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What is a service item in QuickBooks?

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Have you ever asked the question, “What is a service item in QuickBooks?” 

Look no further for the answer. Service items are all about simplifying your workload to keep things organized and clear, whether you’re:

  • Invoicing your customers.
  • Monitoring expenses.
  • Assessing your income. 

This blog guides you through understanding and using this powerful functionality to make financial management a breeze for your small business. 

Let’s dive in!

What is a service item in QuickBooks?

A common question among QuickBooks users is “What is a service item in QuickBooks?” In QuickBooks, a service item defines a line item on sales forms that represents services offered by a business. Essentially, a service item is used to track non-physical items. For example, you can create service items for:

  • Consulting.
  • Labor.
  • Professional fees and service charges. 

A service item can be used in sales receipts or invoices as it tracks income and expenses related to specific services. Plus, service items can be linked to specific income accounts, which provides a way to set standard rates for services. 

A service item also makes accurate financial tracking easier, as you can assign it different hourly or flat rate and tax calculations, depending on your needs. It allows for detailed billing of specific services and streamlines job costing for service-oriented projects.

Benefits of using service items in QuickBooks

Now that you have a better understanding of what is a service item in QuickBooks, let’s look at some of its main benefits.

Detailed financial reporting

Using service items in QuickBooks aids in generating detailed reports on service-based income. Leveraging QuickBooks’ reporting features helps in categorizing revenue streams. So, as your team manages financial records, you can draw insights into the profitability of each service with ease.

It also helps you monitor applicable sales tax, as you can create a system that identifies taxable status automatically. By understanding your customers’ spending patterns using charts, you’ll make better decisions on future investments. 

Complete transactions faster

A service item in QuickBooks simplifies the invoicing process for service-based businesses. These tools incorporate customizable fields and options for your services with predefined rates and taxes. 

Additionally, they can have a description that appears on sales forms. This enables quick and accurate billing to save time and reduce errors in your transactions.

Getting started with service items in QuickBooks

Creating a new service item

To create a new service item:

  1. Navigate to the “Products and Services” section.
  2. Select the “New” option from the services list in the settings. 
  3. Choose “Service” as the category type and complete the information box that specifies details like:
    • Name.
    • Description.
    • Service date.
    • Sales price/rate.
    • Sales tax (if applicable). 

Here, you can also include a checkbox with options like usage in estimates and invoicing.

You can also specify if each item is used in invoicing and is assignable to a customer or job. This sets a foundation for detailed tracking and accurate billing of your services. 

Editing or deleting an existing service item

You can edit or delete a service item to reflect changes in your offerings or pricing, giving you an entirely editable history. 

To do this, in the “Products and Services” list, find the item you want to modify or remove. Then choose the appropriate option from the “Action” column on the screen.

Make sure any changes align with your current business services and pricing strategy. 

Setting up preferred vendors for service items

Each supplier is an unofficial business partner whom your success hinges on.

You can Identify and assign a preferred vendor to specific service items, ensuring consistency and ease in your purchasing and billing processes. This also:

  • Simplifies procurement and expense tracking. 
  • Aids in quick reordering.
  • Maintains consistency in service quality and costs.
  • Facilities in managing expenses linked to cost of goods sold account (optional).

To set up this functionality, specify the preferred supplier under each service item’s details. 

Setting up defaults for sales receipts and invoices

Customize defaults in QuickBooks for your sales receipts and invoices through the gear icon. Setting up defaults incorporates necessary fields that you might forget to include in a manual process. Used properly, a default describes commonly used information on your sales forms. This includes:

  • General terms.
  • Usual quantities.
  • Unit price lists.
  • Sales description.

These settings ensure every transaction adheres to your business standards without requiring manual input each time. As a result, you save time and ensure consistency. 

Accessing the gear icon for bundle items and action columns

The gear icon in QuickBooks provides advanced options for managing service items. Here, users can:

  • Create bundled items.
  • Group multiple services into one package.
  • Customize action columns for better organization and tracking.

Types of service items in QuickBooks

To really answer the question, “What is a service item in QuickBooks?” it’s important to understand the four different types of service items. 


Inventory items in QuickBooks are tangible products that your business sells, including the little things like nuts and bolts. Inventory items make it easy to track quantities and costs. This way, you maintain accurate stock levels and better understand your product-based revenue. 


Non-inventory items are products you buy or sell but do not track quantities as a part of your inventory. These are ideal for one-time purchases or payments in your expense account and could include:

  • Supplies like office supplies and cleaning products.
  • Materials used in providing services. 
  • Digital resources like ebooks.


Services are non-physical items your company bills to customers, like: 

  • Labor.
  • Consulting and training.
  • Subcontractor services. 

A service is distinct from inventory or non-inventory items. It’s billable but does not affect inventory counts. This offers flexibility in pricing for different clients or projects, given that services aren’t limited in quantity. 

Note that you can assign a service item a sub-item under parent service when there is more than one choice for it. Sub-items are part of items list, but do not inflate your inventory count.


Bundles are a combination of products and services sold together. They simplify the selling process and are customizable for different customer needs. 

Bundles also make billing and tracking of grouped offerings easier, which are often used for promotional or package deals.

Frequently asked questions (FAQs)

How can I change the service or inventory item types in QuickBooks?

In case you’re wondering again, “What is a service item in QuickBooks?” remember that it’s a type of item that represents services offered by a business.

To change an item type, go to the “Products and Services” list, select the item, and edit its type. Note that any adjustment to your inventory can affect reporting and inventory tracking.

How many products and services does QuickBooks have?

QuickBooks offers a large amount of products and services, which are all customizable to meet the specific needs of your business. These include: 

  • Online. 
  • Solopreneur. 
  • Money.
  • Payroll.
  • Contractor.
  • Payments.
  • Time.
  • Enterprise for accountants.

QuickBooks also offers free video tutorials to help you implement each solution. Depending on your subscription plan, it allows for a flexible number of products and services. Check QuickBooks’ service limits for specifics on your version.

The best part is, QuickBooks connects with other tools, including integration with time-tracking to boost your services further.

How do I categorize services in QuickBooks?

You can categorize services in QuickBooks based on their nature or business department, during the service item creation or editing process. In case you’re wondering, “What is a service item in QuickBooks?” it’s a type of item that represents services offered by a business. 

You can assign service items a linked income account, which provides a way to set standard rates for services. You can also use QuickBooks to identify and assign preferred vendors or suppliers for specific service Items as it integrates with time tracking for hourly services, which further categorizes them.

How can I create an inventory item?

To create an inventory item, navigate to “Products and Services,” select “New,” and choose “Inventory” as the type. Next, input details like name, SKU,  cost, and quantity on hand. This is essential for tracking stock levels and the cost of goods sold. These items can be added to invoices and sales receipts.

Extend your potential with QuickBooks by starting a free trial with Method. 

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