How to Record Inventory Purchases & Raw Materials in your Bookkeeping - COGS Small Business Owners

A common question I'm asked is how to record inventory in your bookkeeping records. For small business owners, I opt for a simple method, I categorize all raw materials and items purchased for resale directly to Cost of Goods Sold. I don't track inventory on hand in my bookkeeping records. Let me explain why in this video! This method may not be right for everyone, so keep that in mind!

This is for informational purposes only. Consult your own accountant or tax preparer for advice specific to your situation.

I use QuickBooks Online for bookkeeping. This is my referral link: https://www.smallbusinesssarah.com/qu...

Get your product inventory tracker: https://www.etsy.com/listing/92124697...

I use Sync with Etsy for Etsy bookkeeping:    • QuickBooks Online Integration with Et...  

Or my Etsy method for more than one shop:    • 2020 Best Way to Record your Etsy Sal...  

This is my Amazon bookkeeping method:    • How to do your Amazon Monthly Bookkee...  

This is my Shopify bookkeeping method:    • How to Record your Shopify Store Sale...  

0:00 Recording inventory and Cost of Goods Sold in QuickBooks
0:30 This is for small business owners only!
1:50 I record raw materials or products for resale directly to Cost of Goods Sold - cash basis
2:15 Categorize in your bank feed
3:00 At the end of the year you'll do an inventory count
3:33 The alternative is to categorize raw materials and products for resale directly to Inventory - accrual basis
5:15 Inventory management - how much on hand
6:30 The cons of not tracking inventory in your bookkeeping
9:10 Everybody has to do an inventory count at year-end
10:00 My raw materials tracking printable
11:00 Don't assume you have to have a running value of inventory in your bookkeeping!