Still Confused About COGS

[TiffanyT]

Hi y’all. OK, still confused here. I listened to the podcast and what I heard is this: COGS will be the biggest deduction. Therefore, for each item, keep track of
1. description
2. purchase cost
3. purchase date (or would it be more accurate to say ‘listed date’ since it’s can’t be sold until it is listed….?)
4. sell price
5. sell date

A.) Do I move these for each sale to a separate spreadsheet page titled ‘SOLD ITEMS 2018’? And, what do I do with these numbers?

B.) What I am doing now is a homemade EXCEL spreadsheet with description, purchase price, and sell price. I have recently been deleting them as they sell to keep the spreadsheet current inventory only, as well as a page for 2018 business expenses.

C.) When you say your COGS for the week, that basically means how much you paid at purchase time for those items that sold or are you including monthly fees of .05 or .10 for each item that eBay charges and how many months it was listed before selling?

THANKS IN ADVANCE FOR HELPING ME GET CLEAR IN THIS!

[MDC Galleries & Fine Art]

Before u go and recreate the wheel on a bunch of spread sheets you may wish to take a look at “easy Auction Tracker”. we used it years ago before we moved onto more robust programs. But EAT let’s you put in your purchases, line item by line item and then it does everything else for you automatically [it is a very robust and well built spreadsheet program that utilizes Macros]. You give it your Ebay credentials and it will down load all of the Ebay data that Ebay provides and create P&L sheets for you, has an expenses tab, inventory list, tracks COGS based on the Sale of each item, again automatically from the one Tab you maintain and that’s your new, existing unsold item tab.

Very good starting point for someone not ready for WonderLister, SixBit or even QuickBooks [which is a different animal anyway].

here is the link to the Easy Auction Tracker.. and I suggest you watch some of the free video tutorials.

http://www.easyauctionstracker.com/

One thing to note, since Ebay only keeps 90 days of these figures, then EAT will only go back and pull all that data from 90 days ago. Not the first of the year. But every year they do an update and you will have almost a full year and come Jan. 2019, you will then get a whole years worth of data. The price is very reasonable for what all it does and especially the work it will save you in building all of these spread sheets by yourself.

Good Luck…

Michael, Susan and Lisa, the team at MDC Galleries and Fine Art in Atlanta

[Sharyn]

You need to keep track of COGS so that you can deduct it for taxes. You can only deduct the cost of items you sold, so the cost of inventory still in storage can’t be deducted the following year.

You can chose to keep track of it however you wish, but moving it to a SOLD ITEMS page is a good idea. I use GoDaddy bookkeeping (based on Jay & Ryanne’s experience), so I input the purchase price from my spreadsheet into the software after I sell an item.

You really only need the name/description of the item and how much you paid for it. The other information is to help you find it better or to keep track of how successful a garage sale/auction/rummage sale was for you. I gray out the items I sell, so I can go back through my spreadsheet and see where I made some good purchases vs not so good. It helps me make better future purchases.

COGS for the week are the purchase price of all the items that sold. So, if I my sales are $500, and I paid $20 for those items, then I’m getting a great return on investment. If my COGS were $300, then maybe no so much.

The statistics that people post can help you decide the best method for you to source items. There are sellers that are interested in volume at a lower price per item, others look for higher priced items, and others are in the middle. If the volume seller makes $500, they probably sold a large number of items. They have lots to ship, but probably a low COGS. The higher price seller might make the same $500 in sales. They have less to ship, but probably a higher COGS.

You have to find your balance between time spent in photography, listing, and shipping versus upfront costs. I like to find a middle for myself, but I try to buy higher priced items when I find them.

[AdventureE]

Are COGs for auctions, yard sales, garage sales etc where big lots are purchased for one price calculated by the number of items divided into total amount, so everything is worth the same amount?

[Sharyn]

COGS are for everything you resell no matter which type of place you buy it from or how many you buy at one time. If you buy a lot or group of items, then you can chose how you price each item individually. You can take total cost divided by the number of things in the box, or you can vary the price based on the relative value of each item. It’s a judgement call.

This information is based on what I’ve read here and elsewhere. I’m not a CPA, but, should someone get audited, I think that the government would be looking to see that you are making reasonable choices and backing it up with solid record keeping.

[AdventureE]

Thank you Sharyn.

[Author]

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