Now that you have customers, vendors, jobs, and leads, you need items. Items represent the products you sell, as well as the inventory that you buy. Items also represent discounts, sales tax, subtotals, and the list goes on. In short, nothing appears on an invoice or purchase order in QuickBooks unless it's an item that you've created. Everything that we will learn to add to invoices, purchase orders, and etc. will be an item that we will learn to add in this article.
The Item Lists
Remember that everything that you could possibly add to an invoice or purchasing order is an item that you need to add to your Items list. This includes products, services, sales tax, shipping and handling, subtotals, discounts, etc. These are all items because they are added to invoices or purchasing orders.
Again, these items must to be included in your Item list.
To create an item list, go to Lists>Item List from the Menu Bar.
This opens the Item List, as shown below.
Click on the Item button, then select New to add a new item.
You will see this dialogue box:
Select an Item Type from the dropdown list.
Service. If this item is a service that you charge for, select Service.
Inventory Part. If this is something you buy from someone else, then sell, classify it as this.
Inventory Assembly. If what you are classifying as an item is a raw material that you use to make other items.
- Non-Inventory Part. This is for something that you sell, but don't want to count as inventory. It can also be for something that you don't sell, but that you buy, such as office products.
Other Charge. Freight, handling charges, and things like that would be classified under this.
Subtotal. This will add everything before you add tax, discounts, etc.
Group. This can be used to enter several items that are already on the list at one time. It is helpful to do this if you sell products as sets.
Discount. A discount that you give customers after the invoice is subtotaled.
Payment. You don't have to use this if it confuses you. However, you add this item if perhaps your customers put down a deposit when they buy, but before they receive the product.
Sales Tax Item. This is for sales tax.
Sales Tax Group. For sales taxes that are collected in a transaction and owed to different agencies.
We are going to add a Service item, so we choose Service from the dropdown list.
NOTE: We will talk more in-depth about the other different item types later in this article.
Next, add an item number or name. You can also create sub items. These are items that go within other items. To do this, choose the Subitem Of box, then assign a parent item to it.
Also, add a short description of the item. Enter the description into Description on Purchase Transactions if this is an item you buy. Enter the description into Description on Sales Transactions if this is an item you sell.
Next, enter a default rate – or cost. This can be changed at the time of entry into an invoice or when paying a bill if you need to change it.
In the tax code dropdown menu, select whether or not the item is taxable.
In the Account field, choose the account to assign the item to. In our example, we are assigning it to the Sales account.
Click OK when you are finished or click Next to add another item.
This is the basics of adding an item. Now, let's talk about the item types that you can add in a little more depth.
"This Service is Used in Assemblies or is Performed by a Subcontractor or Partner"
Put a check in the box beside "This service is used in assemblies or is performed by a subcontractor or partner" if this applies. For example, if the service is part of assembling a product you sell.
If you put a check in this box, you will see more fields appear:
If this is a purchase transaction – or you are purchasing the service – enter the default cost, the expense account assigned to transactions for this service, and the preferred vendor.
If it is a sales transaction – or a service you are selling – enter the default sales price, the tax code, then the income account assigned to transactions.
The Different Items Types
In the last section, we listed the different items types that you can choose when creating a new item. Let's talk about these different types more in-depth so that you know how to enter them into QuickBooks.
Non-Inventory Part, Service, or Other Charge
If the item type that you choose is Non-Inventory Part, Service, or Other Charge, you must tell QuickBooks how much will be charged for the item, if it should be taxed, and the income account to use to track the income from it.
For Service type, use the Rate text box and enter in how much you charge per unit.
For Non-Inventory Part type, use the Price box and enter the price.
For Other Charge type, use the Amount or % text box. This is usually used for shipping charges.
Also, use the Tax Code dropdown to let QuickBooks know if the item is taxed. You also will have to use the Account dropdown to let QuickBooks know which account you want to use to track income from the sale.
Inventory Part Item
If the item type you are adding is an Inventory Part, you must specify how much to charge for the part, how much it costs, and which income account to use to track it.
You will also have to specify the following information:
Description on Purchase Transactions . Enter a description that will be used when you buy the part.
Description on Sales Transactions . Enter a description to be used when you sell the part.
Cost : Enter the average cost per unit for the items that you have. This will become the default rate when you purchase more.
COGS (Cost of Goods Sold) Account: Let QuickBooks know which account you want to use to track the item's cost when sold. Use the Costs of Goods Sold Account unless you have created other accounts for this.
Preferred Vendor : Put down your first choice in a vendor when buying this item. If the vendor is not on your vendor's list, you will be asked to add it.
- Sales Price : The price you will sell the item for.
Tax Code : Enter if it is taxed.
Income Account : Assign an income account that will be used to track the income from this product. This will probably be the Resale Income or Sales Account.
Asset Account : Assign the other asset count that you want QuickBooks to use to track the item's value.
Reorder Point : How many of this item do you want left in your inventory before you reorder?
On Hand : Tell QuickBooks how many of this item that you currently have on hand.
Total Value : Leave this at zero.
As Of : Enter today's date.
Sales Tax Item
A sales tax item is just data about a sales tax.
For the Sales Tax Item, enter:
Sales Tax Name and Description. Add details for identification.
Tax rate . Enter the tax rate as a %.
Tax Agency . Specify the state or local agency that collects the tax money. If you have to add an agency, click Add New from the list.
A payment item is used to record the receipt of partial payment. This reduces the balance due. If the item type is Payment, describe the payment method, then specify how QuickBooks should handle it. You can add more payment methods by selecting Add New from the dropdown list.
When you are finished, click OK or Next. Use Next if you still have items to add.
Remember, if you have added a new inventory item to record the purchase of the item by creating a transaction. We'll cover that later.
Subtotal items allow you to add and total groups of items in an invoice or receipt. To use it, list the subtotal item, then list the items you want included in the subtotal.
Groups of items are items that you sell together. For example, maybe you have a shampoo and conditioner set. You may sell the shampoo and conditioner separately – and together.
To create a group of items, pull up the New Item window. Make the "item type" as Group.
There will now be fields in the New Item window where you can list each item in the group.
When you click an item line in the Item/Description/Qty list box, there will be a downward arrow at the end of the column. If you click this area, you will open a dropdown list of items.
Select Print Items in Group checkbox to list all items in the group on an invoice.
If you want to offer discounts to customers, such as 25% off, that 25% discount would be an item that you would need to create. The type of item would be a discount item.
Choose Discount as the item type in the New Item dialogue box.
Enter a name for the item.
Then, use the Amount or % box to specify the discount. Next, use the Account dropdown list to specify how to track the discount.
Adding and Editing Multiple Records
It can be very time consuming adding or editing records for one customer or one vendor at a time. For that reason, QuickBooks gives you the ability to add or edit multiple entries all at once. You can paste an Excel table that contains the information into the Add/Edit Multiple List Entries window.
Let's learn how to do it.
To add or edit multiple customer records, go to Lists>Add/Edit Multiple List Entries.
You will then see the Add/Edit Multiple List Entries dialogue box.
In the List dropdown menu, select the type of lists you want to work with. We have selected Customers.
Next, click the Customize Columns button.
You want to customize the columns in the dialogue box to match the columns in your spreadsheet.
The available columns are columns that you can use, but aren't being used in the Add/Edit Multiple List Entries dialogue box. To use one of these columns, click on it to select it, then click the Add button.
Chosen Columns are columns that are currently being used. To remove a chosen column, select it, then click the Remove button.
To change the order of the columns, select a column, then use the Move Up or Move Down button.
Click OK when you are finished.
Now, go to the Excel spreadsheet that contains the data. Select the data, then copy it to the clipboard.
Lists are what makes QuickBooks so simple to use, because all of the information you need to use the program is already there for you – in one of your several lists.
Let's learn about more lists that you might need to create in QuickBooks for your business.
The Fixed Asset List
If you buy things such as vehicles, furniture, or equipment, you are supposed to track these things (fixed assets) in a list so you can calculate depreciation. If you later get rid of one of these items, you need the information to calculate loss or gain from the sale.
To create a fixed asset item list, go to Lists>Fixed Asset Item List.
Click the Item button on the bottom left of the window, then choose New. You can now enter in fixed assets such as furniture, equipment, machinery, vehicles, etc.
Price Level List
Price levels make it possible for you to adjust prices as you create an invoice. This means you can charge some customers more or less for an item than other customers. You do this by selecting a price level from the Price field when you create an invoice. We'll learn how to do this later. For now, let's learn to create the list.
First, you have to enable the feature. To do this, go to Edit>Preferences. Select the Sales & Customers category on the left.
Go to the Company Preferences tab.
Select the Enable Price Levels option.
Now, to create a price level, open the Price Level List by going to Lists>Price Level List.
Click the Item button, then select New. The New Price Level dialogue box then opens.
Enter a name for the price level
Now, select the price level type:
Fixed Percentage Price Levels
Per Item Price Levels
Now, put a checkmark beside the items for which this price level will be available.
Take a look at our example below.
We have our Gift Wrap item checked.
Next, we enter the percentage that we want to lower the price. We can click the Lower button to raise the price as well. When we're finished, we click the Adjust button.
As you can see, the new price that will be charged for this price level now appears in the Custom Price column.
Click OK when you're finished.
NOTE: To assign a price level to a customer, go to the Customer Center. Double click on the name of a customer under the Customers & Jobs tab. This will open the Edit Customer dialogue box.
Go to the Additional Info tab, then go to the Price Level dropdown list. Choose the price level to assign.
Sales Tax Code List
Sales tax codes in QuickBooks serve to identify a product or service as taxable or non-taxable and to also identify a customer as taxable or nontaxable. You can also use the sales tax codes if your state has reporting requirements for nontaxable sales. You can create a sales tax code for every nontaxable sales type.
To create a sales tax code list, go to Lists>Sales Tax codes List.
Go to the Sales Tax Code dropdown box and either select a sales tax code from the list or select New to create a new code. If you select New, you will see a New Sales Tax dialogue box.
Go to the Sales Code Tax field and enter a three-character code.
Now you can assign the sales tax code to items or customers.
Class lists allow you to classify transactions by department or location. This is something you may not want to mess with until you get more familiar with QuickBooks.
However, to use it, you need to turn on the Class Tracking feature by going to Edit>Preferences.
Click Accounting on the left, then the Company Preferences tab.
Put a checkmark in the Use Class Tracking for Transactions box.
To see the Class list, go to Lists> Class List.
Other Names List
The Other Names list is a list you create with other names of people or companies that you may send checks to. All you can do is write checks to these names. You cannot do anything else.
Go to Lists>Other Names List.
Click the Other Names button, then select New to add names to the list.
Sales Rep List
This is a list of the sales reps you work with. You can also use this list to indicate which sales rep sells to which customers or when they generate a sale. The name of the rep must appear in the vendor, employee, or other member of the Other Names list.
Go to Lists>Customer and Vendor Profile Lists>Sales Rep to create this list.
To create a new sales rep, click the Sales Rep button, then select New.
Select the rep's name from the Sales Rep Name dropdown list.
Enter in their initials in the Sales Rep Initials box.
Enter in the sales rep type in the Sales Rep Type box. For example, vendor.
Click OK when you are finished.
The Terms list is where you will list your payment terms. For example, Net 30. Go to Lists>Customer and Vendor Profile Lists>Terms List.
To create a payment term, go to Lists>Customer & Vendor Profile Lists>Terms List.
In the dropdown list, select New if you don't see the terms you want. You will then see the New Terms dialogue box.
Enter in the terms. Click OK when you are finished.
You will then be returned to the Terms List.
The Reminders list allows you to keep track of things you need to monitor, such as invoices and checks to be printed, reorders, etc. To create a reminders list or add a reminder, go to Company>Reminders.
Click the plus button (+) to add a reminder.
You need to create an employee list if you track sales by employee or wish to use QuickBooks for payroll. This will describe each employee to QuickBooks. Don't worry, though. It is easy to do. Start by clicking the Employee Center (Employees) on the top icon bar.
You will then see the Employee Center window.
Click the New Employee button in the upper left hand corner of the screen, as circled in red above.
You will then see the New Employee dialogue box.
You can then fill out information about the employee.
Click OK when you are finished.
Other Types of Lists
Here are some other types of lists you can create in QuickBooks:
Payment Method List. Just as it sounds, this lists your accepted payment methods. Go to Lists>Customer and Vendor Profile Lists>Payment Method.
Ship Via List. List for shipping methods used.
You can also create vehicle lists, reminders list (to remind you to print invoices or checks, etc.), and a memorized transaction list. This list is really a list of accounting transactions that you ask QuickBooks to memorize so that when you record them again later, you save time.
Organizing Your Lists
Once you create your lists, you can organize them to make things easier to find. If you want to move an item (along with its subitems), simply click on the diamond that appears beside it, then drag it up or down to where you want it to appear.
You can also make a subitem an item by clicking the diamond by the item, then dragging it to the left. You can also make an item a subitem by dragging the diamond to the right.
If you want to put a list in alphabetical order, simply click on the Name button at the top of the list window. QuickBooks will alphabetize your customer, vendors, accounts, etc.
Print a List
To print a list, first display the list.
Next, click the button in the lower left corner of the window, then select Print List.
If you want to print customer, vendor, or employee lists, you can click the Print button that appears in the Center's screen for the list you want to print
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