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QuickBooks Tip: Keeping Track of Inventory

QuickBooks Tip: Keeping Track of Inventory

| 2 min read

Sometimes keeping track of inventory can be a pain the butt.  A few initial steps can save a major headache down the road.  Come tax time, accountants will look at the Balance Sheet and use the inventory asset value to calculate your tax returns and having an incorrect inventory can throw off the entire return.   A physical count at year end is always the safest way to go, but why not keep track of it along the way?  Answers usually fall along the lines of 'It's too involving and confusing,' 'I don't have resources necessary,' or even 'I just don't care enough.'  Hopefully with these few easy steps I can help you change your mind.

When purchasing items that will act as inventory, you want to make sure you enter the bill correctly in QuickBooks.  There are 2 tabs within the 'enter bill' screen, one tab is labeled 'expenses' and the other 'items.'  You want to use 'items' to record inventory coming into your business.  Enter the name of the item and QuickBooks will either populate the 'memo' box with the item details or it will ask you to create this item.  When creating the item, make sure to put the proper information in such as; cost, sale price, income category, etc.  Double check to make sure the bill is properly entered and click 'save & close.'  This step will put the items into inventory and all of the details that go along with it.  Once this step is perfected, it all starts to fall into place.

Changing the Details of the inventory items

If you need to edit any of the details of the item, go to 'lists' on the top of the screen and click 'item list.'  This will show all of the items that are in your inventory.  If there is a large amount of items that you no longer use, you can make them inactive.  To do this, just right click on the item and click 'make inactive.'  The item list has the option to show all, just active, inactive, or any combination there of.  You can double click an item and make the necessary changes.

 Benefits of tracking inventory

People may think this can be a waste of time, but I see it as a very useful tool once the proper procedures are put into use.  If I am in the clothing industry, I would want to know if I was making a lot of money on Women's Medium Red Dresses and if I was losing money on Men's Extra Small Tweed Jackets. 

Keeping your employees honest

If you have issues with items disappearing, you can now pin point what is going on.  Sometimes employees feel entitled to helping themselves because 'you owe them.'  Meaning, they are a disgruntled employee and they steal from you.  You can track when the item should have arrived in the building and where it should be stored until sold.  The tighter the inventory tracking, the less pilferage you will have.

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