In QuickBooks, items simply are what you buy and sell. You enter in in customer and purchase forms, like Invoices, Purchase Orders, Bills, etc. When you set up an item, you also define how this item will be posted in your Charts of Accounts. Thus, an item is actually a quick way of entering transaction, while QuickBooks is handling its accounting.

The screen-shot of adding New Item looks like below:

 

QB New Item

 

There are 11 item types in QuickBooks:

  1. Service – create this type for services you sell and/or buy.
  2. Inventory Part – create this type if you are tracking the products you make/buy, place it in your stock, and then resell it to customers. You have to ensure that you’re Inventory and Purchase order is active. Go to Edit > Preferences > items & Inventory > Company Preferences, then activate its checkbox.
  3. Inventory Assembly – create this type for assembling multiple inventory components. Example is bicycle’s inventory from its parts. This type is only available in QuickBooks Premier and Enterprise.
  4. Non-inventory Part – create this item for products that you buy, but you do not track it as inventory. Example is office supplies you buy that you do not charge it to your customers.
  5. Other Charge – create this type for miscellaneous charge, such as shipping, bounced cheques, etc.
  6. Subtotal – create this type, as the name implies, to add subtotal line item on your transaction forms.
  7. Group – create this type to allocate grouping of items on transaction forms. Group is not tracked as a separate item per se, unlike Inventory Assembly. It only provides you a quicker and easier way to display several items in your transaction forms.
  8. Discount – create this type to give your customers discounts in dollars or percentages.
  9. Payment – create this item if you receive the payment directly from your customers, such as a partial payment in your invoice.
  10. Sales Tax Item – QuickBooks automatically allocate this item to your invoice. It’s only available when you enable sales tax button in Edit > Preferences > Sales Tax > Company Preferences.
  11. Sales Tax Group – create this item to group multiple tax items in your transaction forms.