Just a quick question on the average cost method. Say you’re tracking monthly, and for example, in January you sell 200 items at avg cost of 7 dollars, which would be 1400 cogs. However you had 2 cancellations and 8 returns, 10 total returns, and all items went back into inventory. Do you at the end of the month or period make it 190 sales instead of 200? And the cogs would be 1330 instead of 1400, because you had 10 returns and 10 items at 7$ avg (70$)go back into inventory? or would you still write 200 sales and 1400 Cogs despite the cancellations and returns? Hopefully this question makes sense.
Hi your videos are great I been selling on E-bay for less then one year, I was just keeping track of profits didn't know about inventory left over. This video really helped, the only question I have is with this system how do you factor returns and damage goods. Thank you so much for your help. And another thing is when some one gives me something for free do you enter good cost 0?
This video is amazing! Ive been doing spreadsheets for awhile now and ive been putting in each item and cost individually which takes ages so want to try a faster method and one of these would be perfect!
Thank you for your videos. I'm new to a sewing biz. Just turned my bookkeeping over to my tax guy. I had no idea about having zero inventory at the end of the year. I'm sure my tax guy [a cpa] would be happy to help me, but at $150 per hour, I can't do that. I have a feeling I'm going to get really ripped on my taxes for 2022. I think I can keep up with using excel, once I get it set up, and you have helped alot. No disrespect to the videos from other countries, but I'm glad I found someone who speaks clear English, and explains things in detail. What I do need to add to my spreadsheet are taxes. I pay taxes on certain purchases, other than tax exempt vendors, so I have to track what I pay from vendors, what I collect, and what I have to send for retail tax.
This was a very helpful video. I've been tracking individual items which was very time consuming. I would do my spreadsheet at every quarter which took about half a day to do. I would then manually calculate my COGS cause I don't know how to use any formulas on googe sheets. I am going to look into switching to dollar cost averaging (or the last one you showed) at the end of the year and also do some research into learning how to use the formulas so I don't have to add everything up with a calculator which is slow and prone to error. Thanks.
It is pretty easy to learn a few formulas to have the spreadsheet calculate things for you. If you want the last box F3 to equal A3+B3-C3-D3 (or whatever applies), the formula to type in the box is =A3+B3-C3-D3 (press enter). You can also, after clicking = , click the boxes you want in the formula, then the operator (+ - * /). Summing and averaging is easy and you can easily adjust which cells (boxes) are in the formula by click & dragging the boundaries (like text boxes in MSWord).
Awesome Video and I believe I will go with Method 3 (Zeroing Inv=Zero COGS). However, I am stumped once you start assigning the COGS. I think basically you assign-pick a value and whatever is left in the column has a $0 value. Once this point is reached, Profits are at 100% because you have exceeded & surpassed your COST of Goods?? Am I grasping this correctly? Feel free to reword it for me. I am on the verge of understanding this part. :)
So beginning inventory is just what I paid and not what my projected retail price is? Trying to figure out handmade jewelry which started at zero, added purchased items then determine cogs and ending inventory is not easy to understand. My accountant seems to be too busy to help
@@RockstarFlipper Just a quick follow up question. I started setting up my cost averaging worksheet and I'm confused about where I keep track of things like price sold on each item, fees paid for items, shipping and net profits. Do you use a separate spreadsheet for those numbers since they are more accounting related? In my very detailed Excel spreadsheet I currently use, I have date, item, store, price paid, list price, sold price, fees, shipping, profit. I do want to keep track of most of that but the current way is taking too much time. Are there eBay reports I can run to give me numbers on sold price, fees, shipping and profit instead of manually doing it myself on the spreadsheet?
@@kimberlyarmstrong4272 eBay does have sale reports so you can do this it’s in the seller hub dashboard area. You need to do this on the full site not the app. You can customise the dates too if you want to do a month by month basis. I have been following CL Furlong (we are both in Australia) and have started concentrating on how long it takes for items sold so I know what type of items to list first. I don’t normally do this analysis but Chris is good with these. I am an accountant (with ex tax officer) too 😂😂😂 not good at doing my own reports. Excel videos on you tube are good to watch too just discovered this one and subscribed. Jodie Here at Jodstas in Melbourne Australia 🇦🇺
I just don't think people know of this. Its too easy. Especially when your buying huge bulk purchases. I couldn't imagine typing every item with individual cost on a huge buy.
I mostly like doing the 1st option, but am working on setting up google spreadsheets to fill in the COGS and Inventory automatically from a master inventory sheet. Only thing that gets messy is buying multiples of the same item...
Currently, I am just using excel manually. All of the inventory systems I looked into were absurdly expensive for my size. Zoho Inventory was one I was considering but the others were hundreds and some thousands of dollars a month. The expensive systems were for companies that have tens of thousands of items or more in their inventory. Overkill for me. I have used a service called ZarMoney Inventory as well. It was nice but it was very complicated for me. Had too many bells and whistles. Request: I would love to see one that somehow connected to eBay and when I sold an item it adjusted my inventory as sold automatically.
Do you use other channels? If Ebay is all you use, you can get the Easy Auction Tracker. Yea you have to put in some elbow grease by assigning each item a unique SKU but once set up, the tracker auto pulls the item from inventory when it sells. I used it for three years straight. Now that I am branching out to other platforms I am just keeping up with it myself on my own spreadsheet. I would LOVE to find a very cost effective for our small business a program that keeps up with inventory in general that I can quickly enter an sku or scan a barcode to get it to add/delete.
@@jarrodlong850 I just purchased easy auctions tracker and loved it! The only thing is I don’t understand how to assign a SKU to pull automatically out from inventory once it sold. Thanks
@@JoseRamirez-fm2lb So in your Ebay listing, you have to put a specific and unique number in the SKU box that is just under the title. Then in the inventory section of the Easy Auction Tracker, you put that same number in it. Then when you tell the tracker to pull your transactions from Ebay, it will see that SKU from the sale, and automatically deduct it from the inventory. Hope that helps.
What is the third method you showed called? My understanding is this is writing off all your purchased inventory during that year? I appreciate your explanation and all your vids. Thanks for taking the time to read this.
I’d love an app to help me keep track of inventory. I need all the help I can get!! Regarding the inventory, you are a life saver. I used to track everything individually...OMG, that sh*t had my head spinning. I like the idea or zeroing our inventory at the end of the year. Makes it so much easier. Now I can move forward in getting everything to my accountant by the end of the week! Thank you 🙏🏽. Oh, don’t forget to send me your scheduler link 😀
I sell floral arrangements and it is a nightmare to keep track of the materials used in an arrangement and material left to use on future arrangements. Do you have any ideas to help with this process?
You have to figure out how much in materials each arrangement costs, and record that for each one you sell.. if you sell 50.. and they are $1 each.. 50x$1
If you pay sales tax on an item your buying, YES its apart of your cog expense. IE: You buy a $20 item.. tax is $2. $22 total you hand the store.. your cog was $22
That is correct, no you cannot “zero it out.” Since Inventory is what we call a “Permanent Account” in the accounting world, the value of your inventory is carried over from one accounting period to the next.
For those wanting to understand the 3rd method take notes while watching, pausing while you write. I watched it 3 times and it Totally click has I Carefully took notes on the third viewing. First time watching my notes were too sloppy to pull it together in my brain.
Whats it called?? Not even sure what you called that 3rd method.... but I feel you were saying it would get yourself in trouble in an audit??...and I cant afford a CPA and never found one that had any grasp on what you have explained here for bulk buying and selling and averaging of random collectibles.
This is really helpful! I'm going to be starting something like this pretty soon. However, I already have a lot of inventory that I would not be able to recall COGS when I sell them. What would you suggest trying to account of these items I already have? I don't want it to seem like they just showed up out of nowhere. Thanks.
This started out as a hobby but as I've made more and more sales and have alot of inventory I'm now realizing I need to start tracking. Question is, how do I go back and account for previous inventory.
Question on the method 2 or cost averaging. How do you account for returns or items that get returned and are relisted and back into inventory? Do you take anything away from cogs if an item is returned and relisted during that period?
When an item is sold and accounted for as usual, IF it gets returned all of that stays the same you simply add in a "REFUND" for $25 for example.. Now you have an expense of $25, and when you sell it again you will enter a whole new sale. If its bad and you can't sell it then you'll have your original sale for $25, and then your expense (refund) of $25 and you are good to go
Just curious, I do aquire most of my inventory at garage sales, since there are lots here in the Orlando area. The issue I have is, I will usually bundle a lot together and make an offer. Now after talking the seller down to a price, I sure can't ask if they will take time and write a receipt, just doesn't happen. I keep up with the "cash" I spent since they won't take checks or debit. How do I prove my cost of goods purchased?
@@jarrodlong850 For audit purposes it is best to at least try to get the seller to initial the receipt or at the very least you yourself put their name on the receipt.
What about the S&H costs + the fee the website, Poshmark for example. Where would you include this to figure out over profit? Also how do include supply costs? Tissue paper, plastic bags, cleaning items, drycleaning, etc.?
Shipping cost on most websites is YOUR expense.. the buyer pays the $9 and you buy the label. Poshmark handles that so you dont have to. Your materials is an expense you track. anything you buy to include with the packaging (boxes, tissue paper, business cards etc).
How do you calculate the cost of goods that are old items you purchased long ago? For people cleaning out closets and not necessarily recent buys? I'm doing a bit of both and not sure how to calculate it all. Thanks!
You aren’t “calculating it” you are accounting for what you paid for those items. If you don’t know, don’t have receipts then you have to claim them as $0 as you can’t prove it. If it’s a personal used item you used, then you can typically “zero” it out. So you sell it for $20 you claim it as $20. Since you paid more then you sold it for
ok for option 2 whats the best way to incorporate past inventory or do i include any item sold this year regardless of when i bought it for items sol this year for inventory?
I understand method #3 and I like it. It appears that you say it’s hard for most people to understand #3 and you don’t recommend #3 but 30 seconds later it sounds like you say that #3 is actually the easiest which is why you do recommend it. Can you clarify for me? Thanks.
No you don't have to. You can total up your TOTAL SPENT for the year, and just know that every item you sold "used up" the cost of goods, and everything you don't sell is $0 moving forward. easiest way
@@RockstarFlipper I see, so its just front loading the expense deduction. I'm a little surprised the IRS would allow this considering they want you to spread specific thing like a car or large equipment over a few years. I've got some reading and research to do. I'm sure they just do come out and say it either. I'd bet a CPA needs to read between the lines.
@@TheMadFlea Item depreciation on equipment you keep more than a year like a car or new computer etc works differently then inventory/COG/COGS.. Def talk to a CPA as I can't give financial advice or legal advice
Hello, For method 2, would I need to include a buy cost on my sales sheet(a sheet for all my sold items)? or could I keep the two separate, a sheet for money coming in (sales sheet) and money going out (average cost method)? I hope this question makes sense. Thank you!
Thank You. I have some old records and books our family had growing up and want to sell them. There is no way to know what my folks or others paid for them but they did pay for them................ is this profit" to report? doesn't make sense to me.
So say I started selling items on poshmark in 2020, started super slow selling my own items and then over time I started buying inventory to resell and things started growing pretty quick and I kept track of nothing... Not good I know, but I never had any intentions of sticking with it or actually making a profit, it just happened over time and I'm now to the point where I really need to be tracking my inventory, keeping track of sales, and all of that stuff. I know how to do spreadsheets, etc and how to actually log it all, but what in the world do I do about my approximately 1200 items that are current inventory listed for sale still??? I mean I could maybe go back thru my finances and get a semi estimate of the value of it all, but nothing exactly accurate. Is there a way to do this? Or should I just be starting to keep track of things from this point on? Going to be hard to keep track of new vs old inventory so I'm just at a loss of where to start and how to get caught up to and be able to keep a system going. I absolutely regret not keeping track from the beginning and had I known it was something I would stick with then I would of.
do you add the cost of inventory left over from the previous year for the new year? do you you divide cost of inventory by number of item left in inventory and take in to account for the next year?
I have a question on 2nd method . I think I actually did that for 2020 taxes but maybe a simpler version , basically I didn’t track inventory costs item by item so I totaled the number I spent in inventory (say 100) , Found the percentage of total inventory sold (say 50%) , so my cost of goods sold was $50 is that relatively the same thing ?
@RockstarFlipper what do you call that 3rd Method? I followed along and did a spreadsheet and want to label the tab for this method. As for the method, I follow you up until the part where you start picking cost of goods and whittling away at the total.....starting there to the end I'm trying to process but I think I may need a little more explanation to get it. Thanks for this....now if I can put together a way to calculate potential profit at varying discount rates, with or without promo rates , with shipping & fees & finally taking taxes out I will be set. I unfortunately have alot of lower priced items so I have to watch every penny to stay out of the ditch :)
@@RockstarFlipper so we price the items COGs as they sell off in higher COG amounts to get the remaining COG items to be more flexible to sell and stay in the profit zone?
Ty for all your videos. I'm just starting to list n sell this month/year. I'm going to try 3rd method. My question is .. In 2020 i bought a ton of Plushies (u can guess who's YT i was watching LOL). I never did start selling on eBay till this year. Can i use the Receipts from them as COG since i will be selling them this year, when i do 2021 taxes later? Or does all that plush have to start as zero this year? I didn't claim anything last yr since i didn't sell anything
Your cost of goods is actually cost of goods SOLD... so when the item sells, then you put its cost as an expense for whatever year it is... if you bought a plus in 1950.. and you sell it now... its cost of goods sold is apart of these taxes
@@RockstarFlipper i think im dead ...for taxes how I was doing it forever was deducting all my product items purchases (reciepts) at the end of year for that same year weather or not all those same exact items had sold or not(I have more other similar and like items already in inventory purchased in prior years too if that matters for any kind of averaging? ) I did this because all my past accountants would only just say and request without explanation was "I need a total of all your purchases for the year" and so thats what I thought I was giving them and when I did my own taxes on the computer my self later well there was the simple field to plug in the "purchases" for the year too....i never understood before until now that I could only give the purchase amounts on/of those same items that had only sold and not of all the items...now what do I do !?!!?...i did it that way for so long and feel so stupid and in deep trouble now I suppose...I completely misunderstood it omfg. ... and now no way to go back years to know or track which individual amount paid for what each items sold today...any suggestions that I could tell the auditor... I already poor and have a family to feed and think they could destroy me for this massive error...any ideas??
Hey man I have a question about method 2. Let's say I had a year end of 100 dollars in inventory left over and the cost of the new years inventory went up or down, can I average in the previous years inventory with the new, as long as I keep track of what the value was at the beginning of the year?
Ive been doing line by line but recently I started doing average cost of good (like if I buy 5 items for $10 I add a cog of $2 per item) instead of individually adding each original price I paid the item for (it’s time consuming). Is this okay? Thanks
So if I use method number 2, how do I translate cost of goods to my sales tracking? Do I use the average cost of goods number to determine my profit on that sale?
Why would your inventory go to ZERO at the end of the year if you haven't sold everything at the end of the year? I thought you're only suppose to deduct the COGS in the year that it sells which may be several years after you purchased it and put it into inventory.
Normally yes. If you bought 10 shirts for $2 each. $20. And you sold say 6 of them. Your cost of goods sold is $12. And your remaining inventory is 4 shirts. ($8). However there’s another way you can do it Bought 10 shirts for $20. Sold 6. I assign the cost to 4 of those shirts of say $3 each $12. And the last 2 shirts were super cool and I gave them a cost of $4 each. Thus all 6 shirts ate of my cost of $20 and the remaining shirts have a $0 cost in them. No matter how much I buy/sell I always assign the total amount I spent for the year into my cogs and everything left has a zero cost remaining. It’s allowed Think of next year I never buy anything. I sell my 4 shirts for $100. I have 100% profit. There’s no more receipts or cost to assign to those 4
@@RockstarFlipperI know this is old but I’m also trying to understand the 3rd method. How would you know which inventory is from last year (the 4 shirts for example) if you’re keeping track of many items? Do you use labels or SKU #?
@@Deee-yz9rj nope. It doesn’t matter. You’ll do the same thing you do this year next year. Hopefully this helps: 2024- you buy 20 tshirts for $2 each. $40spent You sell 10 of them for say $20 each. You assign a cost of $4 to them each So all of your COST is “used up” the rest have 0 cost at the end of year 2025 starts. You buy 20 more shirts for $2 each. You now have 30 shirts in stock. Cost $40 Say you sell 10 this year only in 2025. You assign them $4 each. Again. Doesn’t matter which ones. You used up your $40. 20 shirts remaining Rinse and repeat
I don’t understand. Are you randomly assigning numbers as the cost of good sold? You say you are assigning a number that you were comfortable with. What does that mean? What do you want to assign at the actual cost of what you paid for it?
Not at all. There are 3 ways to do it. #1- track every item and assign the exact price to each item. (this is doable if you're small with barely any items, but not for me with 10s of thousands of items) #2- work on an average. you bought 100 items for $300. each item is a $3 cost of goods. Even if some items were $2 and some were $4. You would have to track this throughout the entire year or "lot by lot" as you purchase and sell. (again kind of clunky for me to do although I COULD) #3- assign ALL of your cost of inventory to "cost of goods SOLD" and whatever items are left have a $0 cost. For example you pay $100 for 20 shirt. You sell the first shirt for $60 and you assign it a COGS of $25. Then you sell 3 more shirts exactly the same assigning $25 each to them. The first 4 shirts used up your $100 cost, and the remaining 6 shirts are basically $0 and 100% profit. If you ALWAYS do that, you will always be assigning your full cost you spent to COGS and the remaining inventory at $0
Hey casey i heard you say that you use the cash method in this video do you talk about this in any of your videos? I know we talked before but i am still so behind with getting caught up with my numbers but I think the way I am doing it is just so overly time consuming!
Just started to follow your channel & it's very helpful! I'd be interested in the program you developed. Is it available now? I'm just starting out and would like to be organized from the beginning. Thanks!
My Reseller Genie is the company I partnered with who created the program.. heres a demo link and buy link. Reseller Genie Tutorial link- th-cam.com/video/yZylC0JLWiA/w-d-xo.html Reseller Genie buy link: www.myresellergenie.com/?aff=7
Hey there, really enjoy watching your videos. I recently started reselling items and selling my personal items. I'm making my best effort to make sure I'm tracking stuff properly with the expectation of getting a 1099-K. I have two questions that I'm curious how you would handle. * I believe in your other videos you stated personal items are normally a loss, since they are selling less than the price bought. Would I track personal items with my inventory/account spreadsheet.. or would this be a separate area? I know I would want to account for those sales as not being profit. I also have one other question if you have the time. * I collect games and often buy bundles, I keep games I don't have and resell the others. I'm unsure how I properly account for this situation in my inventory. I feel the simple approach would be to just assign a price per item by dividing the total items by the bundle cost. Then subtracting the item cost of all the items i keep form the bundle cost. Though wasn't sure if this was acceptable since the value can range on games. Appreciate your videos and you sharing your knowledge.
Personal items on a spreadsheet if possible. Usually isn't many items. if you have a bunch maybe include them in your software quickbooks or reseller genie etc. yes assign a price to the games you keep and games you sell that is fair. So if you spent $100 and kept 3 games, maybe $5 or $10 each so $15 leaving $85 for the cost on the other games.. or something similar
I hope someone sees this!! Need help. So if I go and buy say $2000 of items to resell in my first month of business. I then resell $1000 of it for $3000 but my issue is I have a balance sheet which shows “purchases (under costs)” of $2000 and income of $3000 and gives me a plus $1000 but I’m confused where I input the cost of goods sold on that balance sheet of $1000 for the sales I made in my first month. So confused!
For inventory purposes (if using the average cost method) how would you handle the following? Say I purchase a lot of 20 vintage magazines. I pull out specific ads or photos to sell individually. Let’s say I average 10 individual items per issue. Do I track that as 20 items or 200 items? Obviously, it makes a massive difference in average cost of goods.
If you are "Creating new items" I would say 200.. Are you selling the original magazine after taking it apart? If not then you would have 200 items and no longer the 20 original ones. otherwise maybe 220 items?
@@RockstarFlipper That’s what I figured but wanted to be sure. I sell the magazines individually or in lots when it makes sense. For the others though I just pull out what I want to list. I just give what’s left of those original magazines to a co-worker for craft usage and she just recycles what’s left when she’s done.
Thanks so much Casey for doing this again I greatly appreciate it! Stay safe and Be Careful hugs to Kate and God Bless you and Kate and your mom. ❤️🤗🙏💜🤩Hugs to Kate and mom. Kelly from OCALA, Fl 1st one (YOU ROCK)
in method 3 you say you assign cost of good sold and imput the number but never explain the formula how you get this number? this is the only part im not quite understanding.
If I buy 10 shirts for $2 each... $20 total.... then I sell 1 of the shirts for say $30... I can assign it a cost of goods sold of $10.... then I sell another shirt for $30... assign it a cost of goods sold of $10... now the total $20 I spent is assigned to those 2 shirts... and the remaining items have a $0 cogs.... Now I just do that for every sale but I don't really have to sit and track it all year long.... I just know that all money is assigned and all remaining is $0 moving forward
My Reseller Genie... I partnered with them and they made it. heres the link and code- www.myresellergenie.com/?ref=caseyparris2 code is - ROCKSTARFLIPPER15 (all capital letters)
Great video. How do you track for items you already have in house? So I don't know how much i paid for it or it was given as a gift. Now I want to sell it. Does this go on another spreadsheet?
So is the third one just totalling your receipts for the year? And then subtracting total sales (minus fees and shipping)? Or did I miss something? I'm kind of panicking because I haven't been keeping track of anything, and I started selling in November 2019.
@@RockstarFlipper Hey, Casey thanks so much for the precise yet thorough explanation of each method. Quick question... I chose method 3 when I started reselling/filed my taxes last year. However I'm not exactly sure about the following scenario... if an item is purchased in the prior year (Nov 2019), sold in the next year (Feb 2020). When using method 3 (zero out at year's end), would you zero out that item's COGS when recording the sale on your 2020 tracking spreadsheet? FYI: last year was my first year reselling professionally so go easy, jk 😁
I was following you on method #3 until you started talking about "assigning it a cost." How do you know what cost to assign it? That part didn't make any sense to me. Also, what if you DON'T sell all that stuff at the end of the year (and we won't), I don't understand that part. I guess it's a matter of absorbing all your cost in the things that you've sold and so it doesn't matter that there are unsold items? What happens if it doesn't equal zero at the end? I'm just kind've lost on that last one. I'll go back and listen again, you sure did go over it awfully fast!
Essentially it will always equal zero. If you buy 10 shirts for say $3 each ($30 total). then you sell a shirt for say $40 a week later..... and you assign it a $10 cost of goods, you now have 9 shirts left and $20 cost of inventory. then you sell another one, same price.... now you have 8 shirts left and $10 left in inventory.. and finally a week later you sell a 3rd shirt and assign it $10 you now have 3 shirts sold for $30 cogs, and 7 shirts remaining which have a $0 cost.. Now when I break it down you see how it works, but basically you don't need to break it down every time.. just at the end of the year you know whatever you spent (the $30) WILL end up as cost of goods sold and whatever inventory you have left is $0. So just total up what you spent... cost of goods sold... all remaining inventory is $0
@@RockstarFlipper can I just assign the whole $30 cost on the first 40.00 shirt that sold?? Doesn't the IRS expect to see some kind of amount of inventory remainder amount with tons of physical stuff still present??...im sorry...I ask because I think im in big trouble with looming audit targeting me and no way to explain myself and methods and no representation...im going in solo and broke and hopeless ..
I just subscribed because you were so helpful. I know nothing of this junk My big issue is I have a garage full and never kept track. Not sure what to do. Been selling for over 5 years. sigh....
Shipping is its own expense... $20 sold item is $20.. either $20 free shipping or $15+$5 shipping.. its a TOTAL $20 transaction you were paid for... $20 sale. Then you have an ebay fee expense, PayPal fee expense, and cost of shipping label expense
I use FIFO method and average cost. I write on each receipt for inventory the number of items purchased. I alway use a credit card which makes it easy since transactions are downloaded. In Excel I simply key the number of items for each receipt. I have a spreadsheet which list every purchase transaction amounts, date, store name, and the number of items. At end of month if I sold 200 items I run a total cost starting with first item counting down 200. This is my total cost for the items sold. Ending inventory will be the total cost of items not marked as sold. You cannot use inventory purchases to reduce your net income. People do this I know, but you probably will never get caught unless you have some wild deductions that might be flagged. I do not do taxes for others but have worked in accounting for 38 years. Actually hoping to retire this year and make extra cash selling on eBay. I probably go over board on my record keeping but it is hard do not do it another way. I feel for those that keep up with nothing until tax time.
I do something similar to what All the Things does. I get many duplicate items and do FIFO. If I have a purchase on 1/5/20 and paid $1 for that item and then purchase the same item on 2/14/20 for .75 and then a 3rd purchase on 3/1/20 and paid .80. The first time I sell one of those items I have COGS of $1. End of year I still have the other two left so my ending inventory is $1.55. I never worked for an accounting firm but I do have my CPA certificate. (Whole long story as to why I didn't use it). But just like you it is difficult for my to do this any other way. I am very detailed in my records and would drive others nuts over it. But it is the only way I am comfortable with.
@@Percydoesstuff I have a spreadsheet to keep track of purchase and sales. That way ending inventory is what's left on the ss at end of year. All relies on tracking both sales and purchases accurately.
I was relieved when you showed method #3, because that's what I've been doing! Is there a name for that method? Thank you for this great info. Really helpful
@@RockstarFlipper Thank you! I have my own online boutique and what about if buy clothing labels to sow on to the clothing I’m selling, does that also go into COGS?
I was wondering on the method 3 do you put the actual cost of goods and actual cost sold? If I paid 100 for an item and sold it for 200 do I put cost 100 and sold 200.00?
The "listing" price doesn't matter.. I can list something for any price, doesn't mean it will actually sell for that price.. no point is tracking the list price.. I ONLY need to track the sale price when it sells.
Nope.. never have in 15 years almost.. The listed price means NOTHING. I listed an item for $50 2 years ago.... finally sold for $25..... what good did keeping track of the $50 do me?
Ok got it. Thank you for all your help. I'm just starting out and technically at this point it's just a "hobby", but I've been doing really well so I need to learn how to properly do this for next year. I'm assuming I'll have to start a new inventory for next year? I guess my question is do I start a new spreadsheet for inventory every year of whatever I have remaining in stock and of course anything new I add?
One more question lol, I make alot of handmade items. You put a column for "store" but I buy materials from many places. What would I put in that column and how do I determine my cost? Just figure the cost of materials for that item? For example I make crystal candles. So I buy wax and fragrance from one place, crystals from another, vessels from another.
RockstarFlipper they don’t, but they do a great job at breaking your sales down, sold price -cog-eBay fees-PayPal fees =profit. I love that part and they track sales per state and taxes, and they have a great accounting section. I personally like it.
You always have best timing for info-just past my 1,000 items getting nervous about maybe needing some insurance- (not sure if you saw my last message) was not trying to promote myself EBAY did come n from behind and put my store on a free shipping sale "its a glitch" they said happening to more than me -well i have no back up! even delete photos as i list now ive got a full amount of ABCs totes and concerned with no back up record
Well you I dk anything about this cause I had no idea about it. I was just a guy doing it for a hobby and to get crap out of my house and storage. I know It would have to be something easy to use and understand cause I am lost lol. Going to take to the gay next week. I know nothing about putting a sku number on ebay I just figured out how to do the location thing.
Is the third example an actual commonly used tax strategy? It seems like your basically doing cash based inventory accounting but your fudging the numbers in a spreadsheet to make a record pretending those sales COGS matched the purchases. And if it is a allowed tax loophole why would you need to plug a bunch of estimated by item COGS into a spreadsheet if all you have to do is claim zero starting and ending inventory. The numbers are not going to help with financial analysis internally of your business as they would not match how your actually preforming. And if the IRS audited wouldn’t they be able to tell that the number of items sold does not match the number of items purchased. Let’s say you purchased 1500 items and sold 1000, but claimed COGS on the 1500 so the numbers match at the end of the year. What you showed means you would get the tax benefit of the 1500 items in year one just as if you did cash based accounting. So how is that not just doing cash based inventory accounting? And I get that it is good for cash flow and business scaling to pay less taxes on the front end. But what I don’t get is if this is a legit tax strategy why you would keep an elaborate spreadsheet where you assign estimated values to things to make those amounts equal out. Is this just a simple tax loop hole that lets you put your beginning and ending inventory as zero in order to use your actual purchase for COGS? If so then why plug a bunch of estimated sales numbers into a spreadsheet?
How do you track your inventory? what do you use?
I just use a spreadsheet right now. It's a pain and very time consuming. Would love to be more automated.
HACKERDONE22 on IG is legit. 💯
Anyone switched from method 3 to method 1 or 2? If so how?
Thanks for making this. I know this is over a year later, but I tried to understand cost averaging somewhere else and it was unclear. So thank you!
Just a quick question on the average cost method. Say you’re tracking monthly, and for example, in January you sell 200 items at avg cost of 7 dollars, which would be 1400 cogs. However you had 2 cancellations and 8 returns, 10 total returns, and all items went back into inventory. Do you at the end of the month or period make it 190 sales instead of 200? And the cogs would be 1330 instead of 1400, because you had 10 returns and 10 items at 7$ avg (70$)go back into inventory? or would you still write 200 sales and 1400 Cogs despite the cancellations and returns? Hopefully this question makes sense.
Hi your videos are great I been selling on E-bay for less then one year, I was just keeping track of profits didn't know about inventory left over. This video really helped, the only question I have is with this system how do you factor returns and damage goods. Thank you so much for your help. And another thing is when some one gives me something for free do you enter good cost 0?
This video is amazing! Ive been doing spreadsheets for awhile now and ive been putting in each item and cost individually which takes ages so want to try a faster method and one of these would be perfect!
Thank you for your videos. I'm new to a sewing biz. Just turned my bookkeeping over to my tax guy. I had no idea about having zero inventory at the end of the year. I'm sure my tax guy [a cpa] would be happy to help me, but at $150 per hour, I can't do that. I have a feeling I'm going to get really ripped on my taxes for 2022. I think I can keep up with using excel, once I get it set up, and you have helped alot. No disrespect to the videos from other countries, but I'm glad I found someone who speaks clear English, and explains things in detail. What I do need to add to my spreadsheet are taxes. I pay taxes on certain purchases, other than tax exempt vendors, so I have to track what I pay from vendors, what I collect, and what I have to send for retail tax.
This was a very helpful video. I've been tracking individual items which was very time consuming. I would do my spreadsheet at every quarter which took about half a day to do. I would then manually calculate my COGS cause I don't know how to use any formulas on googe sheets. I am going to look into switching to dollar cost averaging (or the last one you showed) at the end of the year and also do some research into learning how to use the formulas so I don't have to add everything up with a calculator which is slow and prone to error. Thanks.
It is pretty easy to learn a few formulas to have the spreadsheet calculate things for you. If you want the last box F3 to equal A3+B3-C3-D3 (or whatever applies), the formula to type in the box is =A3+B3-C3-D3 (press enter). You can also, after clicking = , click the boxes you want in the formula, then the operator (+ - * /). Summing and averaging is easy and you can easily adjust which cells (boxes) are in the formula by click & dragging the boundaries (like text boxes in MSWord).
FINALLY !!!!! A great breakdown video, after watching I have now gained more experience using sheets ! Thank you so much !
Awesome Video and I believe I will go with Method 3 (Zeroing Inv=Zero COGS). However, I am stumped once you start assigning the COGS. I think basically you assign-pick a value and whatever is left in the column has a $0 value. Once this point is reached, Profits are at 100% because you have exceeded & surpassed your COST of Goods?? Am I grasping this correctly? Feel free to reword it for me. I am on the verge of understanding this part. :)
Yeah that would be correct. I stick to 0 method
So beginning inventory is just what I paid and not what my projected retail price is? Trying to figure out handmade jewelry which started at zero, added purchased items then determine cogs and ending inventory is not easy to understand. My accountant seems to be too busy to help
Best video on inventory tracking !!!
Thank you soo much!
Yes to an app with a desktop coordinated version. Thanks.
Ok I will have them keep that in mind
Wow! This is so helpful Casey. I’ve been tracking individual items and it is so time consuming. It also gets boring real fast! Thanks for the info.
Yeah takes a ton of time I’m not willing to spend. Hope that speeds it up for you
@@RockstarFlipper Just a quick follow up question. I started setting up my cost averaging worksheet and I'm confused about where I keep track of things like price sold on each item, fees paid for items, shipping and net profits. Do you use a separate spreadsheet for those numbers since they are more accounting related? In my very detailed Excel spreadsheet I currently use, I have date, item, store, price paid, list price, sold price, fees, shipping, profit. I do want to keep track of most of that but the current way is taking too much time. Are there eBay reports I can run to give me numbers on sold price, fees, shipping and profit instead of manually doing it myself on the spreadsheet?
@@kimberlyarmstrong4272 eBay does have sale reports so you can do this it’s in the seller hub dashboard area. You need to do this on the full site not the app. You can customise the dates too if you want to do a month by month basis. I have been following CL Furlong (we are both in Australia) and have started concentrating on how long it takes for items sold so I know what type of items to list first. I don’t normally do this analysis but Chris is good with these. I am an accountant (with ex tax officer) too 😂😂😂 not good at doing my own reports. Excel videos on you tube are good to watch too just discovered this one and subscribed. Jodie Here at Jodstas in Melbourne Australia 🇦🇺
Quickbooks! Just make an expense for the amount as cost of goods sold. When adding the inventory just put as $0 cost
Thats what I do.. some people want to track every single line.. crazy to me
I just don't think people know of this. Its too easy. Especially when your buying huge bulk purchases. I couldn't imagine typing every item with individual cost on a huge buy.
I really want to and need to understand what you just said that you do...
I mostly like doing the 1st option, but am working on setting up google spreadsheets to fill in the COGS and Inventory automatically from a master inventory sheet.
Only thing that gets messy is buying multiples of the same item...
Currently, I am just using excel manually.
All of the inventory systems I looked into were absurdly expensive for my size. Zoho Inventory was one I was considering but the others were hundreds and some thousands of dollars a month. The expensive systems were for companies that have tens of thousands of items or more in their inventory. Overkill for me.
I have used a service called ZarMoney Inventory as well. It was nice but it was very complicated for me. Had too many bells and whistles.
Request: I would love to see one that somehow connected to eBay and when I sold an item it adjusted my inventory as sold automatically.
Do you use other channels? If Ebay is all you use, you can get the Easy Auction Tracker. Yea you have to put in some elbow grease by assigning each item a unique SKU but once set up, the tracker auto pulls the item from inventory when it sells. I used it for three years straight. Now that I am branching out to other platforms I am just keeping up with it myself on my own spreadsheet. I would LOVE to find a very cost effective for our small business a program that keeps up with inventory in general that I can quickly enter an sku or scan a barcode to get it to add/delete.
@@jarrodlong850 I just purchased easy auctions tracker and loved it! The only thing is I don’t understand how to assign a SKU to pull automatically out from inventory once it sold. Thanks
@@JoseRamirez-fm2lb So in your Ebay listing, you have to put a specific and unique number in the SKU box that is just under the title. Then in the inventory section of the Easy Auction Tracker, you put that same number in it. Then when you tell the tracker to pull your transactions from Ebay, it will see that SKU from the sale, and automatically deduct it from the inventory. Hope that helps.
What is the third method you showed called? My understanding is this is writing off all your purchased inventory during that year? I appreciate your explanation and all your vids. Thanks for taking the time to read this.
I’d love an app to help me keep track of inventory. I need all the help I can get!! Regarding the inventory, you are a life saver. I used to track everything individually...OMG, that sh*t had my head spinning. I like the idea or zeroing our inventory at the end of the year. Makes it so much easier. Now I can move forward in getting everything to my accountant by the end of the week! Thank you 🙏🏽. Oh, don’t forget to send me your scheduler link 😀
I’m new to eBay selling and haven’t started a program for tracking inventory costs vs outgoing sold, etc. looking for more information.
This video....
I sell floral arrangements and it is a nightmare to keep track of the materials used in an arrangement and material left to use on future arrangements. Do you have any ideas to help with this process?
You have to figure out how much in materials each arrangement costs, and record that for each one you sell.. if you sell 50.. and they are $1 each.. 50x$1
Does anyone know where sales tax comes into play with COGS ? Its an expense incurred for cost of goods and didn't hear it mentioned. Thank you
If you pay sales tax on an item your buying, YES its apart of your cog expense. IE: You buy a $20 item.. tax is $2. $22 total you hand the store.. your cog was $22
Hey all. What’s the name of the third option? I’m trying to do some more research around it. Thanks
My Reseller Genie-
www.myresellergenie.com/?ref=caseyparris2
Discount code is ROCKSTAFLIPPER15 (all capital letters)
I use your excel spreadsheet to track COG, Sales, Expenses. I have QB but really don't use it. Excel seems easier and has worked for me so far : )
Excel IS very easy, I like quickbooks because it makes it very easy to pull up reports and categories etc
What if you don't actually sell all your items you purchased in a given year? You can't just zero it out right?
That is correct, no you cannot “zero it out.”
Since Inventory is what we call a “Permanent Account” in the accounting world, the value of your inventory is carried over from one accounting period to the next.
ex 2.
If I decide to keep an item for myself or gift it, how do I remove it from my cost of goods?
You would just deduct that amount from the total you have spent
For those wanting to understand the 3rd method take notes while watching, pausing while you write. I watched it 3 times and it Totally click has I Carefully took notes on the third viewing. First time watching my notes were too sloppy to pull it together in my brain.
Thank you so much!! it is very hard to explain through a video
Whats it called?? Not even sure what you called that 3rd method.... but I feel you were saying it would get yourself in trouble in an audit??...and I cant afford a CPA and never found one that had any grasp on what you have explained here for bulk buying and selling and averaging of random collectibles.
This is really helpful! I'm going to be starting something like this pretty soon. However, I already have a lot of inventory that I would not be able to recall COGS when I sell them. What would you suggest trying to account of these items I already have? I don't want it to seem like they just showed up out of nowhere. Thanks.
I have the same question
This started out as a hobby but as I've made more and more sales and have alot of inventory I'm now realizing I need to start tracking. Question is, how do I go back and account for previous inventory.
@@breannelea1215 i would like to know as well. I bought tons of Plushies in 2020 but never sold. Don't have all of receipts. Could I count COGs?
@@breannelea1215 Did you ever find anything for this? I have the same issue and i'm so overwhelmed!!
Having same problem. I started as a hobby and now I’m lost. How do I transition from semi tracking to method #3 please help
Question on the method 2 or cost averaging. How do you account for returns or items that get returned and are relisted and back into inventory? Do you take anything away from cogs if an item is returned and relisted during that period?
When an item is sold and accounted for as usual, IF it gets returned all of that stays the same you simply add in a "REFUND" for $25 for example.. Now you have an expense of $25, and when you sell it again you will enter a whole new sale. If its bad and you can't sell it then you'll have your original sale for $25, and then your expense (refund) of $25 and you are good to go
@@RockstarFlipper Ok, thanks a lot.
I have an excel sheet but wish there was a program to keep up with everything
Working on some more things with someone now
RockstarFlipper thats awesome
Just curious, I do aquire most of my inventory at garage sales, since there are lots here in the Orlando area. The issue I have is, I will usually bundle a lot together and make an offer. Now after talking the seller down to a price, I sure can't ask if they will take time and write a receipt, just doesn't happen. I keep up with the "cash" I spent since they won't take checks or debit. How do I prove my cost of goods purchased?
This question is pretty much asked of me weekly and the answer I give, is to buy a receipt book and write it all down
Yes receipt book.👍
Yep a receipt book. Write down the address, date, time, and what you bought. No need to give it to the owner of the property.
@@jarrodlong850 For audit purposes it is best to at least try to get the seller to initial the receipt or at the very least you yourself put their name on the receipt.
@@RockstarFlipper can you record a bulk cost of goods for the day, or do you need to record items and price paid at each stop?
How do you add new items purchase for resale to your inventory. The guideline says your beginning year inventory must match prior end inventory.
Depends how you do your accounting. You can manually add in new inventory as you buy it
What about the S&H costs + the fee the website, Poshmark for example. Where would you include this to figure out over profit? Also how do include supply costs? Tissue paper, plastic bags, cleaning items, drycleaning, etc.?
Shipping cost on most websites is YOUR expense.. the buyer pays the $9 and you buy the label. Poshmark handles that so you dont have to. Your materials is an expense you track. anything you buy to include with the packaging (boxes, tissue paper, business cards etc).
How do you calculate the cost of goods that are old items you purchased long ago? For people cleaning out closets and not necessarily recent buys? I'm doing a bit of both and not sure how to calculate it all. Thanks!
You aren’t “calculating it” you are accounting for what you paid for those items. If you don’t know, don’t have receipts then you have to claim them as $0 as you can’t prove it. If it’s a personal used item you used, then you can typically “zero” it out. So you sell it for $20 you claim it as $20. Since you paid more then you sold it for
ok for option 2 whats the best way to incorporate past inventory or do i include any item sold this year regardless of when i bought it for items sol this year for inventory?
I understand method #3 and I like it. It appears that you say it’s hard for most people to understand #3 and you don’t recommend #3 but 30 seconds later it sounds like you say that #3 is actually the easiest which is why you do recommend it. Can you clarify for me? Thanks.
It's the easiest method for accounting. But people have a hard time understanding it. I know that wasn't clear completely
@@RockstarFlipper and by saying " people" then that also means the IRS too right??
Just saw this, I kinda use #3 but I assign 100% of profits as COGS until it zeros out and everything after that is profits.
That is one way to do It for sure. I do similar
So if you buy a storage unit you have to count every item? This was a very good video thanks for the learning experience.
No you don't have to. You can total up your TOTAL SPENT for the year, and just know that every item you sold "used up" the cost of goods, and everything you don't sell is $0 moving forward. easiest way
@@RockstarFlipper I see, so its just front loading the expense deduction. I'm a little surprised the IRS would allow this considering they want you to spread specific thing like a car or large equipment over a few years. I've got some reading and research to do. I'm sure they just do come out and say it either. I'd bet a CPA needs to read between the lines.
@@TheMadFlea Item depreciation on equipment you keep more than a year like a car or new computer etc works differently then inventory/COG/COGS.. Def talk to a CPA as I can't give financial advice or legal advice
Yes Casey. I would be interested. Thank you.
Thanks a bunch, im working with some people now
Hello, For method 2, would I need to include a buy cost on my sales sheet(a sheet for all my sold items)? or could I keep the two separate, a sheet for money coming in (sales sheet) and money going out (average cost method)? I hope this question makes sense. Thank you!
I zero out the cost of goods at the end of the year... i consider it time management more than anything
YES... sooo much faster
Thank You. I have some old records and books our family had growing up and want to sell them. There is no way to know what my folks or others paid for them but they did pay for them................ is this profit" to report? doesn't make sense to me.
So say I started selling items on poshmark in 2020, started super slow selling my own items and then over time I started buying inventory to resell and things started growing pretty quick and I kept track of nothing... Not good I know, but I never had any intentions of sticking with it or actually making a profit, it just happened over time and I'm now to the point where I really need to be tracking my inventory, keeping track of sales, and all of that stuff. I know how to do spreadsheets, etc and how to actually log it all, but what in the world do I do about my approximately 1200 items that are current inventory listed for sale still??? I mean I could maybe go back thru my finances and get a semi estimate of the value of it all, but nothing exactly accurate. Is there a way to do this? Or should I just be starting to keep track of things from this point on? Going to be hard to keep track of new vs old inventory so I'm just at a loss of where to start and how to get caught up to and be able to keep a system going. I absolutely regret not keeping track from the beginning and had I known it was something I would stick with then I would of.
Hi did you ever figure anything out? I'm in the same exact situation and I have no idea where to start
Same situation.. Would love to hear how things have evolved for you!
do you add the cost of inventory left over from the previous year for the new year? do you you divide cost of inventory by number of item left in inventory and take in to account for the next year?
Great info as always. i have one question. How do we find out for ebay and amazon how many sales we have for the year? Thanks.
You need to be downloading your sales reports each month. ACCOUNT SUMMARY page OR on "orders paid and shipped"
I have a question on 2nd method . I think I actually did that for 2020 taxes but maybe a simpler version , basically I didn’t track inventory costs item by item so I totaled the number I spent in inventory (say 100) , Found the percentage of total inventory sold (say 50%) , so my cost of goods sold was $50 is that relatively the same thing ?
Sort of yes.. cost averaging I guess I would call that
I would be interested in the inventory tracking and management app.
My reseller genie. Check them out
www.myresellergenie.com/?aff=7
ROCKSTARFLIPPER15 is a discount code (all caps)
@RockstarFlipper what do you call that 3rd Method? I followed along and did a spreadsheet and want to label the tab for this method. As for the method, I follow you up until the part where you start picking cost of goods and whittling away at the total.....starting there to the end I'm trying to process but I think I may need a little more explanation to get it. Thanks for this....now if I can put together a way to calculate potential profit at varying discount rates, with or without promo rates , with shipping & fees & finally taking taxes out I will be set. I unfortunately have alot of lower priced items so I have to watch every penny to stay out of the ditch :)
Its just called/referred to as zeroing out inventory... TOTAL amount spent is cost of goods sold, remaining items are $0 cost going forward
@@RockstarFlipper so we price the items COGs as they sell off in higher COG amounts to get the remaining COG items to be more flexible to sell and stay in the profit zone?
@@RockstarFlipper Fantastic, thank you!
Ty for all your videos.
I'm just starting to list n sell this month/year. I'm going to try 3rd method. My question is .. In 2020 i bought a ton of Plushies (u can guess who's YT i was watching LOL). I never did start selling on eBay till this year. Can i use the Receipts from them as COG since i will be selling them this year, when i do 2021 taxes later? Or does all that plush have to start as zero this year? I didn't claim anything last yr since i didn't sell anything
Your cost of goods is actually cost of goods SOLD... so when the item sells, then you put its cost as an expense for whatever year it is... if you bought a plus in 1950.. and you sell it now... its cost of goods sold is apart of these taxes
@@RockstarFlipper i think im dead ...for taxes how I was doing it forever was deducting all my product items purchases (reciepts) at the end of year for that same year weather or not all those same exact items had sold or not(I have more other similar and like items already in inventory purchased in prior years too if that matters for any kind of averaging? ) I did this because all my past accountants would only just say and request without explanation was "I need a total of all your purchases for the year" and so thats what I thought I was giving them and when I did my own taxes on the computer my self later well there was the simple field to plug in the "purchases" for the year too....i never understood before until now that I could only give the purchase amounts on/of those same items that had only sold and not of all the items...now what do I do !?!!?...i did it that way for so long and feel so stupid and in deep trouble now I suppose...I completely misunderstood it omfg. ... and now no way to go back years to know or track which individual amount paid for what each items sold today...any suggestions that I could tell the auditor... I already poor and have a family to feed and think they could destroy me for this massive error...any ideas??
Yes!! I would be interested in anything that would help!!
Of course!! I've got some people working on it
HACKERDONE22 on IG is legit. 💯
Casey Paris, the one that was included in your training package is still ok to use correct?
Absolutely
Hey man I have a question about method 2. Let's say I had a year end of 100 dollars in inventory left over and the cost of the new years inventory went up or down, can I average in the previous years inventory with the new, as long as I keep track of what the value was at the beginning of the year?
Ive been doing line by line but recently I started doing average cost of good (like if I buy 5 items for $10 I add a cog of $2 per item) instead of individually adding each original price I paid the item for (it’s time consuming). Is this okay? Thanks
So if I use method number 2, how do I translate cost of goods to my sales tracking? Do I use the average cost of goods number to determine my profit on that sale?
Why would your inventory go to ZERO at the end of the year if you haven't sold everything at the end of the year? I thought you're only suppose to deduct the COGS in the year that it sells which may be several years after you purchased it and put it into inventory.
Normally yes. If you bought 10 shirts for $2 each. $20. And you sold say 6 of them. Your cost of goods sold is $12. And your remaining inventory is 4 shirts. ($8).
However there’s another way you can do it
Bought 10 shirts for $20. Sold 6. I assign the cost to 4 of those shirts of say $3 each $12. And the last 2 shirts were super cool and I gave them a cost of $4 each. Thus all 6 shirts ate of my cost of $20 and the remaining shirts have a $0 cost in them.
No matter how much I buy/sell I always assign the total amount I spent for the year into my cogs and everything left has a zero cost remaining. It’s allowed
Think of next year I never buy anything. I sell my 4 shirts for $100. I have 100% profit. There’s no more receipts or cost to assign to those 4
@@RockstarFlipperI know this is old but I’m also trying to understand the 3rd method. How would you know which inventory is from last year (the 4 shirts for example) if you’re keeping track of many items? Do you use labels or SKU #?
@@Deee-yz9rj nope. It doesn’t matter. You’ll do the same thing you do this year next year. Hopefully this helps:
2024- you buy 20 tshirts for $2 each. $40spent
You sell 10 of them for say $20 each. You assign a cost of $4 to them each
So all of your COST is “used up” the rest have 0 cost at the end of year
2025 starts. You buy 20 more shirts for $2 each. You now have 30 shirts in stock. Cost $40
Say you sell 10 this year only in 2025. You assign them $4 each. Again. Doesn’t matter which ones. You used up your $40. 20 shirts remaining
Rinse and repeat
@@RockstarFlipper appreciate the fast response! I understand a little better, thank you.
I don’t understand. Are you randomly assigning numbers as the cost of good sold? You say you are assigning a number that you were comfortable with. What does that mean? What do you want to assign at the actual cost of what you paid for it?
Not at all. There are 3 ways to do it.
#1- track every item and assign the exact price to each item. (this is doable if you're small with barely any items, but not for me with 10s of thousands of items)
#2- work on an average. you bought 100 items for $300. each item is a $3 cost of goods. Even if some items were $2 and some were $4. You would have to track this throughout the entire year or "lot by lot" as you purchase and sell. (again kind of clunky for me to do although I COULD)
#3- assign ALL of your cost of inventory to "cost of goods SOLD" and whatever items are left have a $0 cost.
For example you pay $100 for 20 shirt. You sell the first shirt for $60 and you assign it a COGS of $25. Then you sell 3 more shirts exactly the same assigning $25 each to them.
The first 4 shirts used up your $100 cost, and the remaining 6 shirts are basically $0 and 100% profit. If you ALWAYS do that, you will always be assigning your full cost you spent to COGS and the remaining inventory at $0
Hey casey i heard you say that you use the cash method in this video do you talk about this in any of your videos? I know we talked before but i am still so behind with getting caught up with my numbers but I think the way I am doing it is just so overly time consuming!
Yes, when I buy items it goes right in... and when I sell things it goes right in
As opposed to what??... thanks
Just started to follow your channel & it's very helpful! I'd be interested in the program you developed. Is it available now? I'm just starting out and would like to be organized from the beginning. Thanks!
My Reseller Genie is the company I partnered with who created the program.. heres a demo link and buy link.
Reseller Genie Tutorial link-
th-cam.com/video/yZylC0JLWiA/w-d-xo.html
Reseller Genie buy link:
www.myresellergenie.com/?aff=7
Hey there, really enjoy watching your videos. I recently started reselling items and selling my personal items. I'm making my best effort to make sure I'm tracking stuff properly with the expectation of getting a 1099-K. I have two questions that I'm curious how you would handle.
* I believe in your other videos you stated personal items are normally a loss, since they are selling less than the price bought. Would I track personal items with my inventory/account spreadsheet.. or would this be a separate area? I know I would want to account for those sales as not being profit.
I also have one other question if you have the time.
* I collect games and often buy bundles, I keep games I don't have and resell the others. I'm unsure how I properly account for this situation in my inventory. I feel the simple approach would be to just assign a price per item by dividing the total items by the bundle cost. Then subtracting the item cost of all the items i keep form the bundle cost. Though wasn't sure if this was acceptable since the value can range on games.
Appreciate your videos and you sharing your knowledge.
Personal items on a spreadsheet if possible. Usually isn't many items. if you have a bunch maybe include them in your software quickbooks or reseller genie etc.
yes assign a price to the games you keep and games you sell that is fair. So if you spent $100 and kept 3 games, maybe $5 or $10 each so $15 leaving $85 for the cost on the other games.. or something similar
@@RockstarFlipper I appreciate the input, thank you so much!
I subtract every month net profit from what I purchase every month.
I hope someone sees this!! Need help. So if I go and buy say $2000 of items to resell in my first month of business. I then resell $1000 of it for $3000 but my issue is I have a balance sheet which shows “purchases (under costs)” of $2000 and income of $3000 and gives me a plus $1000 but I’m confused where I input the cost of goods sold on that balance sheet of $1000 for the sales I made in my first month. So confused!
I built a Libre office base database for the business.
HACKERDONE22 on IG is legit. 💯
For inventory purposes (if using the average cost method) how would you handle the following? Say I purchase a lot of 20 vintage magazines. I pull out specific ads or photos to sell individually. Let’s say I average 10 individual items per issue. Do I track that as 20 items or 200 items? Obviously, it makes a massive difference in average cost of goods.
If you are "Creating new items" I would say 200.. Are you selling the original magazine after taking it apart? If not then you would have 200 items and no longer the 20 original ones. otherwise maybe 220 items?
@@RockstarFlipper That’s what I figured but wanted to be sure. I sell the magazines individually or in lots when it makes sense. For the others though I just pull out what I want to list. I just give what’s left of those original magazines to a co-worker for craft usage and she just recycles what’s left when she’s done.
@@billlucas2753 Genuinely curious what kinds of things you are selling as individual pages.
Thanks so much Casey for doing this again I greatly appreciate it! Stay safe and Be Careful hugs to Kate and God Bless you and Kate and your mom. ❤️🤗🙏💜🤩Hugs to Kate and mom. Kelly from OCALA, Fl 1st one (YOU ROCK)
in method 3 you say you assign cost of good sold and imput the number but never explain the formula how you get this number? this is the only part im not quite understanding.
If I buy 10 shirts for $2 each... $20 total.... then I sell 1 of the shirts for say $30... I can assign it a cost of goods sold of $10.... then I sell another shirt for $30... assign it a cost of goods sold of $10... now the total $20 I spent is assigned to those 2 shirts... and the remaining items have a $0 cogs.... Now I just do that for every sale but I don't really have to sit and track it all year long.... I just know that all money is assigned and all remaining is $0 moving forward
Do you have a software program designed yet?
My Reseller Genie... I partnered with them and they made it. heres the link and code-
www.myresellergenie.com/?ref=caseyparris2
code is - ROCKSTARFLIPPER15 (all capital letters)
Great video. How do you track for items you already have in house? So I don't know how much i paid for it or it was given as a gift. Now I want to sell it. Does this go on another spreadsheet?
So is the third one just totalling your receipts for the year? And then subtracting total sales (minus fees and shipping)? Or did I miss something? I'm kind of panicking because I haven't been keeping track of anything, and I started selling in November 2019.
Yes, Total up your entire amount spent and thats cost of goods sold... anything left is $0 moving forward
@@RockstarFlipper Hey, Casey thanks so much for the precise yet thorough explanation of each method. Quick question... I chose method 3 when I started reselling/filed my taxes last year. However I'm not exactly sure about the following scenario... if an item is purchased in the prior year (Nov 2019), sold in the next year (Feb 2020). When using method 3 (zero out at year's end), would you zero out that item's COGS when recording the sale on your 2020 tracking spreadsheet? FYI: last year was my first year reselling professionally so go easy, jk 😁
I use Sage accounts it does all this.
I was following you on method #3 until you started talking about "assigning it a cost." How do you know what cost to assign it? That part didn't make any sense to me. Also, what if you DON'T sell all that stuff at the end of the year (and we won't), I don't understand that part. I guess it's a matter of absorbing all your cost in the things that you've sold and so it doesn't matter that there are unsold items? What happens if it doesn't equal zero at the end? I'm just kind've lost on that last one. I'll go back and listen again, you sure did go over it awfully fast!
BTW, I've been using the item by item method and was like, there HAS to be a better way! I'll NEVER get all this stuff entered in!
Essentially it will always equal zero. If you buy 10 shirts for say $3 each ($30 total). then you sell a shirt for say $40 a week later..... and you assign it a $10 cost of goods, you now have 9 shirts left and $20 cost of inventory. then you sell another one, same price.... now you have 8 shirts left and $10 left in inventory.. and finally a week later you sell a 3rd shirt and assign it $10 you now have 3 shirts sold for $30 cogs, and 7 shirts remaining which have a $0 cost.. Now when I break it down you see how it works, but basically you don't need to break it down every time.. just at the end of the year you know whatever you spent (the $30) WILL end up as cost of goods sold and whatever inventory you have left is $0. So just total up what you spent... cost of goods sold... all remaining inventory is $0
@@RockstarFlipper OK, thanks!
@@RockstarFlipper can I just assign the whole $30 cost on the first 40.00 shirt that sold??
Doesn't the IRS expect to see some kind of amount of inventory remainder amount with tons of physical stuff still present??...im sorry...I ask because I think im in big trouble with looming audit targeting me and no way to explain myself and methods and no representation...im going in solo and broke and hopeless ..
I just subscribed because you were so helpful. I know nothing of this junk My big issue is I have a garage full and never kept track. Not sure what to do. Been selling for over 5 years. sigh....
Yes a program, app, whatever, to help me keep track.
Thanks Nancy working on it with folks now
Definitely interested just using spread sheets.
Im working with someone currently
RockstarFlipper Awesome 👏 tyvm!
So cost of goods does not include shipping? What happens to shipping is that just an expense?
Shipping is its own expense... $20 sold item is $20.. either $20 free shipping or $15+$5 shipping.. its a TOTAL $20 transaction you were paid for... $20 sale. Then you have an ebay fee expense, PayPal fee expense, and cost of shipping label expense
@@RockstarFlipper
Okay so if i buy goods to sell on ebay and $20 is what it cost to ship it to me. Does that get added to the COG or no.
So here's my situation. I have over 500 items I got for free. How do I do my inventory with zero cost of goods?
I use FIFO method and average cost. I write on each receipt for inventory the number of items purchased. I alway use a credit card which makes it easy since transactions are downloaded. In Excel I simply key the number of items for each receipt. I have a spreadsheet which list every purchase transaction amounts, date, store name, and the number of items. At end of month if I sold 200 items I run a total cost starting with first item counting down 200. This is my total cost for the items sold. Ending inventory will be the total cost of items not marked as sold. You cannot use inventory purchases to reduce your net income. People do this I know, but you probably will never get caught unless you have some wild deductions that might be flagged. I do not do taxes for others but have worked in accounting for 38 years. Actually hoping to retire this year and make extra cash selling on eBay. I probably go over board on my record keeping but it is hard do not do it another way. I feel for those that keep up with nothing until tax time.
I do something similar to what All the Things does. I get many duplicate items and do FIFO. If I have a purchase on 1/5/20 and paid $1 for that item and then purchase the same item on 2/14/20 for .75 and then a 3rd purchase on 3/1/20 and paid .80. The first time I sell one of those items I have COGS of $1. End of year I still have the other two left so my ending inventory is $1.55.
I never worked for an accounting firm but I do have my CPA certificate. (Whole long story as to why I didn't use it). But just like you it is difficult for my to do this any other way. I am very detailed in my records and would drive others nuts over it. But it is the only way I am comfortable with.
hey, im interested in learning this method. can you please email me @ raceliftplay@gmail.com thanks
@@magaAsh hey i was wondering if you could help me understand this method a little better. can you please email me @ raceliftplay@gmail.com thanks
@@Percydoesstuff I have a spreadsheet to keep track of purchase and sales. That way ending inventory is what's left on the ss at end of year. All relies on tracking both sales and purchases accurately.
Have you found one that works or or did you your people Create one I would buy if you have
I'd love a comprehensive accounting program
I was relieved when you showed method #3, because that's what I've been doing! Is there a name for that method? Thank you for this great info. Really helpful
I was also relieved as that is the method I use!
@@katiem.hughes7516 Do you know the name of the method by any chance? Thanks in advance
if you purchase wholesale online and pay for shipping, does the shipping go into the COGS? Or is that shipping not deductable?
Its apart of your cost of goods
@@RockstarFlipper Thank you! I have my own online boutique and what about if buy clothing labels to sow on to the clothing I’m selling, does that also go into COGS?
What is option 3 called?
$0 Inventory
I was wondering on the method 3 do you put the actual cost of goods and actual cost sold?
If I paid 100 for an item and sold it for 200 do I put cost 100 and sold 200.00?
Yeah you paid $100. so its cost of goods sold $100. and total gross sold $200. $100 profit before fees and shipping/expenses etc
I have heard go daddy and quick were actually good.
Godaddy shut down its accounting earlier this year
@@RockstarFlipper good to know
HI If i purchased items in Dec 2023 and I want to start selling in 2024 would my numbers be on my tax return?
Depends on how you account for your inventory. seek out a cpa
So you suggest or like the third one the best, correct? What do you call the third one?
JUST Zeroing out inventory.. I like the last method, but most people don't or cant understand it
I'm confused, I use a version of your method #1. Why are you not tracking the listing price? Like the price I will sell it for?
The "listing" price doesn't matter.. I can list something for any price, doesn't mean it will actually sell for that price.. no point is tracking the list price.. I ONLY need to track the sale price when it sells.
@@RockstarFlipper ok so do you think it's important to keep track of listing prices at all?
Nope.. never have in 15 years almost.. The listed price means NOTHING. I listed an item for $50 2 years ago.... finally sold for $25..... what good did keeping track of the $50 do me?
Ok got it. Thank you for all your help. I'm just starting out and technically at this point it's just a "hobby", but I've been doing really well so I need to learn how to properly do this for next year. I'm assuming I'll have to start a new inventory for next year? I guess my question is do I start a new spreadsheet for inventory every year of whatever I have remaining in stock and of course anything new I add?
One more question lol, I make alot of handmade items. You put a column for "store" but I buy materials from many places. What would I put in that column and how do I determine my cost? Just figure the cost of materials for that item? For example I make crystal candles. So I buy wax and fragrance from one place, crystals from another, vessels from another.
do your prices include taxes?
Yes, I’d be interested.
Thanks Valerie
I'd be interested!
Got it working as we speak
For average good sold ,do you add different items or same item?
You can do either
Datamiine does all the tracking of cost of good, profit and taxes. I highly recommend it.
I have experience with it, but I don't believe they do cost of goods sold vs inventory in stock cost I could be wrong
RockstarFlipper they don’t, but they do a great job at breaking your sales down, sold price -cog-eBay fees-PayPal fees =profit. I love that part and they track sales per state and taxes, and they have a great accounting section. I personally like it.
I feel like taking a on-line class from you “ RESELLERS 101”! Another helpful video. Thank you 😊
I am happy to help or put anything together for you!!
RockstarFlipper Thanks Casey!
Total agree learn so much from your content!
me too.
Hi, so i was wondering on your zero inventory method do you put your total sales on line 4 cost of goods schedule c, thanks your awesome
Im not sure the line but yes. my cost of goods sold is the total
@@RockstarFlipper Hi again, what i meant to ask is does what i spent for the year on products go in to my cost of goods total, Thanks again
Good video!
Thanks sir!
What if you get your inventory for free?
then its $0 cost....
@@RockstarFlipper sooooo does the zero out method ding you with taxes?
Yes please!
:-)
You always have best timing for info-just past my 1,000 items getting nervous about maybe needing some insurance- (not sure if you saw my last message) was not trying to promote myself EBAY did come n from behind and put my store on a free shipping sale "its a glitch" they said happening to more than me -well i have no back up! even delete photos as i list now ive got a full amount of ABCs totes and concerned with no back up record
A app would be awesome.
I thought it might be. working on it
Thanks for the info Rockstarflipper. 🦸♂️⭐🎸
Well you I dk anything about this cause I had no idea about it. I was just a guy doing it for a hobby and to get crap out of my house and storage. I know It would have to be something easy to use and understand cause I am lost lol. Going to take to the gay next week. I know nothing about putting a sku number on ebay I just figured out how to do the location thing.
Is the third example an actual commonly used tax strategy? It seems like your basically doing cash based inventory accounting but your fudging the numbers in a spreadsheet to make a record pretending those sales COGS matched the purchases.
And if it is a allowed tax loophole why would you need to plug a bunch of estimated by item COGS into a spreadsheet if all you have to do is claim zero starting and ending inventory. The numbers are not going to help with financial analysis internally of your business as they would not match how your actually preforming. And if the IRS audited wouldn’t they be able to tell that the number of items sold does not match the number of items purchased.
Let’s say you purchased 1500 items and sold 1000, but claimed COGS on the 1500 so the numbers match at the end of the year. What you showed means you would get the tax benefit of the 1500 items in year one just as if you did cash based accounting.
So how is that not just doing cash based inventory accounting? And I get that it is good for cash flow and business scaling to pay less taxes on the front end. But what I don’t get is if this is a legit tax strategy why you would keep an elaborate spreadsheet where you assign estimated values to things to make those amounts equal out.
Is this just a simple tax loop hole that lets you put your beginning and ending inventory as zero in order to use your actual purchase for COGS? If so then why plug a bunch of estimated sales numbers into a spreadsheet?