Set up inventory in QuickBooks Online for Amazon Sales
It’s easy to set up inventory in QuickBooks Online to track your Amazon sales, but there’s a lot more you can do to optimize your inventory for better tracking.
Learn more about these related topics on SellerZen:
- Why Cost of Goods Sold (COGS) is missing in QuickBooks Online
- Learn how to set up service items for invoice line items in QuickBooks Online
Let’s take a look at the different options when you add new inventory in QuickBooks Online. You’ll need a QuickBooks Online plan that supports inventory tracking, so that means you’ll have to get Plus or Advanced.
To add a new product or service, go to Sales > Products and Services > New > Inventory.
QuickBooks Online only requires a few fields to quickly set up inventory, but you’ll want to think about how you’re going to organize inventory in QuickBooks Online.
Consistency will help with your workflow, and it’ll lead to better reporting and more efficient reconciliation if you always follow the same procedure.
Let’s take a look at the new inventory setup below.
Here’s an example from your Manage Inventory on Amazon.
Below is the recommendation for how you should populate the fields for your inventory item in QuickBooks Online.
Notice that the Name, Initial quantity on hand, and As of date are the only fields required. QuickBooks uses the default accounts for the other accounts.
For the Name field, many sellers are tempted just to use their Product Name on Amazon. That might be something like “Super Shiny Stainless Steel Spoon 4-Pack,” but this isn’t ideal because Product Name on Amazon can be changed. Some sellers will go through multiple Product Name changes before settling on one they like.
When you change a product title on Amazon, you’ll have to change it through QuickBooks, and this can cause a lot of confusion.
We use the Amazon SKU to QuickBooks Name field so that there’s no confusion when the Product Name changes.
For the QuickBooks SKU field, we recommend using the Amazon ASIN just so sellers can search for convenience should anyone change the QuickBooks Name field for whatever reason. Using the Amazon ASIN in the QuickBooks SKU field also gives you another level of fine detail should you need it.
For the Initial quantity on hand, we recommend that you put 0 when you create a new inventory item. Why? If you enter a number here, QuickBooks Online will put the Cost of Goods Sold at $0, giving you 100% profit when the item sells. Of course, that’s not likely to be true.
Use Vendor Bills or Expenses to receive and increase your inventory accordingly.
The “As of date” field is also important. For this field, you’ll want to enter a date that precedes the date of the first sale. This is because putting the current date on the inventory item will mean you can’t create a sales transaction with a date before the one you selected.
So if you’re setting up your QuickBooks Online for the first time, have those inventory purchase dates ready, or at least have an estimate of it ready so that you can post transactions to QuickBooks Online without errors.
FBA sellers may want to use the inventory shipment date here, or simply use the date of the Purchase Order, Bill, or Expense when you purchased the inventory.
These settings can be changed later, but any changes will also affect your reporting.
The remaining fields in the inventory item deal with the associated accounts.
Notice for the Description field, we entered the Product Name here. While this isn’t necessarily required, having it will make reviewing your transactions much easier. But you’ll have to update this field whenever you make a change on Amazon.
This can be very tedious if you’re optimizing your Amazon listings daily. Otherwise, leave it blank if you have a fairly descriptive Amazon SKU and QuickBooks Name.
One common mistake sellers make here is to add their Cost to the field. QuickBooks Online will generally ignore the value in the Cost field if you’ve used Bills, Expenses, or Checks to receive inventory. But in their absence, it’ll use the value in the Cost field.
The reason you should leave the Cost field at 0.00 is that any update to the Cost field will mean that you’re using averages instead of the actual cost per unit. And averages will give you some misleading information about your inventory status.
One thing sellers can do with the inventory accounts (Inventory Asset, Income, and Expense account) is to set up the inventory so that inventory transactions are tracked across multiple warehouses or brands.
Alternatively, you can use class tracking or location tracking in QuickBooks Online, but if you’re already using those features for other reasons, then having different Inventory Accounts can be helpful.
For instance, you can have all of your kitchen utensils use a Kitchen Utensils Sales of Product Income Account. And you can just use the default Inventory Asset and Cost of Goods Sold account.
When you run reporting later, you’ll be able to see your sales income from Kitchen Utensils, Home Goods, and Furniture income accounts.
Or, if you’re like many sellers, you can use different accounts to track various warehouses. For instance, you’d have a Warehouse A Inventory Asset, Warehouse A Sales of Product Income, and Warehouse A Cost of Goods Sold.
When you run reporting later, you can more details about sales and inventory at both of your warehouses.
The remaining fields aren’t necessary. Leave the Sale price, Purchasing information, and Preferred Vendor fields blank. If you’re using a repricer on Amazon, then it’s pointless to enter a Sale price on the actual item—you’ll enter it on the document that you create.
The Preferred Vendor field is a convenience that may help your workers if you have multiple vendors for the same item. This will let your employees know which one you prefer.
If you set up inventory in QuickBooks Online correctly and consistently, then your accounting for your Amazon transactions will be far more detailed. Better financial reporting in QuickBooks Online will give you an advantage over other Amazon sellers who are just guestimating what their finances are.
Or use a service like SellerZen to automate the hassle of manually entering all of your Amazon transactions.
Like this article and want to learn more?