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Sure thing.. and as I said I am not an Accountant, just trying to explain how our CPA has approached it and explained it to us. He asks for our year end inventory every year. Of course he has the year start from last years end. And he asks for our Annual Sales Totals. He has told us that he doesn’t want a long ledger or Log of each item bought or sold but tells us to just make sure that we “do” have such a log of all of our itemized purchases and expenses in our accounting program. I keep a cumulative spread sheet of numbered line items and log each purchase into it’s own line with it’s pertirnent corresponding data. It shows up in our year end P&L statement and also in the General Ledger.
* And yes, we do log and track each and every item separately, the spread sheet Easy Auction Tracker does this for us as well as does Wonderlister. Dbl. back up systems here. We capture the exact date, location and item cost for each and every item we buy. We also take a $5.00 box lot of 5 items and just distribute and allocate $1.00 cost to each of those five.
So using the first and last inventory, total amount purchased, total sales and all of our Chart of Accounts [COA] categorized expenses he seems to tell us that is what he needs to do our Corporate Taxes.
So, unsure if we didn’t understand him, our he didn’t explain it correctly but he has done the final year end for us since 2002.
The real thing I am interested in and it is not really COGS is my P&L statement I pull monthly. That really tells me my true story. It shows all categories of income and expenses and the gross profit for the month. Then it shows me in a third column to the right of each what percentage of the income each of those expenses represent. I really like these feature and Then it shows me at the bottom what my total net profit is and it’s percentage as related to total income. Love that also [when it is in the black]Yep and you are correct so I don’t disagree that inventory is an Asset. I think I mentioned that a couple of times above.
And I know we both agree on this, a CPA or Accounting Professional such as yourself is a great investment in growing and understanding ones business and a valuable asset to a business regardless of size. Trying to zig-zag through all of the complexities of the Tax Codes, especially if you are a corporation [such as us] or are going to hire “employees” by yourself is a daunting task.
So good to know your background and look forward to more “Tax” related data from you in the future. I knew we had some smart members on here. 🙂
mike at MDC Galleries in AtlantaIt is a very simple formula for re-sellers and retailers. It is the method that our accountant [and us] use.
But first let me say you need a log system to record your purchases either manual [spread sheet or a simple bookkeeping system like Quicken for Business or GoDaddy Bookkeeping.] Quicken is about $89 a year for Home and Business PC version and GDB is about $10 mo. = $120 a year. BTW- Quicken can be set up to also track your personal accounts also, with internal Bill Pay, Budgeting and even has a simplified Business Reports section which includes a Business Profit and Loss section [which I think Jay says GDB does not.
I have always used Quickbooks Pro [a more robust real accounting system as Jay calls it, but that is because I have run 3 and 4 business of different types all at the same time before and need that kind of more powerful software]
Second let me say as does Jay and many others here, that if you are going to treat Ebay as a business as many of us do, then get yourself an accountant. An accountant does more than just fill out tax forms for you at the end of the year, they “advise” you on how to run your business, how to organize your paperwork, how to account for your expenditures, costs and deductions. You can call them any time of the year. In a sense they are your financial advisor. They will steer you right, guide you to success, keep you within the letter of the law AND show you how to do things much more simply and not have to do as much detailing as some “A” types force on them selves.Mark Tew is an accountant whom Jay has interviewed here on SL and he also does taxes for some of the members here on SL, but it is a side line more for him. You could try searching for him here on the forums or maybe ask Jay for contact info. Our find a local CPA, maybe even one who works out of his home close to you. Mine is only 2 miles up the road. Sometimes I have even just dropped by and sat down and asked him some questions, especially about inventory control, and certainly the COGS questions.
Now with that said:
The formula is this:
*** A retailer’s cost of goods sold is equal to the cost of its beginning inventory plus the cost of its purchases (the combination of these is the cost of goods available) minus the cost of its ending inventory.It has to be said that you have to have a total count from last year end of what your final Dec. 31st 2016 inventory was. We do a count every year, but this can be derived from our accounting system. That number also becomes your Jan. 1st 2017 starting inventory [which are classified as assets BTW]. Then you track all of your inventory purchases for the whole year, but let me say, you don’t have to have it item by item. If you buy 67 things at an auction on Wed., 26 things at 9 different yard sales then just make yourself hand written receipts for those 9 different address and a total, [personally I keep a Petty Cash Account within Quickbooks for all cash purchases], 3 purchases at one thirft store and you have all the receipt, then that’s all you need for “accounting” purposes. Then at the years end [Dec. 31st 2017] you add up all that is left in your inventory [year end inventory assets] and that will be what you will need for your year end calculations for 2017 COGS Sold.
So in the simplest of terms here is how it works.
*** Start the year with $11,200 of inventory [the amount you spent on the items in your storage on Dec 31st and starting Jan. 1st]
*** You buy $3,000 worth of “stuff” all year long [which you have receipts for and hopefully sort of tracked in a software program of manually in the old green ledger books].
*** At year end you add the year’s total purchases [new assets] to the Years starting Inventory number and we now have $14,200 of hard goods represented on our books [our 2017 assets]
*** BUT WAIT, Now we have to do our 2017 year end inventory count. And we see that all of the stuff left in our storage system comes to $9,000 worth that we spent on what’s left. This means we have “SOLD” some stuff [Assets through out the year]. This ending inventory number is subtracted from the two numbers that we added together above.So, the numbers come out like this… $11,200 [start invent. cost we paid] + $3,000 [new stuff we bought during the year] = $14,200 minus $9,000 [cost of what is left in storage at year end] = $5,200 in COGS [Cost of Goods Sold]. It doesn’t matter which items sold or for how much. Accounting wise, the amount of Inventory Sold [sold assets] cost you $5,200.
And thus we are back to the simple formula … The Year’s starting inventory “COST” + [plus] the years “PURCHASES” costs – [minus] the cost of the year end inventory count. That is it, three numbers.. Year start + years purchases – year end cost.
This question has been asked many times on the old blog and maybe now it will be searchable in the new forums.
BTW.. I am not an accountant and if I have this wrong. PLEASE correct me so we don’t let exist on the Forum as an incorrect statement. Mark or any other CPA Accountant types please chime in.
And Lastly: There are other ways to arrive at COGS sold, most which require more detailing but also will provide more data and information in return. Some people like to track COGS by the item. Each item with it’s own set of numbers, but that type of tracking can get tedious. Also Ebay and PayPal do provide many reports that can provide you with the same data. We also use WonderLister a robust listing program that I have always said was TurboLister on steroids, that provides tons of details on an individual item by item basis. Just sort, filter and print out any reports, any way you wish. But the simple formula above gets to your numbers fairly quickly.
mike at MDC Galleries in Atlanta
Hey.. That last character of the middle numbers maybe 29855 “D” width. I wear a wide shoe and have to find shoes with the letter “E” or “EE” on them.
Another thing is do as J&R do and others, in your item specific / description mention the words “outside sole dimen. edge to edge” and just put in the measurement. Then most people know to subtract the sewn shoe edge on each side which is usually about a 1/4″ on each side or even mention that in your listing [just to be doubly safe] about subtracting the 1/2″ total from your full width number.
Hope this helps and if I am wrong those more experienced will correct me and provide better information.
mike at MDC Galleries in Atlanta
Think this is something like it.
http://www.worthpoint.com/worthopedia/tuareg-african-saharan-leather-purse-536653891
[hope the photo link works]The very old ones [show lots of aged wear] that were sold from 2011 until now seem to run in the $200 to $300 range
the newer ones [less grungy wear with nicer, newer leather] seem to be falling $60-$90 range with lots of others conditions and prices in between.Database shows in the area of 200 +/- [with odd no matching items thrown in] from approx. 2006 until now.
Hope this helps, mike at MDC Galleries in Atlanta sold from
Thanks but too late. Order was delivered yesterday. I will just end up having a good supply of supplies 🙂 LOL. mike
Wanted to do a follow up about the coupon that will disappear if you leave your shopping cart then come back to it. The Ebay rep said that is how it is working, but they have had some complaints just like mine. She said that the problem has been moved upwards in their que for the technical team to address and see if they can get it fixed.
They are aware of the problem which is this: If you put items in your shopping cart, then think you are ready to check out. you go to your cart and paste in your coupon code and review your order.. BUT [this is the flaw], you decide to click out of your cart for a minute to go check another item or to continue shopping becauswe you may want to add one more item to your order, when you pull out and come back to your cart, your coupon has disappered from the “Apply Coupon-Enter Coupon Code Here” box. If you don’t notice it and proceed to checkout, then your coupon is not applied to that order. She did say that your coupon is still good for another order but couldn’t be retro applied to the order that was just placed.
So I said back to her, then what you are saying is to do all of your shopping before hand, put things in your cart you want to buy, then go to your cart and put your coupon code in, BUT ONCE YOU DO THAT then you need to proceed to checkout, without any continue shopping or backing out to add anything else, and that is the only way your coupon will be applied. She said YES. So be aware, shop, go to cart, apply coupon and then straight to checkout and make sure your coupon is still in place. If not she said to past it again by using “Control-V” [on a PC] while you are right there in the cart area.
I asked if they knew how long before Tech fixed it and she didn’t know. So just be aware guys.
My coupon is still good, but to redeem it I have to make a second order but still have to pay the $55 for the first order.
mike at MDC Galleries in Atlanta
Question AK:.
We use the Evaluator mentioned above. It shows us everything that you spell out. Except we also have to use other methods when we buy things that may not have been listed and or sold on Ebay for a very long time.But our question is, with a Premium level store whereby we get 1,000 listings, and we have about 680 items currently listed. Any reason to dump so many lower priced items all at once?
Out of the 688 items we have listed 350 are all priced over $25 each. Then we have 283 items between $12.50 and $24.99. Then the balance of approx. 117 items are all under $12.00.
So until we need the space and get about another 250 items listed, pushing us close to the 1,000 mark, isn’t it quicker for now just to leave those several hundred items in the store because we don’t need the room and maybe some will sell and help us out somewhat until we are ready maybe mid summer to do a purge?
Our current unit price avg. at this point of our inventory is $8 to $9 per item and we try to list for approx. 6.7 to 7 times and even more often 10 times or higher when we feel they will sell and even higher still when we find out the actual sold prices from some of our databases.
So we have been on the path you suggest for the last year or so, but don’t totally understand why the urgency to dump everything under the minimum threshold all at once?
But thanks for validating the direction and process we have been moving. We too came to this conclusion by piecing together some of Jay’s comments over the past months.
Thanks for any reply
mike at MDC Galleries in AtlantaHey EC411: Your first paragraph is interesting. I do keep all my photos on my office hard drive [with a cloud based and also a separate external HD as back ups of course]. When we photograph our items and transfer them to our HD I always highlight each item and assign the inventory number to them and a keyword ricj title of 4 or 5 words. This was more for our internal use just to make scanning, looking and or finding images of items easier internally.
BUT if I read you correctly, then it would be a good SEO tactic to also include one shot in our description area which already contains keywords and it would be easily accessible for the Google spiders and bots to crawl, thus in about 60-90 days those items would start showing up on Google searches by themselves? If so that sure would be a help and no trouble at all to grab one photograph which is already titled and drop into that area, especially since we use an offline bulk listing tool. Also following the same “school” of thought, how about also including our company logo and business name as a extra photograph at the bottom of our listing?
mike at MDC Galleries in Atlanta
Good Morning Shelly:
Your question is a good one and along with the first reply, got us wondering. Is it all semantics or is it just numbers “math” as you call it.
I have not validated the following so it is just my opinion on it, but it is the way I think about it at this point. We are also only at approx. 800 items in our store so up to this point not even “self-tested” the following but we believe this is how it works.
So, maybe a better way to track it for “math” or should I say cost reasons is by billing cycle. Take a look at your Ebay invoice. Everyone has an invoice billing date. So regardless you use the term insertions, you will be allowed to have at the end of 30-31 days of your billing cycle 1,000 items contained in your store for sale. Any amount over the 1,000 count would then be billed to you at the per piece price. $.10 each I think.
So every 30-31 days when Ebay sends you the invoice you will be charged the “extra fee” per item over the 1,000 item limit. With direct response to your question and the rely, it is correct that during the 30-31 day billing cycle all of your items should have rolled over at that point and be FULLY COUNTED within your billing cycle. So at this point the 110 you reference is all that have “RENEWED” based on their anniversary date of insertion at the time you read that number. But by the end of your billing cycle all 500+ of your items should have been Renewed” and probably the day before your Ebay bill is sent all of your items will have been accounted for.
But, as stated above if the word “Insertions” is correct, then if you add [INSERT] 3,000 items onto what you already have that will “rollover” you will have a fairly large charge for the extra 3,000 insertions over what is rolled over plus what was already existing.
But and a BIG BUT, our contention here is that you could “INSERT” 3,000 items in your store during that billing period and sell all 3,000 and if at billing time you are under 1,000 you should be billed for only that number that exists at billing time, not a tally count of the middle of the months activity which would include 3,000 new entered and then 3,000 sold within 24 hours, thus now gone at billing time. You still have to pay your FVF on all those that sold but not listing fees if they are not present and accounted for at billing time. So unsure if the word and process of “INSERTIONS” is correct? We are unsure.
Once you know your billing date, just look at the number of items in your store the week before or a few days before and you should have a good idea of the extra items you will be paying the $.10 each on. If you pay by the “INSERTIONS”, then you would have the normal store fee for 800 items and then a huge fee for “INSERTING” 3,000 listings and then selling all 3,000 the next day. Hhmmm?? Makes us wonder?
Hope this is correct, unless we are totally wrong. Maybe someone will validate if we are correct or not and if not set us straight.
mike at MDC Galleries in Atlanta.
Thanks Terri & Linda. I will give that another try. I did this once before and called and they said couldn’t anything about it this time, but the coupon was still good and I could just go and make another order and use it then on the 2nd order. So that is what I did last time. I was low on supplies anyway so just went ahead with the second order.
But now I am in fairly good shape with supplies and don’t really need anything at the moment so would like to get the credit this time. Thanks and I will call a few people today and see what they say.
mike at MDC Galleries in AtlantaWell you deserve it.
Speaking above of my friend who owns the brick and mortar consignment store wanting to move things online. I told her if she joined the SL Forum first, and then also rented your farm house for 1 full week during Jan. or Feb she would get a SL discount. Then if they bought you guys dinner that she could ask all of the questions she wants about taking her business online. Sorry if I threw you under the bus but figured a full weeks rental during your slower time would be worth it. Her husband came in while we were talking and she immediately begin pitching him and he seemed receptive. We see them every week because we have bought from her almost every weekend for the last three years. I will check in with her again this Sat. for a weeks rental for you guys.
She used to have a B&MS for all vintage clothing, then gravitated toward the Consignment model. Now years later she is thinking hard about everything we have been sharing with her as well as some of her competitors and is now seeming to want to either mix the two or move online. So what better way to get the coaching as to do the rental and the sit down with you guys.
Will give you an update after we speak with them again later this week.
mike in AtlantaHey.. I have a suggestion that will take a lot of this issue away. Especially since you say you research your items and know fairly well the pricing structure. There is a setting on your store that you can set that will apply to your “make an Offer”. It allows you to set it as either a percentage or a specific dollar amount of the amount you will take. That means any offer that comes in at too low of the price listed will “automatically” be declined and Ebay will send the one who offered that low price an e-mail [which you can customize with your own words if I can remember correctly] saying their offer is to low.
So in your case if you know your market, research and pricing is really spot on and the best you would do on any of your items is say 35% off then set it to automatically decline any offer lower than 35% off your listed price. So a $20 listed item will automatically reject any offers lower than $13.00. You will never even hear or know about them.
If a buyer really wants it he can make another offer and come up and try again. If still too low, he will get another auto rejection notice. Eventually they get the idea and either jump up to a decent offer or just go away. In that case you will never be bothered by any low offers even coming in to you.
There are some pro’s and con’s to this as Ryanne has mentioned way back but a good tool if you are pretty sure of your prices. In some of our cases we at times may take a real low offer so we keep that option open to us. I have an item right now at $2,500 dollars. I got it for free, I would take $500 or less for it [80% off] so using the auto rejection system isn’t for me.
BTW you can do it on individual listings.
Hope this helps or provides you with an alternative to getting stressful emails all the time.
mike at MDC Galleries in Atlanta
Hey Nancy.. You got me thinking. Boy I need to list and get so side tracked by SL comments some times. Anyway here is a link thaty shows the “cheap” Impulse sealer I was mentioning. But those poly bags she is using are expensive. The roll of poly tubing is way less.
Then at the end, there are many other ads / vids that show the fancier machines which can run over a thousand dollars. No need for that. I see an 8″ Impulse sealer for $25 online. Then add the cost of the poly tubing. But I would NOT SUGGEST USING poly bags. You pay for that opacity and the adhesive strip [which she cuts off=a waste] they are too expensive.
Also you can just open up the poly tubing and let a fan blow air into the tube much faster than her “little pump gizmo”. Uline also has poly air pillow making machines at various costs but are geared more to the higher volume user.
I may just set-up to do this as a late Christmas present for me [Uhh my business]. Maybe even see if the poly bags that Ryanne uses will heat seal well enough to be used. I just ordered 350 12″ x 20″ bags for $11.64 w/ free shipping. Cheap enough. Especially since I can maybe yield 4 pcs. of 6″ x 10″ pillows out of one 12″x20″ bag. That is not even a penny an air pillow if it will work. certainly worth $25 to $30 for an Impulse Sealer to find out.
mike in Atlanta
Jay… Hope you and Ryanne have a Great, Wonderful New year. I was just poking around and say a number that made me remember something and then I got a big smile and it was the thought for all of the Kudos you two deserve.
I was poking around in my profile stats and saw the numbers for the new forum here. It said 387 Topics, 576 threads, with 4,464 comments and 856 members. Then I remembered a very early pod cast from you guys where you ended it by you asking for the members-readers to “come on and join in, don’t be shy. Post some comments we really need them.” Then, Ryanne said, “yeah, we got 12 comments last week” and you said “Come ‘on guys, let’s get that up to 24 by the next pod-cast”.
What a smile to think that at 12 commenters you were asking for more and now in less than a month with the new site you have 4,464 comments and 856 members. That could project out to being approx. 55,000 comments in a year not including new members. WOW!!! That is a great accomplishment and in my opinion shows the power of the process of having an open and honest, forthright area for like minded business people to come, gather, share, learn and help each other.
I was telling a friend who owns her own consignment store, how the group was so small a few years back but still provided very valuable information that helped us build our business. She would ask me occasionally how it was coming and I always told her good but sort of kept the site on the quite. She is a great source for us and the SL info. helped us learn to make great deals for us along with her system of selling.
The other day she informed me of thinking of changing her business model from being a consignment store to now including her own sourcing and selling her inventory online. I immediately told her to join in with us and hope to see her here. A consignment store owner would be neat to hear from and see how the transition goes.
My point being is you two deserve all the kudos for investing the time into this forum and creating such a great place to others to come, share, learn, grow and in turn be propserous.
Good luck in all of your “experiments” :-), this year and may all of your projects come to fruition without major hassels and may we all grow and build our futures together through sharing.
mike at MDC Galleries in Atlanta
Nancy: Your question just made me remember something from the past. I may try this myself and see what the total outcome is. But in the large printing company I was at we used “impulse” sealers to make and bag many of the small, loose items we included in the display kits we sent out to chain stores.
We had a stand on the left side of the sealer that held two rolls of plastic tubing 6″ and 12″ wide one above the other. We just reached over and pulled the width of choice across the sealer and with the size we wanted sticking out on the right, we lower the sealer arm down and in 2 secs it sealed a bag. Leave the arm down for 4 to 6 secs and it cut through the bag. We could pull the flat tube across, stuff the parts inside and then seal it and then throw the bag into the kit we were shipping. BUT… we also had a hair dryer paying on it’s side and when we needed air pillows, we would use our fingers to spread the end of the plastic tube open a little bit and the hair dryer air [on cool blow] of course would billow up inside the tube and we would then seal the tube and thus created our own air bags to the size and quantity we needed. We used this as a filler job for some employees when they had nothing else to do, we had them make some air pillows to keep them on the clock. We had them throw them into a large “Gaylord” box for future use. BTW a small desk fan worked also to blow in the air.
So now remembering that, I looked up and saw that you can buy complete air pillow making systems but they are expensive. But I also see that you can buy an 6″, 8″ or 12″ heat sealer for approx. $25 to $50 bucks with the built in timer for the heat impulse. Why not buy one of those like we did, then buy say a six inch wide roll of light weight poly tubing plastic and just make your own filler air pillows as needed? You can even make your own bags this way and I also remember if you get the shrink type of plastic you can run the hot air gun over it and the plastic will shrink to a tight fit around your item [if so desired].
I haven’t researched the cost of the roll of plastic yet, but am thinking that a one time small investment would pay off in the longer run, save money over all and you would have what you need any time you needed filler.
Just a thought. I am going to research further and maybe do this myself. Certainly the air pillow bags are lighter and would save on shipping weight and provide a ROI for setting this up. Who knows, maybe even be a money maker on those marginal items that would tip the scale to the next higher pound other wise. Much easier than cutting down and resizing boxes to lighten the weight load. But I do also cut down or resize boxes fairly regular. I can take 4 ounces of a box usually by just resizing the flaps and 6 to 8 ounces by resizing the box an inch or two. But all that takes a little extra time.
BTW the way, cutting a USPS box in half makes a great small size box of 7-1/2″ long x 5″ wide x 4-1/2″ high and at a weight of 2 ounces. Perfect for small items, cups-mugs and hats. I then wrap it with a layer of my 8 mil opaque contracter’s plastic, just like a Christmas present and it ships First Class without any problems. If needing Priority, it is ready to go since it already has the Red, white & blue Priority images on it.
P.S. several of the Priority Boxes cut down to nice useable sizes and come close to the new Ebay sizes and it saves you from having to “buy” those Ebay sizes. We usually make a few during some of our down time and put into our box shelves. The price is certainly right.
Just an idea ….
mike at MDC Galleries in Atlanta
