V8 VIDEO TUTORIAL

Defining an item, Part 1: Essential data fields

What you’ll learn in Defining an item, Part 1: Essential data fields

• Understand what constitutes an item in SOS Inventory
• Know what it means to define an item
• Grasp the kinds of information needed in critical item page data fields and properly assign their characteristics and values

Video transcript: Defining an item, Part 1

This video is the first in a three-part series that explains the data fields on an item edit page. Parts 1 and 2 of Defining an item are relevant to all SOS Inventory customers, regardless of subscription plan. Part 1 focuses on the core data fields that are essential for items, while Part 2 addresses fields that are optional but add functionality that you may find beneficial in meeting the needs of your business. Part 3 covers the advanced data fields on an item edit page. The third tutorial is designed specifically for Plus and Pro plan customers, as well as Companion plan customers who use shopping cart integrations.

A tutorial that is relevant to but not a part of this series is Item creation methods, which serves as a prequel to the Defining an item series. This video shows the different ways of accessing an item page and adding a new item, as well as how to make changes to an existing item in SOS Inventory. If you are unfamiliar with any of these processes, be sure to view the tutorial.

This video, Defining an Item, Part 1 will cover three different topics:

1. Explain what constitutes an item in SOS Inventory
2. Describe what it means to define an item or other data type that is in the system.
3. Introduce the essential data fields used on an item edit page and explain how to populate those fields properly.

Items and item definitions

SOS Inventory allows great breadth in what constitutes an item. While an item certainly can be something that you stock, it also can be so much more. For an example, it might be a service that you provide, an expense you pay, or a category that groups related items. In short, an item really can be whatever you need it to be for your business.

The set of data you assign to a specific item, customer, vendor, warranty, and so forth, forms what we at SOS Inventory describe as its definition. Defining an item is the process of assigning the data pertaining to the item.

Essential fields for defining an item

Not all data fields listed on the item edit page may be applicable to a specific item or item type. But the core fields for most items include: Name, Description, Type, Category, Sales price or Markup, Minimum sales price, Income account, Asset account, COGS account, Always shippable, Purchase description, Purchase cost, Sync with QuickBooks, Taxable, and Used on.

Now let’s open a new item edit page and take a look at the various data fields used to define an item. (This blank page has the fields you would see on the Pro plan. Since this video addresses only key item fields, we will skip over those fields that aren’t relevant to our topic.)

• At the top of the page is the Name field. The name you choose for an item is important, and it must be unique. Although the maximum allowable character length is 100 characters, we recommend that the number used for a name be no more than 89. The remaining 11 characters are reserved in case you need to delete the item and later decide to return it to your Items list. Those additional characters are used by the system, which adds (deleted) to the end of item names in the Deleted Items list.
   
• The text entered in the Description field will appear in the line-item areas of forms whenever the item is entered on a transaction. If you are a QuickBooks Online customer, please note that QuickBooks requires each item description to be unique.
   
• The Type field allows you to choose from a dropdown list of item types:
  • The most common item type is Inventory, which represents any item for which you want to track the stock that you have on hand.
  • Non-inventory items are those that you wish to use in transactions but for which you do not maintain stock, such as drop-shipped items.
  • Choose Category if your intent is to create a means of grouping similar items. For example, you can create a category named Chairs as a means of grouping all the different types of chairs that you have in inventory.
  • An Expense item—such as a fee that you pay to a vendor—is not tracked for inventory purposes but is posted directly to QuickBooks Online as an expense whenever the item is entered on a transaction.
  • An Assembly is a special type of inventory item that is manufactured from component items. Its cost is determined by the assembly’s bill of materials, also known as a BOM.
  • A Kit or Item group, in contrast to an Assembly item, is a collection of physical items bundled together at the time of purchase or sale. Unlike assembly components, the items in a kit can be sold individually, if desired.
  • Service items represent services or fees, such as installation or delivery, that you provide or that are provided to you.
  • A Labor item is used to track the labor that goes into the building of an assembly or into process manufacturing.
  • The Overhead item type allows you to create an item that represents a business expense that is not directly attributable to a specific product or service, such as rent or a utility.
  • The last option, an item type called Other, is used to designate any non-inventory item that does not fit any of the other item types.
     
• If you use categories, select the appropriate one for this item from the Category dropdown list. Are you confused by the difference between the Category option under the Type dropdown list and the Category field here? For the sake of clarity, let’s review the difference. If the item you create will serve as a category, you should select Category from the Type dropdown list. But if your intent is to assign the item to an existing category, select the appropriate one from the Category field’s dropdown list.
  
  Information on creating and using categories is beyond the scope of this video, but you can obtain more information about this topic in the SOS Inventory User Guide.
   
• If you will charge customers a fixed price for the item, enter its regular list price in the Sales Price field.
   
• To indicate that the pricing will be a percentage above the purchase price rather than a fixed price, select Switch to markup pricing and enter the percentage desired in the Markup field.  If you want the markup based on the actual cost of the item under your valuation method, go to the General tab under Sales Settings and enable Markup on actual cost.
   
• The Minimum sales price field specifies the lowest price at which you are willing for this item to be sold. The system will not allow a transaction to be saved if the sales price entered on the transaction for an item falls below its minimum sales price.
   
• Select the accounts associated with the item from their respective dropdown lists. The accounts available in these dropdowns are synced from the accounts established in QuickBooks Online. The default accounts in the settings will appear as a starting point.
   
• The Always shippable option appears on the item edit page for any item type except Inventory, Assembly, and Category. Always shippable means just what it says: that the item can always be shipped.
   
• Purchase description is the default item description used on purchasing forms. If this field is left blank, SOS Inventory will use the text entered in the Description field.
   
• The value entered in the Purchase cost field, otherwise known as the standard cost, is the default price paid when the item is purchased. Pro Plan customers, if you will use the item as the output on a process transaction, specifying the purchase cost is mandatory.
   
• If your organization’s SOS Inventory account is set up with a connection to QuickBooks Online, the Sync with QuickBooks box will be checked by default. But in some cases, you might not want an item to show up in QuickBooks. You can disable the Sync with QuickBooks setting for the item if it will not be used on any transaction sent to QuickBooks.
   
• If the item is taxable, check the Taxable box. For accounts based outside the United States, you will have two dropdown lists for each item—Purchase tax and Sales tax—instead of the Taxable box.
   
• The Used on field allows you to choose the types of forms on which the item appears. You can enable the item to appear on Sales forms, Purchasing forms, and/or Manufacturing forms. This option can be useful, for example, if the item is a raw material component for manufacturing. You may want those components to appear on purchasing and manufacturing forms but not on sales forms.

This concludes the first of our series of videos on defining items. You are now ready for Defining an item, Part 2: Optional data fields. Thank you for watching this presentation!