Have you ever needed to set up products and services in QuickBooks Online? In this blog post, I will show you the ins and outs of adding products or services, how to add those items to an invoice, and then how to view activity created by that invoice in your profit and loss statement.
Let’s start by navigating to the dashboard of our QuickBooks Online file. In the dashboard, you should be able to see your left-hand navigation menu containing various links like expenses, banking, and sales. And in the upper right-hand corner, you’ll be able to see the settings gear. Find the gear and click on it.
Once you click on the gear, a drop-down menu will appear. This menu will have four total columns. It will have a column for Your Company, Lists, Tools, and Profile. We are interested in the Lists column, and from there, click the item on the third row titled Products and Services.
After clicking Products and Services, a page will open that has a matrix of the various items you sell. Here is where you enter items that are added when you create an invoice or sales receipt. It is not the exclusive place to enter such things, but we’ll get more into that later.
Now let’s have a look at how to use these items. We’re going to click on the plus sign next to the gear we previously clicked. That will open a drop-down menu where we can find the Customers column and click on Invoice. The plus sign indicates that we’re adding some information to our file.
Clicking on the invoice link will bring you to a page that allows us to create a new invoice. Ignore the customer name and email for now – what we’re interested in is drop-down menu title “product/service.” Note, the drop-down menu only appears once we click the line item. Once we click that, the items shown in the list mentioned above will show as line-items
So now that we know how the products and services are used within the context of creating an invoice let’s have a look at how to create a new product or service. The first step is to go back to the products and services list by clicking the gear and navigating to the Products and Services link. From there, you will see a list of your products, and in the upper right-hand region, you’ll see a green button labeled “new.” Click the button.
This will bring up another menu where we can tell QuickBooks how to begin classifying this product, service, or bundle. For this example, we’re going to select “service.”
After you click service, you are prompted with the next screen where the service’s details can be entered. We’ll call our new product, “Training Video Service” and give it a sales price of $100,000. Next to the sales price, you’ll see a dropdown menu where we can assign the sale of this service to a different income account. Select “Training Income” as the income account. This will attach income from the sale of this service to the income account called Services on our profit and loss report. The account you choose will depend on how your business is set up, and you will need to use your judgment to assign it to an account that will make sense for you.
Now, I want to show you what this will look like on the profit and loss statement. To recap, we’ve created a service valued at $100,000 called Training Video Service. The service was created and will show up in our “Training Income” income account. We now need to take this service and add it to an invoice and save it (pictured below). The steps to create that invoice are outlined above.
Once the invoice is created and saved, it’s time to have a look at how this will appear on your profit and loss report. To do that, begin by looking to the left-hand navigation menu and click on Reports.
After you click reports, navigate to your favorites and find profit and loss.
Profit and loss is relevant only for a specific interval of time. To see our new service and invoice most clearly on this statement, let’s just set the date to today’s date (which for us is 10/17/2019), and it will only have information from the invoice we just created.
What if we wanted to modify some of the information stored in Training Video Service that is being displayed on this Profit and Loss statement? Well, do to that we go back to our Products and Services list and find our product. As mentioned before, click the gear in the upper right-hand part of the screen and select products and services under the Lists column. We know that the sales price of our item is $100,000, and that is by far the most expensive service we sell in our sample file, so to quickly find this item, click the SALES PRICE column header until descending prices sort it. In the farthest right column labeled action, you can click edit, and we can now modify this previously created product.
Once we click the edit button, a screen similar to that which we used when creating the service will appear. Let’s change the name to Custom Training Video Service, we’ll modify the description slightly, and we’ll make the sales price $100 instead of $100,000. Once you’re satisfied with the changes you want to make, click save and close.
So now, let’s put this newly modified product into practice by creating a new invoice and adding it to it. Again, to make a new invoice, click the plus sign next to the gear in the upper right-hand part of the screen and then select invoice. Once the invoice screen is open, you will be able to add line items as you see fit. If you didn’t know the name of the product or service you were adding, you can click the downward arrow under the name and search from there. As a bonus, if you want to change the default description, it can be modified here in the description column.
If you’re creating an invoice and realize that the product you wanted to add wasn’t listed, then there is a straightforward solution. Just click open the drop-down menu under product and service and select “add new.” You’ll be able to create a brand new product and add it to this invoice.
I hope this blog post was informative. If you have any questions about it, please let us know. Our contact information is in the footer, and if you wanted to email Rachel directly, please reach out to firstname.lastname@example.org. For a full video tutorial on this topic, please see below.