QuickBooks does not allow users to directly change inventory items to non-inventory items. An indirect workaround is possible to accomplish this task, however. Existing inventory items can be duplicated with a non-inventory status. This essentially creates two versions of the items. The new, non-inventory versions are used for future transactions, while the quantities of the old inventory items are set to zero and no longer used.

Backup Existing Items

Backup the QuickBooks items before making any changes. Click the "File" menu and select "Create Copy." Choose "Save a backup copy of your QuickBooks file." Click "Next." A an options dialog box appears.

Select "Local Backup" from the available options. Press "Options," and then choose "Browse." Select a location to hold the backup.

Click the "Complete Verification" option. Press "OK" and then "Next." Choose "Save it now" and "Finish." The backup is created in the chosen location. Make a note of the folder name.

Replicate Existing Inventory

Click the "Reports" menu, and select "List." Choose "Item List." A list of all existing items appears. Click "Modify Report" and then "Filters."

Select "Type" and choose "Inventory Part." Click "OK." All existing inventory items are listed. Click "Print" to create a printed copy of the list.

Select the "List" menu and click "Item List." Press "Item" and then "New." Set the item type to "Non-Inventory."

Read the printed list of existing inventory items. Enter the name of the existing listed item, as well as a unique identifier. As an example, enter "Item One New" if the existing inventory item is named "Item One." QuickBooks does not accept items with exactly identical names.

Type a description for the item, and choose a cost of goods sold account to associate with the item. Press "Next." The new non-inventory item is created. Repeat this process to replicate all of the items from the printed list.

Remove Previous Inventory

Select the "Vendors" menu. Click "Inventory Activities" and "Adjust Quantity / Value On Hand."

Choose a date for the inventory change to take place. This can be the current day, or any other desired date. Click the box labelled "Adjustment Account," and select the cost of goods sold account.

Enter the number zero in the column marked "New Qty." Repeat this for every inventory item that has a listed quantity. When every item is set to zero, click "Save and Close." QuickBooks subtracts the inventory from the business balance sheet and adds it to the cost of goods sold.

Check that the change is complete. Click "Reports," and then "Memorized Reports." Select "Accountant" and "Balance Sheet." Confirm that no inventory appears on the balance sheet.