What is "balance-level" inventory tracking?

What we call "balance-level" inventory tracking (and others call "periodic") is designed to be the simplest way to get your annual taxes done properly. For any sellers that have had to fill out Part III of a Schedule C, this option will look familiar.

Schedule C: Cost of Goods Sold

Once per year, you need to add up the cost of your inventory. The reason you only need to do this once per year is that last year's "Inventory at end of year" should equal this year's "Inventory at beginning of year."

In addition, as you purchase additional goods or materials that you intend to sell, you will want to categorize those purchases as "Inventory"

Using these two simple steps, it becomes reasonably easy to track inventory in a way that allows you to calculate Cost of Goods Sold using a very simple formula:

Cost of Goods Sold = Beginning balance + Purchases - Ending balance

In fact, Seller Ledger's new Inventory feature highlights this:

See your inventory and cost of goods totals at a glance

As long as you categorize inventory purchases throughout the year as "Inventory", then you can, at the end of the year, count up the cost of your unsold inventory and use the formula above to calculate cost of goods sold. Then, click the button to add a single, large cost of goods sold entry before the final day of the year. That's all there is to it.

For more help in using this option, please consider checking out:

Did this answer your question? Thanks for the feedback There was a problem submitting your feedback. Please try again later.