees. Tip: The difference between inventory and non-inventory items can be confusing. Each item type is connected to specific accounts and shows up on financial reports differently. Learn more about inventory and non-inventory items.
Service	Service items are for tracking services a business provides to customers. For example, labor, consulting hours, and professional fees.
Bundle/Group	Bundles (also known as “groups”), represent a unique group of items bundled together. For example, you can set up a bundle with 5 apples, 5 oranges, and 5 pineapples and call it a “fruit basket” bundle. The bundle becomes a single item that contains other items. Bundles can’t contain other bundles. Bundles can’t contain categories. An item can be listed more than once with same or different quantities. Bundles can be added to transactions.

Tip: In QuickBooks, services are considered “items.” Even though services aren’t items in a literal sense, from a tracking and data perspective, they’re considered items just like a product.

Learn what makes inventory items unique

Inventory items the products a business plans to sell and tracks the quantity of.

Small businesses with inventories need to know:

The current amount of inventory items in stock, also known as the “quantity on hand.”
The cost of buying or creating an item, also known as the “cost of goods sold,” so they can subtract the cost from sale total.
The total value of specific inventory items and the entire inventory at a given time.

Certain versions of QuickBooks Online come with inventory tracking and management features.

Inventory items are a specific item type in QuickBooks. Businesses sometimes sell items they don’t track quantities for — these are non-inventory type items. This distinction is important since the item type decides if items are tracked and how the accounting works.

QuickBooks calculates the cost of producing and keeping items in stock. This is known as the cost of goods sold. This calculation lets customers know the current actual value of their inventory since it includes.

If you add inventory type items to sales forms, purchase orders, and refund transactions, QuickBooks automatically adjusts the quantity on-hand when they’re bought or sold.

QuickBooks inventory management offers several features:

What’s supported	What’s not supported
FIFO inventory accounting	LIFO or Average Cost inventory accounting
Tracking quantity on hand	Tracking individual items, for example, by serial number
Up to four levels of item categories	Tracking by different stock locations
Taxable status of items
Price and cost

Learn about inventory accounts

In QuickBooks Online, inventory items need to be linked to three separate accounts:

Asset account: Asset accounts track the value of inventory based on the quantity on hand. This account tracks the following:

When businesses buy or produce an inventory item and record it in QuickBooks, it increases the value of their inventory asset account by the cost of the item. This increase appears on the business’ balance sheet report. It also increases the inventory item’s quantity on hand.
When businesses sell an inventory item and record it in QuickBooks (via an invoice or sales receipt), it decreases the value of their inventory asset account by the cost of the item. It also decreases the inventory item’s quantity on hand.

Income account: Income accounts track the revenue (i.e. profit) made from the sale of the inventory item.

Expense account: There’s a special kind of expense account, known as the cost of goods sold (COGS) account, that tracks the cost associated with either purchasing an item from a vendor or producing it in-house.

Inventory items need to be linked to the cost of goods sold account. This lets businesses subtract costs and calculate their actual gross profits. COGS accounts state the total underlying costs on Profit & Loss reports.
When businesses sell an inventory item and record it in QuickBooks, it records the cost for the item in the cost of goods sold account. It also reduces the value of the inventory asset account.

Learn more about accounts in QuickBooks and the cost of goods sold account

Tip: Many customers may already have these accounts in QuickBooks. It’s important to look for existing accounts before creating new ones so everything gets recorded accurately.

Buying inventory from vendors

Businesses either create the products they sell, or buy them from vendors.

If they buy products from a vendor, they usually get a bill they must pay for in the future. Users should record this as a bill in QuickBooks.
If they pay for the products at the time of the sale, users should record this as an expense in QuickBooks.

Once they receive the products from the vendor, as long as the user recorded the transaction as a bill or expense in QuickBooks, QuickBooks automatically updates the inventory item’s quantity on hand.

This also records the purchase in the inventory asset account.

Selling items to customers

In QuickBooks, businesses record sales with either an invoice or a sales receipt.

Businesses need to know the current quantity on hand so they don’t sell products they don’t actually have. Services and non-inventory items usually aren’t recorded the same way.

How this relates to app development

Many apps need to create and get information about product and service items so users can add them to invoices and transactions. When you’re developing your app, think about what items your app needs and what already exists in an end-users QuickBooks Online company.

Additionally, items are always connected to multiple accounts. This lets businesses track the value of items, how much it costs to purchase or produce them, and how much money they make from sales.

As a developer, you can create and query items via the item entity.

Important: Small businesses often use the terms “products” and “services” instead of “items.” The QuickBooks Online customer-facing UI also refers to them as products (inventory and non-inventory) and services. However, from a data and backend perspective, the Item entity handles both products and services. The Item entity itself doesn’t define whether something is a product or service. This is set by the itemCategoryType attribute.

Implement inventory features for your app

Before you get too far into development, set up the basic inventory implementation so you have pre-created entities to use.

Once you set up the implementation, you can start using the Item entity to create products and services.