Identifying the right QuickBooks Online

subscription for a client’s needs

Different clients, different needs

Clients will come to you with different business types and structures—and with different
bookkeeping needs. With the many different levels of subscriptions available, clients might
find selecting an option confusing.

How can you and QuickBooks Online help?

QuickBooks Online offers a range of subscription levels to meet the needs of all clients. To
identify the solution that’s right for each client, you need to understand their unique business
situation and requirements.

One of the first things you’ll do for your new clients is to help them choose the right
QuickBooks Online solution for their business. As part of your ongoing QuickBooks Online
training and support, you’ll find many resources and checklists to help you do this. One of
these is the New Client Checklist, which allows you to build up a detailed picture of a client’s
needs.

The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.

Learning outcomes

In this lesson, we’ll cover:

 Exploring a client’s needs and recommending the right QuickBooks solution

Make sure you cover the highlighted suggested learning material to pass your next exam
attempt.

Topics

 Subscription options and levels

 Gathering requirements
 New Client Checklist
 Asking the right questions: The Needs Assessment tab
 Usage limits

Subscription options and levels

QuickBooks Online offers five different subscription plans, plus the option of QuickBooks
Self-Employed.

Here’s a summary of each QuickBooks solution—and who they’re aimed at.

Self-Employed

Designed specifically for independent

contractors and freelancers who file a
Schedule C form with their 1040 at
year end.

Ledger

Designed for accounting professionals

who manage their clients’ finances.
It’s the ideal subscription for tax-only
and low-volume transaction clients—
and clients with non-operating entities
or holding companies. Although
Ledger is intended for accountants,
you can give your clients direct access
to their company file.

Check out this article to learn more about QuickBooks Ledger.

The four main QuickBooks Online subscription levels are as follows:

Simple Start

Designed for sole proprietors, LLCs,

partnerships, and other types of small
businesses. This subscription level is
the best fit for solopreneurs and small
business owners with basic
accounting needs.

Essentials

Has all the features of Simple Start

but with extra functionality for
businesses with more complex needs.
However, it’s not designed for clients
who need to buy, sell, and track
inventory, or who need to create
purchase orders and budgets. For that,
they need Plus.
 Plus

Designed for small businesses

employing staff and carrying out
functions such as budgeting,
managing inventory, and tracking
multiple jobs. Plus is the most popular
subscription level for clients with
small businesses.

Advanced

Our flagship subscription, aimed at

growing businesses that are
approaching mid-market size.

Follow the link for further information on QuickBooks Online Plans and Pricing.

To identify the most suitable subscription for your client, you’ll need to explore their current
and future business needs. We’ll look at this next.

Gathering requirements
You need to get to know your client and their business. That way, you can tailor your advice
to their needs—and make sure they get the most out of QuickBooks Online.
Discover and target your clients’ needs by using the New Client Checklist to help you gather
the right information, focusing on the Who, What, When, and How.

Who? You need to find out the client’s:

Get to know who your client is, what  Legal/Tax entity type
they’re aiming for, and where they’re  Accounting year end
coming from.  Accounting method (cash or accrual)
 Business owner(s)
 Business history
 Business profile
 Unique industry
 Growing enterprise
 Mission, vision, values, and business
goals

You need to find out the client’s:

 Reporting requirements
What?  Daily operations
 Sales/Customer workflows
Understand the structure of the client’s  Expense/Vendor workflows
business to best discuss QuickBooks  Employee/Contractor workflows
Online features and benefits with them.  Administrative tasks
 Accounting software and processes
 Other business applications and processes

When? You need to find out the client’s:

Find out information such as how often  Compliance and filing deadlines
the client runs reports, and their internal  Income tax needs
and external deadlines. All your clients  Estimated tax needs
  Payroll/payroll tax requirements
will have compliance requirements for  State tax requirements
their business, even if they don’t run  Industry-related compliance requirements
payroll or pay sales tax.

How? Activities you can carry out include:

Consider how you can help the client.  Running a discovery session using the
You can dive deeper using the New Client New Client Checklist
Checklist, follow the onboarding process,  Following a structured onboarding
and begin to plan deliverables and tasks process
with your clients.  Planning 15-, 30-, 60-, and 90-day
deliverables
 Designing workflows and choosing tools
that allow you to collaborate with your
client
 Assigning tasks to yourself, your staff,
and the client based on individual
strengths

New Client Checklist

The New Client Checklist is a handy resource for getting to know new clients, gathering the
information you need to set them up with QuickBooks Online, and discovering their business
needs to best match them to a subscription level.

The checklist is an Excel spreadsheet with six tabs, each focusing on a different aspect of the
client’s requirements and the onboarding process.

Follow the link to download/open a copy of the New Client Checklist and use it as a
reference while you explore each tab in more detail here.

Select the headings to find out more.

Client Profile
The Client Profile tab of the New Client Checklist covers the basics you need to set up your
client’s QuickBooks Online subscription.

Needs Assessment

The Needs Assessment tab lists the functionality your client may need from QuickBooks
Online and helps you to understand their business better. You can use the links in the Help
resources column to explain certain relevant QuickBooks Online workflows to the client.

Each item listed in the Needs Assessment tab has a Yes/No option that you can use to specify
whether the client requires this function. These responses carry over to the associated
QuickBooks Online feature in the QuickBooks Features and Solutions tab.
We’ll look at this tab in greater detail later in the lesson.

QuickBooks Features and Solutions

The QuickBooks Features and Solutions tab is designed to help you and your client identify
the subscription that best suits them.

The workflows and functions you marked with a Yes in the Needs Assessment tab are
automatically marked with a Yes in the Recommended features from the Needs
Assessment column on this tab. You can use the dropdowns in this column to change any
selections—and to mark additional features with a Yes or No as required.

You can also use the Additional features required column to note any extra functionality
the client may require. They’ll likely want to include or discard certain features at this point
too.
Mileage

If your client needs to track mileage, use this tab to collect the profile information of their
vehicles. Gathering this information will help you complete the QuickBooks Online setup for
the client, who can then set up the QuickBooks Online mobile app to track mileage for
business trips easily. This app is explained in the QuickBooks Online mobile app lesson.
QuickBooks Bookkeeping Onboarding Checklist

Use the QuickBooks Bookkeeping Onboarding Checklist tab to gather any final additional
requirements from your client.
You should use this checklist with the Client onboarding template inside the QuickBooks
Online Accountant Work center. Here, you can set up an onboarding project with tasks and
subtasks you can assign to your team members. The Client onboarding template is explained
in the lesson on workflows for onboarding clients.

QuickBooks Self-Employed Profile

If your client needs the QuickBooks Self-Employed subscription, use this tab to gather the
additional information you need to set up the subscription.
Asking the right questions: The Needs
Assessment tab
To ensure you have all the information to identify the right QuickBooks Online solution for
your client, use the Needs Assessment tab of the New Client Checklist to dig deeper and ask
the client questions about how their business operates.

Select each section of the Needs Assessment tab for more detailed guidance.
ProAdvisor tip
Exploring the client’s industry-specific needs will help you identify any additional
functionality they may require. For example, they may need third-party apps to track e-
commerce sales or manage their logistics, manufacturing, shipping, point of sale, or personal
billable time.

Check out this resource for more information on which QuickBooks Online subscription can
help with industry trends.

Usage limits
Now let’s look at another factor you need to consider when recommending a subscription
level to a client.

Each subscription level in QuickBooks Online is designed for a wide range of users, whether
they’re busy e-tailers, architects, or contractors. However, each subscription level also has
limits. Usage limits are the maximum number of things (such as accounts or users) that a
client can have in QuickBooks. The more of these they require, the higher the QuickBooks
Online subscription level they’ll need.

Usage limits vary according to the level of subscription. For instance, with Simple Start,
clients can only have one user and a maximum of 250 accounts in their chart of accounts.
With Advanced, however, they can have up to 25 users and unlimited accounts.

Follow this link for a comprehensive explanation of usage limits in QuickBooks Online.

Try it out: Example 1

It’s time to put your knowledge to the test...

You’ve just completed a meeting with a new client and have established that they need the
following capabilities:

 To keep worked on each client/project

  To keep track of expenses related to each client/project

What’s the minimum QuickBooks Online subscription level that would

provide these capabilities?

 QuickBooks Online Simple Start

 QuickBooks Online Essentials
 QuickBooks Online Plus
 QuickBooks Online Advanced

Try it out: Example 2

Now try another example.

Here’s the Features and Solutions tab of the New Client Checklist that you completed for a
new client.
Based on the information in the first two columns about the QuickBooks
Online features that the client will need, which subscription level would you
recommend?

 QuickBooks Self-Employed
 QuickBooks Online Simple Start
 QuickBooks Online Essentials
 QuickBooks Online Plus
 QuickBooks Online Advanced

Try it out: Example 3

Try one last example...
Here are the results of an initial needs assessment you did with a potential client:

 The client runs a haulage and warehouse business

 The business is a large SMB with more than 10 users
 Their HQ is in Idaho, but the business also has distribution centers in Maine and
New Mexico
 They manage a team of around 50, made up of a mixture of employees and
contractors. The truck drivers don’t need access to QuickBooks Online, but the
finance team, the separate sales team, and purchasing department all need access to
different sets of data
 They’d benefit from giving the sales and purchasing teams custom access to
financial data
 There will likely be complex tracking and categorization requirements

Which QuickBooks Online subscription level would you recommend?

 QuickBooks Self-Employed
 QuickBooks Online Simple Start
 QuickBooks Online Essentials
 QuickBooks Online Plus
 QuickBooks Online Advanced

Summing up
Learning outcomes

Well done. In this lesson, we covered:

 Exploring a client’s needs and recommending the right QuickBooks solution

Make sure you have covered the highlighted suggested learning outcomes before moving on.

Knowledge recap
Getting the client’s requirements right from the very beginning is essential for identifying an
appropriate QuickBooks Online solution for them. You can now use the New Client
Checklist to ensure you identify the QuickBooks Online subscription level and features that
meet their current and future needs. Understanding a client’s needs and recommending the
right subscription level for them will help you establish a good working relationship from the
very beginning.

Next steps
In the next lesson, we’ll explore how clients can pay for their QuickBooks Online
subscriptions.

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Billing options
Flexibility from the outset

Whichever QuickBooks Online solution and subscription your client chooses, they’ll want
value for money and flexibility in how they pay for their subscriptions. They also won’t want
to miss out on any discounts you can offer as a ProAdvisor.

How can you and QuickBooks Online help?

When you sign up a client via QuickBooks Online Accountant, you can offer them a choice
of billing options. Clients may want to pay for their subscription directly, or for you to add
the cost to your fees. Whichever method the client chooses, our ProAdvisor Preferred Pricing
program offers discounts for you and them.

To get the most out of this lesson, we recommend that you first complete the lessons on
workflows for onboarding clients into QuickBooks Online and identifying the right
QuickBooks Online subscription for your client’s needs.

The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.

Learning outcomes

In this lesson, we’ll cover:

  The billing options and discounts available with QuickBooks Online

Make sure you cover the highlighted suggested learning material to pass your next exam attempt.

Topics

 Billing options when you add a client via QuickBooks Online Accountant
 Billing methods

Billing options when you add a client via

QuickBooks Online Accountant
When you add a client to QuickBooks Online Accountant, you can choose whether to sign
them up to QuickBooks Online straightaway or later.

To sign them up immediately, select Add client from the Clients list and then Subscription
in the Products section.

In the Billing options section, you can choose how they’ll be billed for their subscription.
The three options are:

 ProAdvisor discount
 Direct discount
 Revenue share

We’ll explore these three options in the next section.

Billing methods
The billing options you can offer your clients are all part of our ProAdvisor Preferred Pricing
program. This gives you and your clients exclusive discounts.

How you charge your client is up to you. Some firms build the cost into their monthly fee,
while others charge a software or subscription fee separately.

Select the headings to find out more about the features and benefits of each billing
method.

 ProAdvisor discount
 Direct discount
 If your client wants to pay their subscription fees to Intuit themselves, choose Direct
discount at the sign-up stage.

 With the Direct discount option, clients get a 30-day free trial. Then, like the
ProAdvisor discount, they receive a 30% discount on all QuickBooks Online,
QuickBooks Online Payroll, and QuickBooks Time subscription levels, and 15% off
employee and contractor fees with QuickBooks Online Payroll and QuickBooks
Time.
 The main difference is that with the Direct discount, the client pays for their own
subscription and the discount only applies for the first 12 months from their
enrollment date. Once the discount period ends, the fees revert to the full listed
monthly amount.
 Clients receiving the free trial must enter their payment information in QuickBooks
Online before their trial ends.

 Revenue share
  The third billing option is Revenue share.

 The Revenue share program is another client-billed option, but it benefits you and
your client. However, before you can offer it to your clients, you need to enroll in the
program. Find out more about how to do that in this ProAdvisor Preferred Pricing
revenue share program article.
 Once you’re enrolled, the Revenue share program offers clients a 30-day free trial
followed by a 50% discount on billed charges for the next three months. You’ll
receive 30% of the billed price they pay each month for 12 months and, depending on
which products they sign up for, you’ll also receive 15% of any employee fees your
client pays.
 Unlike the other discount options, the Revenue share option doesn’t apply to
QuickBooks Time.

Choose ProAdvisor discount if you pay for your client’s subscription.

You’ll receive a 30% discount on all QuickBooks Online, QuickBooks Online Payroll, and
QuickBooks Time subscription levels. With QuickBooks Online Payroll and QuickBooks
Time, you’ll also get 15% off employee and contractor fees. The discount applies to the
whole duration of the client’s subscription, with the option to cancel anytime.

With this option, you pay for your client’s subscription, but you can decide how to pass the
cost on to your client. You’ll receive one consolidated monthly bill that includes the ongoing
discount. You’ll also have access to monthly itemized bills displaying your firm-billed
clients.

For any wholesale clients who were enrolled before the launch of the ProAdvisor Preferred
Pricing program, we’ll continue to honor the 50% wholesale discount for their subscriptions.

ProAdvisor tip

Take a look at the ProAdvisor Preferred Pricing webpage for more information on
QuickBooks Online pricing and discount options.

As part of the ProAdvisor Program, you are also eligible for additional discounts for your
firm and clients. These depend on your tier. Follow the link to learn more about the benefits
of the ProAdvisor Program.

Knowledge check
Which billing options allow clients to pay their QuickBooks Online
subscription fees directly themselves? Select all that apply.

 Revenue share
 Direct discount
 ProAdvisor discount
 Only clients who sign up for QuickBooks Online themselves are billed directly

Summing up
Learning outcomes

Well done. In this lesson, we covered:

 The billing options and discounts available with QuickBooks Online

Make sure you have covered the highlighted suggested learning outcomes before moving on.

Knowledge recap
With our flexible billing options and ProAdvisor Preferred Pricing program, you and your
client can benefit from our QuickBooks Online discounts.

Next steps

In the next lesson, we’ll look at the benefits and subscription levels of QuickBooks Time and
QuickBooks Online Payroll, and how to sign up clients for each product.

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Customizing the chart of accounts

Your business, your needs

The chart of accounts is at the heart of any QuickBooks Online file. Although you can choose
a default chart of accounts when you sign a client up, you and your client may still need to
customize it to meet their business needs.

How can you and QuickBooks Online help?

You can add value to your client’s business by ensuring that their chart of accounts reflects
the reporting requirements for their business.

There are several ways to edit a chart of accounts in QuickBooks Online to make it work for
your client. In this lesson, we’ll look at using chart of accounts templates for different
business types and other customization options.

To get the most out of this lesson, we recommend that you complete the one on the chart of
accounts first.

The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.

Learning outcomes

In this lesson, we’ll cover:

 Customizing the chart of accounts, and managing accounts in QuickBooks Online

Make sure you cover the highlighted suggested learning material to pass your next exam attempt.

Topics

 The benefits of having a customized chart of accounts

 Examples of customized charts of accounts
 Creating and using chart of accounts templates
 Enhanced capabilities with chart of accounts templates
 Adding account numbers
 Editing account names
 Merging accounts
 How to merge accounts
 Making an account inactive
 Account-editing limitations
 ProAdvisor challenge

The benefits of having a customized chart

of accounts
Setting up a client’s chart of accounts correctly in QuickBooks Online means paying
attention to their business’s needs and business profiles. Some clients may not want to
include accounts that don’t apply to their business. Still, they may need new accounts that are
specific to their industry or unique to their business.
As a ProAdvisor, you can help your clients reflect their needs in the way you set up their
chart of accounts (COA).

Watch the video to find out more about the benefits of customizing the chart of accounts
for different business types.

How can you and your clients customize their chart of accounts?

As well as adding accounts, edits to a default chart of accounts can include:

 Editing the names of default accounts

 Adding account numbers
 Merging accounts
 Changing the account type and/or detail type of accounts where permitted
 Making unused or redundant accounts inactive. Note that you can’t delete an account

We’ll explore how to make these changes later in the lesson.

Examples of customized charts of accounts

Let’s look at two different business types, their charts of accounts, and how the setup reflects
the accounting profile of each business.

Select each of the tabs to find out more.

 Sample client A
 Sample client B

Client A is a sole proprietor with no employees. Their primary focus when it comes to data
and reporting is customer profitability.

The reports that this client is most interested in are:

 Profit and Loss by Customer

 Unbilled Charges
 Balance Sheet
 Accounts Receivable Aging

How should you set up the chart of accounts for this client?

Because the client deals with job-related expenses in their business, they have two materials
accounts on their chart of accounts:
 1. Job Materials (Purchases): Used for categorizing expenses that can be directly attributed to a
job (whether the expenses are billable or not)
2. Materials and Supplies (Overhead): Used for categorizing other expenses not directly
related to a job

Creating and using chart of accounts

templates
As an accountant user, you can create chart of accounts templates and use them as the basis
for configuring a client’s QuickBooks Online file with a chart of accounts tailored to their
business type.

To get started, in QuickBooks Online Accountant, go to Accountant tools and then select
COA templates.
Select each tab to find out more.

 Creating a new template

 Applying a template

1. To create a new template, select Add new template from the Chart of accounts templates
screen
2. Select the type of template you want to create, followed by Next

3. Enter a name for the template and toggle on account numbers if required

The template is prepopulated with accounts based on the type of template you chose.
 4. To add more, select Add a new parent account

5. Enter a name for the new account, and select the appropriate account type and detail type.
To add a subaccount to an account, select Add new subaccount and fill in the necessary
details

6. Continue these steps until you have added all the extra accounts you need, then select Save.

The new template will now appear in the list on the Chart of accounts templates screen.
Enhanced capabilities with chart of
accounts templates
Creating a suite of business-specific templates is a good start when setting up your clients
with a customized chart of accounts. However, you can do more with templates to further
tailor a client’s chart of accounts—and save yourself time in the process.

Select the dropdowns to learn more about using chart of accounts templates.

Creating a template from scratch

1. To create a new template, select Add new template from the Chart of accounts
templates screen
2. Select the type of template you want to create, followed by Next

3. Enter a name for the template and toggle on account numbers if required

The template is prepopulated with accounts based on the type of template you chose.
 4. To add more, select Add a new parent account

5. Enter a name for the new account, and select the appropriate account type and detail
type. To add a subaccount to an account, select Add new subaccount and fill in the
necessary details

6. Continue these steps until you have added all the extra accounts you need, then select
Save.

The new template will now appear in the list on the Chart of accounts templates screen.
Importing a template

As well as creating a new template, you can import a template in CSV format. You can do
this by selecting Import from the Chart of accounts templates screen.

Check out this article to view examples of—and import—industry-specific chart of accounts
templates.

Duplicating, editing and deleting templates

You can duplicate, edit or delete a template by selecting the dropdown in the
Actions column.

If you select edit or duplicate, the template screen will show. From here, you can make any
necessary changes, such as renaming the template, toggling account numbers, editing account
and detail types, and copying accounts.

To delete an account, select the bin icon from the Actions column.
Keep in mind that deleting a parent account will also delete all of its subaccounts.

Editing a chart of accounts template won’t change any clients’ chart of accounts where you've
already applied the template.

Applying a template to a client with existing accounts

You can apply a chart of accounts template to a client even if they have existing accounts set
up. The accounts from the template will simply be added to their chart of accounts and won’t
overwrite any existing accounts.

If a client already has an account with the same name as one on the template, QuickBooks
Online will keep the one they already have.

ProAdvisor tip

Next, we’ll look at how you can customize a chart of accounts in QuickBooks Online,
starting with how to number the various accounts.

Adding account numbers

You might want to customize a client’s account numbering and hierarchies to create
consistency across all clients or to comply with the industry or the government’s accounting
standards.
Before you can add numbers to a client’s account, you need to enable numbering. Let’s see
how to do that, and then add some account numbers.

Watch the video to see how it’s done. The individual steps are below for you to follow.

To enable account numbers:

1. Select the Gear icon, then Account and settings

2. Select the Advanced tab from the left
3. Select anywhere in the Chart of accounts section to enable editing
4. Move the slider next to the Enable account numbers option. Note that this setting will affect
all users in the client’s company
5. Next, check the Show account numbers option. This setting allows account numbers to show
on the chart of accounts and on reports. If it is not selected, account numbers will be hidden
on reports—but clients will still be able to search for an account by number when they
record transactions
6. Select Save
7. Then select Done

QuickBooks Online now allows account numbers in the chart of accounts. It may
automatically assign account numbers, but these can be changed if needed.

To do this:

1. Select the Gear icon, then Chart of accounts

Alternatively, select Transactions from the left-hand navigation and select Chart of accounts
2. Select the Pencil icon above the Action column
3. In the Number column, enter the desired account numbers. These can be up to 20 digits long
4. When done, select Save

That’s it.

Editing account names

Sometimes, it’s a good idea to edit default account names to make them more appropriate or
easily identifiable for clients. This can help avoid errors such as posting transactions to the
wrong accounts.

To edit an account name, you need to be in the chart of accounts.

1. Find the account to rename and, from the Action column dropdown, select Edit
 2. In the Edit account panel, enter the new account name in the Account name field

3. When done, select Save

Merging accounts
Merging accounts is a common practice when there are duplicates or two accounts are being
used for the same thing.

Note that the merging process is permanent and can’t be reversed. Any transactions in
merged accounts are also merged and appear under one category in reports.

What do you need to be aware of when merging accounts?

To successfully merge accounts, the Account Type and Detail Type must be the same.

If the Account Type or Detail Type of the accounts doesn’t match, you may be able to edit it
to make it match. Note that the Account Type and Detail Type can’t be changed for most
default accounts or accounts linked to products and services.

To change the Account Type or Detail Type, find the account in the chart of accounts, and
from the Action column dropdown, select Edit.
To change the Account Type, select one of the icons at the top of the Edit account panel or
choose a new type from the Save account under dropdown. If changing the Detail Type,
select the new type from the Tax form section dropdown. Select Save when done.

What about subaccounts?

You can merge subaccounts that are under the same parent account. The Account Type and
Detail Type must be the same to do this. Also, the subaccount Account Type must be
identical to the parent Account Type.
How to merge accounts
Now let’s look at the process for merging accounts in the chart of accounts.

Watch the video to see how it’s done. The individual steps are below for you to follow.

1. Find the account that you want to keep and, in the Action column dropdown, select Edit
2. In the Edit account panel, copy the exact Account name by highlighting and selecting the
name, then copying it
3. Select Cancel to close the Edit account panel
4. Back in the Chart of Accounts list, find the other account to be merged and—as before—
select Edit in the Action column dropdown
5. In the Edit account panel, paste the name of the previous account into the Account name
field. You need to replace the current name with the one that you copied from the first
account
6. Select Save
7. QuickBooks Online will ask you to confirm that you want to merge the account. To proceed,
select Yes, merge accounts
8. Finally, select Save again

These accounts are now merged in the chart of accounts.

Making an account inactive

When setting up a client file, you may want to make some default accounts inactive. This
helps keep the chart of accounts tidy and prevents clients from posting transactions to the
wrong or redundant account by mistake.
QuickBooks Online lists inactive accounts as deleted on reports. However, transactions in
inactive accounts remain part of the company data. They appear on reports if they were
posted to the account when it was active.

Select the headings to see how to make accounts inactive—and how to reactivate them.

 How to make an account inactive

 How to make an account active again

You can make accounts inactive individually or in batch.

To make a single account inactive:

1. In the Chart of Accounts screen, select the down arrow from the Action column for the
relevant account, then choose Make inactive
 2. In the pop-up, select Yes, make inactive to confirm

To make multiple accounts inactive at once:

1. Select each one by placing a checkmark in the box to the left

 2. Then, from the Batch actions dropdown, select Make inactive

3. To confirm, select Yes, make inactive

Use this same technique in the future to inactivate accounts that won’t be used again (such as
loans that have been paid off).

What happens when a balance sheet account is made inactive?

If your client needs to inactivate a balance sheet account, its balance will be moved to their
Opening balance equity account.
It’s therefore best practice to zero out the balance sheet account in question manually using
the appropriate date(s) and account(s), then make it inactive. A journal entry is created for the
day the account is made inactive.

You can make any inactive accounts, including those merged with other accounts, active
again. However, it’s important to note that any transactions moved to or merged with another
account won’t be moved back to the original once reactivated.

By default, inactive accounts aren’t visible from the chart of accounts. To make an account
active again, you’ll first need to make it appear in the Chart of Accounts screen:

1. Select the small Grid Gear icon above the Action column
2. Check the Include inactive option

Inactive accounts will have (deleted) in their names.

3. Find the account you want to make active again, and select Make active from the
Action column
Account-editing limitations
Because QuickBooks Online requires some default accounts to carry out essential functions,
customization has certain limitations.

You can edit the following accounts’ names, but they can’t be made inactive or merged:

 Accounts Receivable
 Opening Balance Equity
 Retained Earnings
This may appear under a different name to better suit a client’s business, such as if they are a
sole proprietor or a partnership. Be sure to check which of your client’s accounts has the
detail type of Retained Earnings (they can only have one)
 Reconciliation Discrepancies
 Unapplied Cash Payment Income
 (Sales tax agency name) Payable
Such as California Department of Tax and Fee Administration Payable
 Services
 Sales of Product Income
 Uncategorized Asset
 Uncategorized Expense and Uncategorized Income

The Inventory/Stock Assets and Cost of Goods Sold/Cost of Sales accounts can also be
renamed. They can be made inactive, too, as long as they aren’t assigned to a Product/Service
item.
Knowledge check
Which of the following options is NOT true regarding editing a chart of
accounts?

 You can make an account active once it has been made inactive
 Account numbers can be up to 20 digits long
 Merging accounts isn’t possible for all account types
 All transactions are deleted from an account if you make it inactive

Take our ProAdvisor challenge

Ready to test your skills?

Complete the following task and help a sample client, Craig’s

Landscaping company, merge two accounts in the chart of
accounts.
To complete the task, you need to:

 Right-click on the Craig’s Landscaping link below and select copy link address
 Open a new browser window in private view (Incognito in Chrome, InPrivate in Microsoft
Edge, Private Window in Safari, and so on), then right-click and paste the full link

Craig’s Landscaping is a practice account and a safe space for you to explore and try out
new things without worrying about making a mistake or breaking something. Once you
close the window, the account is completely refreshed, so you can start over again.

Craig’s Landscaping

Select the headings to find out more.

The task

How did you do?

Our solution

Having trouble?

Summing up
Learning outcomes

Well done. In this lesson, we covered:

  Customizing the chart of accounts, and managing accounts in QuickBooks Online

Make sure you have covered the highlighted suggested learning outcomes before moving on.

Knowledge recap
Even though there are some limitations to editing accounts in the chart of accounts, there are
a number of ways that you can customize a client’s chart of accounts to make it work for
them.

Next steps

In the next lesson, we’ll look at importing products and services, customers, and vendors into
QuickBooks Online.

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 Product Training QuickBooks Online

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Managing the products and services list

Save time with automation

The products and services list in QuickBooks Online contains the details of the items and
services that a client sells to their customers. As clients add new products/services—or
discontinue them—they’ll need to keep their products and services list up to date.

This can be a challenge for clients, especially those with larger businesses.

How can you and QuickBooks Online help?

QuickBooks Online gives you and your client the tools to manage the products and services
list and keep it in good shape.

Helping your clients understand how products and services work in QuickBooks Online is a
vital part of helping them get the most out of their accounting software. If you can get your
clients into good habits managing their products and services list, it’ll be easier for everyone
in the long run—including you!

To get the most from this lesson, we recommend completing the ones on the Chart of
accounts and the products and services list first.

The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.

Learning outcomes

In this lesson, we’ll cover:

 Managing the products and services list in QuickBooks Online

Make sure you cover the highlighted suggested learning material to pass your next exam attempt.

Topics

 Product and service types

 The Products and services center
 Creating and using product categories
 Setting up products and services to sell and/or purchase
 Products and services settings

Product and service types

You or your client must select the appropriate item type when adding an item to QuickBooks
Online. Here’s a quick recap of the available item types:

Inventory (available in QuickBooks Online Plus and Advanced

only)

These are items that are bought and sold, and whose quantities on
hand are tracked. Your clients must subscribe to QuickBooks Online
Plus or Advanced to use this feature.
 Non-inventory

These are items that are bought and sold, and whose quantities on
hand are not tracked. Your clients may use this item type for small
parts used in the installation or delivery of a product.

Service

These are services that are provided to your client’s customers. They
can be one-time, recurring, or fixed-fee services.

Bundle

This is a collection of products and services that are sold together.

For example, a package that includes an exterior door and a security
lock, or a product installation that includes both labor and materials.

The Products and services center

The products and services list can be found in the Products and services center in
QuickBooks Online.

To open the Products and services center, select Sales from the left-hand navigation, then
Products and services.
Select each of the highlighted areas to find out more.
Creating and using product categories
Product categories in QuickBooks Online allow your clients to group items of the same type.
For instance, if your client has a retail business selling hiking gear, they may want to create
product categories for items such as hiking boots, backpacks, and tents.

Categories help you and your client easily find products or services. They are also very useful
when running sales and inventory reports, as they make it easy to compare and explore data
by product category.

Select each question to reveal more about creating and using product categories.

How do you create a product category?

You and your clients can create a new product category before adding new products/services
to QuickBooks Online. To do this:

1. Select More, followed by Manage categories

 2. Then select New category

3. Give the category a suitable name and select Save

The new category will now appear in the categories list.

Can you add sub-categories to a category?

If your client wants to be more specific with grouping items, they can also create sub-
categories.

Note that you can only add a sub-category via the More > Manage categories > New
categories method, not when setting up a new product/service item.

To create a sub-category, select the Is a sub-category checkbox in the Category information

panel. This will make a second dropdown appear, from which clients can assign the sub-
category to an existing category.

The sub-category appears in the categories list, as you can see here:
Note that you can only have up to four category layers, including the parent.

How do you assign a product/service item to a category?

Once you’ve set up a product category, you can assign a product/service item to it when
you’re adding the item in QuickBooks Online.

You can also assign an existing product/service item to a product category. To do this, select
Edit from the Action column in the Products and services center.

Either way, in the Product/Service information panel, select the appropriate category from the
Category dropdown:
Note: If you choose a sub-category here, it will appear in the Category name field as
“Category name:Sub-category name.” For example, “Vehicle inspections:Oil inspections.”

Can you create a product category when you add a new product/service? Yes, you or your
client can also create a new product category when setting up a new product/service.

Note that you can only create a new product category when you add a new non-inventory,
service, or inventory item—not a bundle.

1. Start by setting up a new product/service, as described in the lesson on the chart of

accounts and the Products and services list
2. When you get to the Category field, open the dropdown and select Add new

3. Give the category a suitable name and select Save

4. Continue to add the remaining item details, then select Save and close
The item will be listed under the new product category in the Products and services list.

ProAdvisor tip

Follow the link for more information on grouping products and services into different
categories.

Setting up products and services to sell

and/or purchase
Now let’s look at another aspect of setting up products/services where your clients may need
extra guidance.

In the Product/Service information panel, clients have the option to tell QuickBooks Online
whether they:

 Sell this product/service to their customers

 Purchase this product/service from a vendor (available in QuickBooks Online Plus and
Advanced only)
Select the headings to reveal what additional detail the client needs to enter for each
option.

 Sell the product/service

 Purchase the product/service

Clients who select this option need to fill in the following details:

 Which account in the chart of accounts will be credited when they generate a sales form for
this item
 The sales tax rate for the item

The following details are optional, but can save your clients time as they will automatically
populate the corresponding fields in any sales forms generated for the product or service:

 A description of the item

 The sales price/rate (if the rate it constantly changing, this field should be left blank)

lients with QuickBooks Online Plus or Advanced can add additional information about
products or services they purchase from vendors. Clients who choose this option must select
the expense account that will be debited when the item is added to a purchase transaction.

To make generating expense forms for the product or service easier, clients may also choose
to fill in:

 A description of the item

 The item cost
 The preferred vendor, if they have one

What do clients need to be aware of when setting the sales tax rate?

For clients who use sales tax in QuickBooks Online, QuickBooks Online calculates the sales
tax using the standard rate by default. With this setting, when clients add a new taxable
product/service, sales tax is calculated based on the seller’s (that is, the client’s) location.
Clients can change the sales tax rate to a custom rate or tell QuickBooks Online that the item
is nontaxable, if applicable.

You can dive deeper into how sales tax works in QuickBooks Online by exploring the lessons
on basic sales tax setup and advanced sales tax activities.

Products and services settings

QuickBooks Online allows you or your clients to customize certain product and service
features, such as whether to include product/service information on sales forms (invoices,
estimates, and sales receipts) and whether to turn on inventory tracking.

To customize the fields and columns on sales forms, select the Gear icon and then Account
and Settings. Select Sales from the left menu and scroll to the Products and services section.

Select each highlighted area to find out more about the setting options.

Knowledge check
Which of the following statements about adding sub-categories to the product
and services list are correct? Select all that apply.

 You can only add up to 4 category and sub-category levels, including the parent
 You can edit existing product/service items to assign them to a sub-category
 You can only assign a product or service item to a sub-category when you’re setting it
up for the first time
 You can create a sub-category when you’re setting up a new product/service item
 You can only add 1 sub-category level to a product category
Summing up
Learning outcomes

Well done. In this lesson, we covered:

 Managing the products and services list in QuickBooks Online

Make sure you have covered the highlighted suggested learning outcomes before moving on.

Knowledge recap
The Products and services center in QuickBooks Online enables clients to gather and analyze
valuable data on the products they sell and the services they provide. You can now help
clients manage and configure their products and services list so they can work smarter.

Next steps

Next, we’ll look at managing customer and vendor lists in QuickBooks Online.

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