Feedback on resale business bookkeeping

[brianr64]

Just some quick background and then the question.  I started  a P-T resale business last year.  I did about $10K on the side.  This year I am tracking to more than double that.  I would like to start simplifying some processes which take me alot of time.

For instance, the bulk of my inventory is thrift store merch.  I log every single item line by line in Excel for COGS.  When it sells, I match the revenue and fees to that line item to get profit per item which can then be extrapolated into my monthly and y/e profit.  I am a Finance guy and like spreadsheets, but can see how continuing down this path will be too time consuming.

I have seen some you tube videos where people tracks cogs and sales idependent of each other.  For instance, they purchase 10 items at Goodwill on Dec 1.  Rather than logging 10 line items in Excel, they just make one entry for the total cost.  At the end of the month, all these entries in aggregate become COGS for the month.  Like wise for sales.  They never go to the granularity of matching item sales and costs to get to an item by item profit.  They just calculate in aggregate each month.

I like the idea of doing this, but under this method, all items purchased would be COGS when a large portion of it would realistically be inventory and not yet sold.  Just wondering how some of you folks who do not use software programs  manage your profitability tracking.

Also, I currently print and tape all shipping labels.  Not a problem when you do just 1 or 2 per day, but lately it has been 10 to 15.  I have a dymo and am inclined to start using that.  I have always printed the label with receipt, which I use to facilitate my line by line spreadsheet tracking.  If I stop calculating profit on each item, I think I will no longer need the label receipts and can then swith to the Dymo which will save me time as well.  Does anyone else use the label receipts for anything productive?

[sam9876]

" I log every single item line by line in Excel for COGS.  When it sells, I match the revenue and fees to that line item to get profit per item which can then be extrapolated into my monthly and y/e profit. "

That is a complete waste of time.

"I have seen some you tube videos where people tracks cogs and sales idependent of each other.  For instance, they purchase 10 items at Goodwill on Dec 1.  Rather than logging 10 line items in Excel, they just make one entry for the total cost."

That is a complete waste of time.

[the_fancy_fox]

I too run a business so I treat it as such.

I also use excel but I do not log every purchase, just the receipt date, a code for type of merchandise and amount. I keep all receipts so if for some reason I need to see one I have them. 

i also log all sales, transaction number, short description, cost of item , shipping costs, sales tax paid etc.. I don't log the customer as I don't find it necessary.

The cost of the item goes on the item when I get it home either on the bag I put it in, a slip of paper or some other removable way. I also use this if a customer told me a minimum amount they want for the item.

when I print the shipping label I flip it around so the packing slip prints on the bottom half which I keep for my records so one side has the shipping info from underneath the actual label and the other side has a copy of the packing slip. So all info fits on a half sheet.

I also sell items for other people and those are also logged but each excel sheet I use is for each person, business  or estate.

i don't find it a waste of time. Much better than sitting there surrounded by pieces of paper trying to figure it all out at tax time. 

i still tape on labels as well. I don't find it that time consuming. Since my item can vary so much, packing takes me the longest.

[sam9876]

Sounds like you enjoy wasting time too.

You only need to report the totals to the IRS.

[the_fancy_fox]

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@sam9876 wrote:

Sounds like you enjoy wasting time too.

You only need to report the totals to the IRS.

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Considering I can log the transaction in less time than it takes to print the label, not a waste of time to me.  If you like to stare at the monitor while your label prints, fine by me.

i am pretty sure most real businesses don't use the "Sam" system of bookkeeping.

[doozer0712]

I'm an accountant.  I've been doing eBay on the side for three years now, and even though I get bigger every year I still track COGS on each individual item.  There's something nice about seeing how much of a profit is associated with certain things - it helps you better plan when you purchase inventory.  That being said, I also keep track of my "lot" items in aggregate.  In my spreadsheet I have my inventory tab, where I keep track of each transaction where I purchased something to resale (be it goodwill, lots off ebay, individual pieces, etc.).  I then have a tab where I categorize the individual items that make up each "lot" line by line.  These two tabs are linked to each other as well as my main items sold tab.  People say it's too time consuming, but it really isn't if you are familiar with Excel formulas.

[dbmm-media]

your overthinking this 

when you file your taxes, all irs wants is the totals.

[baantiques]

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@dbmm-media wrote:

your overthinking this 

when you file your taxes, all irs wants is the totals.

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Not completely.  Knowing how much profit you made on each item is good for deciding if you're going to buy more or not.

I don't log every item.  That would suck up all my available time - I buy parts in lots quite often, and I don't even know how many parts sometimes let alone how much I paid for each single one.  Each purchase gets a lot number assigned to it and I track each item sold against the total paid for the lot.  That way I can tell if the lot itself was a profitable buy. I do this for two reasons - I need to be able to calculate a cost of goods sold and I need to know if I made a good buy on each lot, so I can adjust my offers in the future.

[sam9876]

"Knowing how much profit you made on each item is good for deciding if you're going to buy more or not."

You should know how much money you are going to make on a particular item before you buy it.

[baantiques]

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@sam9876 wrote:

"Knowing how much profit you made on each item is good for deciding if you're going to buy more or not."

You should know how much money you are going to make on a particular item before you buy it.

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You can have a pretty good idea, but you never know what you are going to sell it for until you sell it.  Anything else is just a guess.

[sam9876]

I only use fixed price listings.

[the_fancy_fox]

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@dbmm-media wrote:

your overthinking this 

when you file your taxes, all irs wants is the totals.

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Your underthinking it.

There is a lot more to business records than just figureing out what you owe the IRS.

[grapplingmonkey]

the more info you have the better choices you can make to grow your buisness.  Its nice to know what brings you the most profit, accounting for irs can be done quicker but for a smart buissenss the details can make a bid diffrence

[rfmtm]

Since you have an ever changing inventory of different individual items, you'll be bogged down soon enough.  No reason you need individual item accounting, just lot totals and receipts to back them up for the IRS. 

End of month or year, easiest to just pull in your PayPal history to Excel, do some sorting and a little rearranging, then subtotal by category.  PayPal will also total all income in a separate report and/or a 1099.  Best to use this number, as it is what is supplied to the IRS, and can be different from the history totals , as this is total PayPal income processed, no deductions, not even for customer refunds.

You really only have to worry about inventory left over at the end of the year.  As long as your accounting method is consistent and reasonably reflects the total value, the IRS will be fine with it. 

The Dymo will save you a lot of work.  Forget printing the receipt half.  If you have one of the larger 4XL Dymo's using 4"6" labels you can even print the packing slip on it. 

[anthemshop247]

I can understand why you are meticulous with your present bookkeeping practice because our education in accounting and finance requires attention to detail. However, this is my own business and I do not have to report to anybody and nobody else uses my reports for decision-making. These things are what I pay attention to: balance sheet and income statement are correct, I file the correct tax return with IRS, make profit in every transaction at the time of sourcing, comply with policies, maintain my level and good standing.  I am a part time seller, full time mom and wife so I have to balance things. 

I have business accounts with PayPal and eBay. The reports generated by PayPal for business accounts are more extensive than individual account. I lift my shipping costs from PayPal reports. You can also print annual PayPal report of your business.

I use the Sales Reports Plus by eBay. I simply lift totals per month from the reports. I do not start my financial statements until January, but I can finish the f/s and tax returns in a few weeks. I just make sure I keep all pertinent receipts, mileage and bills. I use Google Sheets for my spreadsheets because it is free. All my expense statements, balance sheet and income statement are on spreadsheets by month and year totals. 

As for Cost of Goods Sold, I also get totals of my purchases. My inventory amounts are probably easier to keep track of because I mainly sell books.

As regards how profitable each item is, everything in my inventory will return profits. I do not buy anything that will not give me a certain net profit. I just know how much selling fees I will incur for every item I source. Hope this helps.