The Products and Services list in QuickBooks Online is the foundation of accurate income tracking, inventory management, and customer billing. Whether you sell goods, provide services, or both, setting up this section correctly helps ensure your invoices, sales receipts, and reports are clean and meaningful. In this post, we’ll guide you through best practices for configuring your Products and Services list.
Why Products and Services Matter
Each item in this list links directly to income accounts in your chart of accounts. It controls what appears on customer transactions, how income is categorized, and whether inventory or service details are tracked. Mistakes here can lead to incorrect reporting, duplicated entries, and compliance issues with sales tax.
How to Access the Products and Services List
- Click the Gear icon (⚙️) in the upper right corner.
- Under ‘Lists,’ choose ‘Products and Services.’
How to Add a New Product or Service
- Click the green ‘New’ button in the upper right corner.
- Choose the type: Inventory, Non-inventory, Service, or Bundle.
- Enter a name and SKU (if applicable).
- Fill in a description that will appear on sales forms.
- Set the Sales Price/Rate and specify the Income Account.
- If it’s an inventory item, enter initial quantity and cost, and choose the asset account.
- Check the box if the item is taxable (for applicable sales tax jurisdictions).
- Click ‘Save and close.’
Tips for Keeping Your List Clean and Organized
- Use clear, specific names (e.g., ‘Consulting – Hourly Rate’ vs. ‘Service 1’).
- Avoid duplicate names. Use consistent naming conventions for easy sorting.
- Review periodically and inactivate items no longer in use instead of deleting.
- Link each item to the correct income account to ensure clean Profit & Loss reports.
- Distinguish between services and products clearly to avoid confusion on transactions.
Sales Tax Considerations
If your business collects sales tax, make sure taxable products or services are correctly marked. QuickBooks Online integrates with automated sales tax features in many U.S. states, so it’s important to flag only those items that require tax collection. Incorrect settings can lead to over- or under-collection.
Conclusion
Taking the time to set up your Products and Services list the right way will pay off through more accurate transactions, easier categorization, and clearer financial reports. It’s one of the first important steps in maintaining a clean bookkeeping system in QuickBooks Online.
Please Note:
- QuickBooks Online has different versions (e.g., Simple Start, Essentials, Plus, Accountant). Some features or menu labels may vary slightly depending on your subscription level.
- QuickBooks Online is regularly updated by Intuit. Features, menu labels, and workflows described in this post may change over time. Always refer to the latest guidance within your QuickBooks account or consult a professional for current information.
If you require additional assistance with QuickBooks, please feel free to contact us.