What your accountant needs from a reseller at tax time
What your accountant will likely ask a reseller for, and how the numbers fit together. General information, not tax advice.
Unsold items aren’t a cost yet
What trips resellers up is cost, not sales. In most places you don’t subtract everything you bought this year, only the cost of the items you sold. Whatever’s still on the shelf at year end counts next year.
That’s why an accountant asks what inventory you had at the start and end of the year. Without both, they can’t work out what your sold items cost. (If this is your first year reselling, inventory at the start of the year is usually $0.)
Cost of goods sold, worked through
- Inventory at the start of the year
- $1,200
- + Everything you bought during the year, including the shipping and tax you paid to get it
- $4,800
- − Inventory still unsold at year end
- $1,500
- = Cost of the items you actually sold
- $4,500
The $1,500 still in bins counts next year, when it sells.
Cash or accrual?
These are the two accounting methods. With cash, money counts when it moves: a sale when you’re paid, a cost when you pay it. With accrual, it counts when the sale happens or the bill arrives. Most small resellers use cash, and since marketplaces pay out within days, the two rarely differ.
Cash doesn’t change the inventory rule. Fees, supplies and mileage count the year you pay them; items bought to resell generally count the year they sell. So “money in minus money out” from your bank statements is a fair rough check if your inventory stays about the same size, but it drifts in a year you’re growing, and in the year you stop.
Garage sales and thrift runs are often paid in cash, and a bank statement shows only the withdrawal. A dated note or photo of each haul fills that gap.
An example: Schedule C in the US
Many US resellers who sell on their own report the business on Schedule C, part of Form 1040. Here’s roughly where each number goes. Other countries use different forms for the same figures.
| Schedule C | What goes there |
|---|---|
| Line 1, gross receipts | Total sales for the year |
| Line 2, returns and allowances | Refunds you gave buyers |
| Line 4, cost of goods sold | Carried over from Part III, line 42 |
| Part III, line 35 | Inventory at the start of the year |
| Part III, line 36 | Purchases during the year, less anything you kept for yourself. Items marked Personal in ItemLogue stay out of the pack’s purchases. |
| Part III, line 41 | Inventory at the end of the year |
| Part III, line 42 | Cost of goods sold: lines 35 to 39 added up, minus line 41 |
| Part II, expenses | Platform fees, postage and shipping labels, boxes and supplies, mileage, booth fees and other business costs, by category |
| Line 31, net profit | What’s left after all of the above |
A Form 1099-K from a marketplace shows your gross sales there. A per-platform summary lets your accountant match it to your records.
What’s in ItemLogue’s accountant pack
On Pro, one tap builds a ZIP of the year’s records as CSV files any spreadsheet opens. Amounts are in your home currency, at the rate you entered on each purchase and sale (any missing a rate are left blank).
- Inventory at the start of the year. Every unsold item on January 1, at what it cost you
- Inventory at the end of the year. Every unsold item on December 31, at cost
- Purchases. Everything bought that year, with its share of shipping, fees and tax
- Sales. Every sale: price, platform fee, shipping, net, cost and profit
- Returns. Items returned and what came back
- Expenses. Business costs by category, with source and date
- Platform summary. Gross sales, fees, shipping and net for each platform
- Profit and loss summary. The year’s totals on one sheet
- A short README. What each file is, in plain English, for whoever opens the pack
Sold something before entering what it cost? The sale counts as revenue but stays out of profit, so it never looks like pure margin. See also what records resellers should keep.
Not tax advice. Tax rules, forms and accounting methods differ by country, state and province, and they change. Check the rules where you live and ask an accountant or CPA how they apply to you before you choose a method or file.
Tax time, without the shoebox.
ItemLogue keeps every purchase, sale, expense and receipt as you go, so year end is a download, not a weekend.
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