Setting Up and Tracking Inventory in QuickBooks Online

QuickBooks Online includes built-in tools for tracking what is on hand, receiving alerts when stock runs low, and reviewing buying and selling activity — but those tools are not available at every subscription tier, and they do not turn on by themselves.

Plan Requirements

Inventory tracking — meaning the ability to monitor quantity on hand, record cost basis, and automatically post inventory values to a balance sheet account — is available only in QuickBooks Online Plus and Advanced. Users on Simple Start or Essentials will not see the inventory settings described below. Upgrading to Plus or Advanced is the path to full inventory functionality. Intuit has also offered a standalone inventory add-on for lower tiers in some regions, though availability varies.

Turning On the Right Settings

Before adding any products, you need to enable the correct preferences. The settings live under the Gear icon, then Account and Settings, inside the Sales tab. Within the Products and services section, select Edit and turn on the following options:

• Show Product/Service column on sales forms — so line items appear on invoices and sales receipts.
• Track quantity and price/rate — enables quantity tracking for all product and service items.
• Track inventory quantity on hand — the setting that activates true inventory tracking, including automatic cost-of-goods-sold posting and balance-sheet valuation.

Price rules can also be enabled here for flexible or tiered pricing. Once everything is selected, save the changes.

Adding Items

QuickBooks Online uses three main item types, and each serves a different purpose:

Service items cover work performed for a customer — landscaping, consulting, bookkeeping, or any other billed time or service.

Non-inventory items are physical goods you buy or sell but do not track as stock. Examples include nuts and bolts consumed during an installation, or materials purchased specifically for a single job. Non-inventory items do not maintain a running quantity or post to an asset account.

Inventory items are the goods you buy, hold, and resell. When you create an inventory item, you enter a name, description, cost, sales price, income account, and the asset account used for balance-sheet valuation. You also set an opening quantity on hand and an as-of date — the starting stock level and the date those units are valued at. QuickBooks Online uses a first-in, first-out (FIFO) cost basis, meaning the oldest costs are assigned to the first units sold, which affects both cost-of-goods-sold and the remaining inventory value on the books.

Bundles let you group multiple products or services together so they can be added to a sale as a single line item — useful for gift baskets, service packages, or any grouped offering.

Selling Inventory Items

When a customer pays later, create an invoice. When a customer pays on the spot, use a sales receipt. In either case, adding an inventory item to the form automatically reduces the quantity on hand and posts the appropriate cost to cost of goods sold at the time of the sale.

While working on an invoice or sales receipt, hovering over the quantity entered for an item reveals a quick view of what is currently on hand and what is still on order — useful for confirming availability before committing to a sale.

Reorder Points and Low-Stock Alerts

Each inventory item can be assigned a reorder point. When the on-hand quantity drops to that threshold, QuickBooks flags the item so you know it is time to restock. Setting reorder points during initial item setup avoids discovering shortages after the fact.

What to Expect Once Set Up

After the settings are enabled and items are created, QuickBooks Online maintains the running counts, calculates FIFO cost of goods sold on each sale, and keeps the inventory asset balance on the balance sheet current. The product list becomes the central place to review stock levels, reorder status, and valuation — no manual spreadsheet reconciliation required, provided every purchase and sale flows through the system correctly.