QuickBooks Online Inventory Limitations: What You Need to Know
- Fars Geraldino
- 1 day ago
- 2 min read
QuickBooks Online (QBO) is a popular cloud-based accounting solution for small and medium-sized businesses. One of its features is inventory management, which allows businesses to track products, costs, and stock levels. However, QuickBooks Online comes with several inventory limitations that users should be aware of before relying on it for complex inventory management.
This guide will explain QuickBooks Online inventory capabilities, key limitations, and potential workarounds.
QuickBooks Online Inventory Features
QuickBooks Online provides basic inventory tracking, including:
Track quantity on hand for products and items.
Assign inventory costs using the average cost method.
Receive alerts when stock levels are low.
Include inventory items in invoices and purchase orders.
Generate reports like Inventory Valuation Summary and Inventory Stock Status by Item.
These features are sufficient for many small businesses, but some users may find QBO lacking for more advanced inventory management.
Key Limitations of QuickBooks Online Inventory
No FIFO or LIFO Costing Methods
QuickBooks Online only supports average cost for inventory. Businesses that require FIFO (First-In, First-Out) or LIFO (Last-In, First-Out) cannot use QBO for accurate cost tracking.
Limited Inventory Reporting
While basic reports are available, QBO lacks advanced reporting options like lot tracking, serial numbers, or multi-location stock summaries.
No Multi-Location Inventory Management
QuickBooks Online does not natively support multiple warehouses or locations. Businesses with several storage locations must use workarounds or third-party apps.
Restricted Historical Adjustments
You cannot easily adjust historical inventory quantities or costs for past periods, which can impact financial reporting.
Limited Item Types
QBO distinguishes only a few item types: inventory, non-inventory, service, and bundle. Complex product hierarchies or kits cannot be fully managed.
No Barcode Scanning
QuickBooks Online does not support barcode scanning natively. This makes physical stock counts slower and more manual.
Maximum Item Limits
Each QuickBooks Online plan has limits on the number of items you can track (usually around 1,500–2,500 depending on the plan).
Workarounds for Inventory Limitations
Third-Party Inventory Apps
Apps like TradeGecko (QuickBooks Commerce), SOS Inventory, or DEAR Systems integrate with QBO to provide advanced features like FIFO costing, multi-location tracking, and barcode scanning.
Use Non-Inventory Items for Simple Tracking
If you don’t need strict inventory accounting, track items as non-inventory to simplify workflow.
Manual Adjustments and Spreadsheets
Maintain separate Excel sheets to track multi-location stock or historical cost adjustments, then periodically update QBO.
Regular Stock Audits
Conduct frequent physical counts to reconcile QuickBooks Online inventory with actual stock levels, especially if using workarounds.
Tips for Managing Inventory in QuickBooks Online
Plan inventory management according to your business size and complexity.
Keep your average cost updated to reflect purchases accurately.
Run Inventory Valuation Summary reports regularly to spot discrepancies.
Consider integrating a specialized inventory app if you require multi-location, FIFO/LIFO, or lot tracking.
Final Thoughts
While QuickBooks Online inventory tracking works well for small businesses with simple inventory needs, it has notable limitations such as lack of FIFO/LIFO costing, multi-location tracking, and advanced reporting. Businesses with complex inventory requirements should consider third-party apps integrated with QuickBooks Online to ensure accurate tracking and reporting.
If you need help managing QuickBooks Online inventory or exploring integrations, contact QuickBooks Support at 877-419-2575 for expert guidance.
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