Setting up items correctly in QuickBooks is critical so that you can get the most value out of your QuickBooks system. In this episode of MissionBusinessPodcast.com Bernard Roesch explains the importance of QuickBooks items and how to set them up correctly.
If you have any questions about this podcast episode, please feel free to contact us.
What Are Quickbooks Items
Quickbooks items are used for many aspects of managing your data in Quickbooks, including invoicing, reporting and much more. By making sure that you have your items configured correctly and according to best practice, you set yourself up for success in using Quickbooks effectively in your business.
Common Quickbooks Items Mistakes
Quickbooks users often make mistakes in configuring their Quickbooks items.
Not mapping out the items you need – If you have not taken the time to think about what specific items you need in Quickbooks, then this can usually lead to having an unorganized item list over time.
- You should not simply add items over time when you need them.
- Instead, take time to strategically think about what specific items you need in Quickbooks.
Mis-categorizing items – Quickbooks allows you to define the type of item for each Quickbooks item. For example; inventory has a specific type of item and services has a specific type of item.
- If you don’t use the correct type of item when configuring items in Quickbooks, reports and other uses of that data in the future will have errors or will not be as helpful as they could be.
Unneeded levels of detail – When you’re creating items, it’s important to consider the level of detail that you need. For example;
- A furniture store might sell multiple colors of a single type of chair. If you set up each chair, such as red chair, blue chair, etc as a different item, then it can make reporting in the future difficult.
- Instead, you should consider setting up a single chair item and using other aspects of Quickbooks, such as custom fields, to keep track of the color or other information about the product.
Setting Up Quickbooks Items For A New Business
If you are a new business using Quickbooks for the first time, the below process should help you understand what to do when setting up Quickbooks items.
Consider what you are selling? – Take time to consider what specifically you are selling. For example, if you are an accounting-related business, you might sell tax preparation services, bookkeeping services, and accounting consultations. Each of these can be set up as an item within Quickbooks, which allows you to keep track of sales figures for each service that you offer.
Map to appropriate sales accounts – When creating items, map them to the appropriate sales accounts, depending on how you want to produce reports later. A Quickbooks Pro Advisor may be able to help you determine the appropriate sales accounts to use for your business needs.
Identify what subcategories do you need to keep track of – You can use sub-items to keep track of more detailed information for each of your items. For example;
- If you provide tax preparation services, that could be an item.
- Underneath tax preparation, you could have personal tax returns as a sub-item and corporate tax returns as a sub-item.
Using sub-items is helpful in certain business situations where you want to track more specific data.
How To Fix Quickbooks Items For An Existing Business
If you’re already in business and using Quickbooks, and you’ve not designed your Quickbooks items list well, this can be resolved. Below is an overview of the process that Bernard helps clients go through.
Fix items that are mapped incorrectly – The first step is reviewing the item list to see if the mapping to revenue or cost is done correctly. It’s possible to fix these items retroactively if you are able to identify the patterns of incorrect mapping within Quickbooks.
Merge items – If multiple items have been set up that should be a single item, an experienced Quickbooks Pro Advisor can help you merge items so that they become a single item and are easier to do reporting with.
Reorganize item list – If you have multiple items that you want to keep as separate items, it may make sense to have some of them be sub-items of other items. A Quickbooks Pro Advisor can help you identify when this should be done and make the change to your Quickbooks data to reflect this.
Setting Up Quickbooks For Your Business
If you’re currently setting up Quickbooks for your business, or you have Quickbooks and need support to organize it more effectively, contact Bernard today.
You can also visit MissionBusinessPodcast.com for more insights that Bernard has been sharing with us in the previous episodes.