Inventory Accounting Services | COGS, Landed Cost & Stock Tracking

Inventory accounting services for e-commerce brands, importers, wholesalers and manufacturers. Inventory is where cash goes to hide. We keep your inventory asset account, your cost of goods sold and your warehouse count in agreement every single month — landed costs allocated, marketplace fees stripped out of every deposit, and the inventory sub-ledger reconciled to your general ledger in the software you already use.

Inventory Accounting vs. Inventory Management: Not the Same Job

Inventory management is an operations discipline — counting stock, setting reorder points, running the warehouse floor. Inventory accounting is a finance discipline — making sure the dollar value of that stock, and the cost of the units you actually sold, land correctly on your balance sheet and income statement.

Most product businesses buy software for the first job and leave the second to guesswork. That is why four numbers that should always agree almost never do:

1. What your purchase orders and vendor bills say you bought.
2. What your inventory asset account in the general ledger says you are holding.
3. What your cost of goods sold says you consumed.
4. What is physically on the shelf when someone walks out and counts it.

Our inventory accounting services exist to keep those four in agreement, month after month, inside the software you already use. We do not sell you a system and we do not count your stock — we do the bookkeeping that turns your counts and your purchase records into financial statements you can actually price from.

What Breaks When Inventory Bookkeeping Is Left to Guesswork

What goes wrong	What it costs you
Freight, duty and broker fees expensed instead of capitalised into inventory	Gross margin looks 10 to 15 points better than it is, so products that lose money look like winners
Marketplace deposits booked as revenue	Revenue and expenses both understated; advertising and fulfilment costs disappear entirely
COGS posted as a plug at year end	Eleven months of unusable P&Ls, and no way to see margin by product or channel
Dead, damaged or shrunk stock never written off	You pay income tax on inventory you will never sell
Inventory sub-ledger never reconciled to the GL	A balance-sheet gap that grows quietly until a lender or buyer finds it
Stock sitting in third-party warehouses nobody is tracking	Unregistered sales tax nexus in states you did not know you were in

Costing Methods: FIFO, LIFO and Weighted Average, With the Numbers

When your unit cost changes between purchase orders — and with freight and tariffs moving the way they have, it always does — the method you use to value inventory changes both your reported profit and your tax bill. Here is the same inventory under all three methods.

The facts. You buy the same SKU three times: 100 units at $10 in January, 100 units at $12 in March, 100 units at $15 in June. That is 300 units for $3,700. By the end of the period you have sold 150 of them.

Method	COGS on 150 units	Ending inventory (150 units)	What it does to reported profit
FIFO (first in, first out)	$1,600	$2,100	Highest profit in a rising-cost period, and the highest balance-sheet value
LIFO (last in, first out)	$2,100	$1,600	Lowest profit in a rising-cost period; defers tax, understates the balance sheet
Weighted average ($12.33/unit)	$1,850	$1,850	Smooths the swing; simplest to defend in a review

Same purchases, same sales, a $500 spread in COGS — on a single SKU in a single period. Multiply that across a catalogue and the choice stops being academic.

Two practical notes. LIFO is a US tax election that has to be made on Form 970 and carries a conformity requirement, and it is not permitted under IFRS — so it is rarely the right answer for a business that may raise money or sell internationally. Weighted average is what most e-commerce and light manufacturing clients end up on, because it survives contact with a real warehouse.

We are not CPAs and we do not give tax advice. The costing method is a decision for you and your tax preparer; our job is to maintain the inventory records that support whichever method you choose, consistently, so the election holds up.

Landed Cost: The Number Most Books Get Wrong

Your product cost is not the number on the manufacturer invoice. Until a unit is sitting in your warehouse ready to sell, every dollar spent getting it there belongs in inventory — not in an expense account. Here is a single container of one SKU.

Cost component	Amount
Supplier invoice — 1,000 units at $8.00	$8,000
Ocean freight	$1,450
Customs duty at 7.5%	$600
Customs broker fee	$175
Drayage and inbound delivery	$390
Cargo insurance	$85
Total landed cost	$10,700 — or $10.70 per unit

If that SKU retails at $19.99, your true gross margin is 46.5%. Book the freight, duty and broker fees to expense accounts instead — which is what happens by default in almost every bank-feed-only setup — and the same SKU reports a 60.0% margin. That is a 13.5-point overstatement, and it is the single most common reason a growing product business feels profitable on paper and broke in the bank account.

We allocate landed costs to the receiving batch on a consistent basis — per unit, by weight, or by value depending on what your product mix justifies — and we document which basis we used so the next person to open your books can follow it.

Multi-Channel and Marketplace Reconciliation

If you sell on a marketplace, the money that lands in your bank account is not your revenue. It is your revenue minus a list of things the platform already took. Recording that deposit as a sale understates your revenue and your costs at the same time, which is why marketplace sellers so often cannot explain their own margins.

We post at the settlement level, so every component is visible as its own line:

Channel	What has to be separated out of the deposit
Amazon (FBA and FBM)	Referral fees, FBA fulfilment and storage fees, long-term storage, returns and refunds, FBA reimbursements, advertising, Amazon Lending repayments, and the sales tax Amazon collected and remitted for you
Shopify	Shopify Payments processing fees, chargebacks, gift card liability, discounts, shipping collected versus shipping paid, Shop Pay Installments
Walmart, Etsy, eBay, Faire	Commission, payment processing, promoted listings, label purchases, platform-remitted tax
POS and retail	Card processing fees, tips, cash variances, house accounts, inter-location transfers

At the same time we relieve inventory for the exact units that shipped, so COGS moves when the goods move rather than when the cash arrives. For a full view of how we handle each storefront, see our e-commerce bookkeeping, Shopify bookkeeping and WooCommerce bookkeeping services.

Where Your Inventory Sits Can Create a Sales Tax Obligation

Holding stock in a state — in your own warehouse, a 3PL, or an Amazon fulfilment centre you did not choose — can establish physical presence in that state, independently of any economic nexus threshold. Sellers routinely discover this years late, after the inventory has already been sitting there.

Because we are already tracking where every unit is, we can tell you which states hold your stock and flag it when that list changes. Registration and filing then run through our sales tax filing services. We are not attorneys or CPAs and this is not tax advice — but we will make sure you are not finding out from a notice.

Cash Basis, Accrual Basis, and the Small-Business Inventory Exception

Businesses that meet the gross receipts test in section 448(c) can take the section 471(c) exception and treat inventory as non-incidental materials and supplies rather than applying the full inventory rules. The threshold is inflation-adjusted each year:

Tax year beginning in	Three-year average gross receipts limit
2024	$30 million
2025	$31 million
2026	$32 million

Here is the part that gets missed: being allowed to simplify inventory on your tax return is not a reason to run your management books that way. If inventory never hits your balance sheet, you have no margin by product, no stock valuation for a lender, and no way to tell an overstock problem from a sales problem. We keep inventory properly on the management books and let your return take whatever position you and your tax preparer decide on.

Shrinkage, Obsolescence and the Entries Nobody Posts

Stock goes missing, gets damaged, and goes out of fashion. These are normal, and each one has an entry attached to it that most books simply never receive:

• Cycle-count variances. You count, the system is wrong, and the difference has to be posted — debit shrinkage, credit inventory — not quietly absorbed into next period.
• Obsolete and slow-moving stock. Inventory is carried at the lower of cost or net realisable value. Stock you can only move at a discount should be written down to what it will actually fetch.
• Damaged and returned goods. Sellable returns go back into inventory at cost; unsellable ones come out of it.
• Samples, influencer sends and internal use. Units that leave without a sale still have to leave inventory — usually to marketing expense, not COGS.

Posted monthly, these are small and uncontroversial. Left for the year-end scramble, they turn into one large unexplained adjustment that makes every month of the year wrong.

Our Month-End Inventory Close

Every client on inventory work runs through the same close, and you get the reconciliation — not just the reports:

1. Match purchases. Purchase order to receipt to vendor bill, three-way, with quantity and price variances flagged rather than forced.
2. Allocate landed costs. Freight, duty, broker and insurance assigned to the receiving batch on the agreed basis.
3. Import and post settlements. Every channel at settlement level, fees and refunds broken out.
4. Relieve inventory and post COGS on your costing method, for the units that actually shipped.
5. Post adjustments. Cycle-count variances, write-downs, damage, samples.
6. Reconcile the sub-ledger to the general ledger. The inventory asset account ties to the inventory system, and any difference is explained in writing — not plugged.
7. Report. Margin by SKU and by channel, inventory valuation, then your P&L and balance sheet.

If your books are behind before any of this can start, that is a catch-up bookkeeping job first — inventory cannot be reconstructed out of order.

Software: We Work Where You Already Work

You should not have to change your warehouse operations to accommodate a bookkeeper. Our team works inside your stack and keeps the data flowing into your core ledger:

Layer	What we work in
Core ledgers	QuickBooks Online and Desktop/Enterprise, Xero, Sage, NetSuite
Inventory and ERP add-ons	Cin7 Core (formerly DEAR Systems), Cin7 Omni, Fishbowl, Katana, Unleashed, SOS Inventory, Finale Inventory, Zoho Inventory
Channel connectors	A2X, Shopify, Amazon Seller Central, WooCommerce, BigCommerce, Walmart Marketplace, Etsy, Faire
Point of sale	Square, Clover, Lightspeed, Toast

Who This Is Built For

• DTC and marketplace brands running Shopify plus Amazon, where settlement reconciliation is the whole job.
• Importers and CPG brands whose real cost is decided by freight and tariffs, not by the supplier invoice.
• Light manufacturers needing raw materials, work in progress and finished goods kept apart — see manufacturing bookkeeping.
• Wholesale and distribution businesses carrying deep SKU counts — see wholesale bookkeeping.
• Multi-location retailers reconciling POS to stock on hand — see retail bookkeeping.

What Inventory Bookkeeping Costs

Inventory work is hourly, not revenue-indexed — you pay for the time your books actually take, so a seasonal brand is not billed in January for a December it did not have. Inventory clients normally sit on our Enterprise plan at $300/month for 20 hours, with additional hours at $15/hour, month to month, no contract. See our full pricing plans for the Standard and CPA-firm tiers.

Every engagement carries a 100% money-back guarantee on your 1st retainer, refundable on the unused balance. If the first month does not earn its keep, you are not locked in.

CPA and accounting firms outsourcing inventory clients on a white-label basis should see bookkeeping for CPA firms.

Inventory Accounting FAQ

What is inventory accounting?

Inventory accounting is the process of valuing the stock you hold and recording the cost of the units you sell, so that your balance sheet shows what your inventory is worth and your income statement shows the true cost of your sales. It covers costing method, landed cost allocation, write-downs, and the reconciliation between your inventory system and your general ledger.

What is the difference between inventory management and inventory accounting?

Inventory management is about units — where they are, how many, when to reorder. Inventory accounting is about dollars — what those units cost, what the ones you sold cost you, and what the remainder is worth. Software handles the first well. The second needs a bookkeeper.

Do you perform physical inventory counts?

No. We are a bookkeeping firm, not a stock-counting service. You or your warehouse team count; we post the adjusting entries your count produces and reconcile the result to your ledger.

Can a bookkeeper handle inventory, or do I need a CPA?

The monthly work — landed costs, settlements, COGS, reconciliations, write-down entries — is bookkeeping, and it is what we do. Choosing a costing method, making a LIFO election, or filing an accounting-method change is tax work for your CPA or tax preparer. We prepare tax returns, but we are not CPAs and we do not provide audit, attest or review services.

Do I have to use accrual accounting if I carry inventory?

Not necessarily — smaller businesses meeting the section 448(c) gross receipts test may be able to simplify their treatment of inventory on their return. But accrual-basis inventory on your management books is what makes margin visible, so we generally maintain it either way.

How do you handle Amazon FBA inventory?

We post Amazon settlements at the line-item level, break out referral, fulfilment, storage and advertising fees, track reimbursements and returns separately, and relieve inventory for units actually shipped. We also keep a record of which fulfilment centres hold your stock, since that affects where you may have a filing obligation.

How quickly can you take over inventory books that are a mess?

Most inventory cleanups start with a diagnostic month: we reconcile one closed period end to end and show you the gap between your ledger and your stock before quoting the full cleanup. Catch-up work is quoted per month behind.

Learn More About Inventory Accounting

Want to understand the mechanics before you outsource? Read our in-depth guides for product-based businesses:

• 9 Best Inventory Management Practices for Small Businesses
• Inventory Costing Methods Explained: FIFO, LIFO, and Average Cost