Year-end inventory count in QuickBooks Online, step by step

A year-end inventory count in QuickBooks Online is one physical count against one cutoff. An inventory adjustment then brings the books to the count. Most of the work happens before and during count day, not in QuickBooks. If you doubt a full count is worth it, read why physical counts still matter first.

Set the cutoff before you print anything

The cutoff is the date and time your count is meant to describe. Every receipt or shipment entered after it changes the book number, so the count and the books can agree only for that one moment. The quantity on hand page explains why that number keeps moving.

Decide four things before count day:

• Pick the cutoff date and time, and write them on every count sheet.
• Name the last receipt and the last shipment that will be entered before the cutoff.
• Name who enters nothing in QuickBooks while the count runs.
• Settle the adjustment date with your accountant before anyone opens the adjustment form. It is usually the cutoff.

Look for items already below zero in the books. Intuit's negative inventory article says "if the quantity on hand is less than zero, you have negative inventory". It also says "In QuickBooks Online, you can accidentally oversell products." Ask your accountant about those items before count day, not after.

A count tests one cutoff. You cannot count half the warehouse before it and the rest after. A rolling schedule is a different practice, compared in cycle counting vs a physical inventory count.

Before count day: locations, zones, counters, sheets

List every location on the count plan, including receiving, returns and anything on a truck. Group the locations into zones, usually by aisle, and give each counter one zone. Name a second person for recounts and name who approves variances.

QuickBooks does not track inventory by location within a warehouse. Your plan, not QuickBooks, is the record of which locations were counted. QuickBooks keeps one quantity on hand per item. Its inventory adjustment form takes one number per item.

Print one blind count sheet per location. List the items with a blank line for the counted quantity, and keep the expected quantity off the sheet.

QuickBooks has a Physical Inventory Worksheet report that lists each inventory item on one line with Quantity On Hand and a blank Physical Count line. It has no location column and no line for who counted or when. A counter holding it can see the expected quantity.

Count day

Count each location once, and get its sheet back to the count lead before anyone starts the next location. Nobody re-enters a counted location without a recount record. A recount is a second counter, working from a fresh sheet.

Recount the large variances before anyone shows a counter the book number.

A location with nothing in it still gets a sheet, and the sheet says empty. An empty sheet is a result, not a missing sheet.

An item the books show in stock that no sheet carries is either a missed location or really gone. Look before anyone writes a zero.

The hand reconcile procedure is written in full in the hub guide.

After the count

Date the adjustment as you settled it with your accountant. If you lock your books, the date matters. Intuit's lock-your-books article covers a transaction dated on or before the lock date. It says QuickBooks will either give a warning or ask for a password, depending on your settings.

Close the count in the file. Record the count plan name and the cutoff with the adjustment, and file the count sheets, the recount sheets and the variance list behind it. Enter a correction found later as a second adjustment with its own memo.

If your company shows an Inventory counts option under Products and services, Intuit's instructions have you enter a New Quantity for each product and finalize, which creates an Inventory Quantity Adjustment. The steps are in Intuit's Inventory Counts article. Intuit's instructions have no step for recording a location, assigning a counter, recounting or approving a variance.

Running the year-end count in Count

Count connects to QuickBooks Online and imports items with their QuickBooks quantity on hand. The web app's count roles are User, Manager and Finance, alongside the company Admin. Only a count manager or the company owner can approve a discrepancy.

Sync before counting

A QuickBooks Online sync runs when a company owner or admin starts it from the QuickBooks integration page, and nothing schedules a sync. A sync refreshes the QuickBooks quantity Count holds for each linked item, and the item's average unit cost when QuickBooks Online has one. It does not change the Count item's own item number or description.

We recommend that you sync QuickBooks Online before the count starts, and do not sync again until the approved lines have been sent. The reason is the send. At send time, Count recomputes which lines are discrepancies against the last-synced QuickBooks quantity. An approval is pinned to the counted quantity it approved. So a sync that changes a QuickBooks quantity can drop a line whose counted total now matches, while a line that is still a discrepancy keeps its approval.

While counting

Every counted quantity is recorded against a location. An item's counted total is summed across the plan's locations. On the phone, the counter sees no expected quantity and no variance number for what they count.

A manager can reopen a location for recount from the plan audit screen. A manager can also add locations to a plan that is complete, which returns it to in progress. Adjustments are blocked until the count plan is complete again. A recount that changes an approved quantity voids the approval, and the line does not send until it is approved again.

After counting

Items QuickBooks shows in stock that nobody counted are listed as possible missing items. Each is sent as zero only after a manager approves it as zero. A manager can also ignore an uncounted item so it is left out of the adjustment.

Count posts adjustments to QuickBooks Online only once the count plan is complete. Nothing posts while the count is running, and nothing posts until a manager approves the discrepancy. Only approved lines post to QuickBooks Online. Nothing nobody counted is zeroed automatically. Count is built for one complete physical inventory count, and posting adjustments to QuickBooks from a partial count is not available.

A send creates one Inventory Quantity Adjustment in QuickBooks Online. It has one line per item that is still an approved discrepancy at send time and is linked to a QuickBooks Online item. Each line carries the item's counted total as its new quantity. The adjustment's post date defaults to the count plan's completed date, and you can change it before sending.

You choose the inventory adjustment account for the send from the company's Cost of Goods Sold and Expense accounts in QuickBooks Online.

Your accountant can get two reports from Count. The variance report lists each item with a variance. It shows where the item was counted, the snapshot quantity, the counted quantity and who last counted it. It also shows the quantity variance, the percent variance and the cost impact when the plan has cost data.

The count history by location report shows, for each count, the count plan, the date counted and who counted. It carries the item's snapshot, counted and variance quantities. Variance and count reports can be exported to Excel and PDF.