Inventory Accounting
Inventory tracking, valuation, and reporting for product-based businesses. We maintain accurate cost of goods sold so you know your real margins.
What This Is
Inventory accounting tracks what you have on hand, what it cost you, and what it’s worth. For product-based businesses, this isn’t optional paperwork. Your inventory is often one of your largest assets, and the way you account for it directly affects your reported profits and your tax liability.
We handle the ongoing work of maintaining accurate inventory records. That means tracking quantities, applying proper valuation methods, calculating cost of goods sold, and reconciling your physical counts against what the books say should be there.
What Gets Tracked
What Gets Tracked
Raw materials, work in progress, finished goods. Every category tracked separately with proper valuation. FIFO, LIFO, weighted average. Whichever method fits your business and tax situation. Monthly reconciliation against purchase records and sales data to catch discrepancies early.
The Reports You Get
The Reports You Get
Inventory balance reports showing what you have and what it’s worth. Cost of goods sold calculations tied to actual sales. Margin analysis by product line. Turnover ratios showing which items move and which sit on shelves collecting dust.
Why This Matters
Without accurate inventory accounting, you’re guessing at your margins. You think you made 40% on that product, but you didn’t account for the freight cost or the waste from damaged units. Your actual margin might be 25%, but you won’t know until you’ve been pricing wrong for months.
The tax implications are just as real. Inventory directly affects your cost of goods sold, which directly affects your taxable income. Understate your inventory and you’ve understated your tax liability. Overstate it and you’re paying taxes on profit you didn’t actually make.
Margin Blindness
Margin Blindness
You sell a product for $50 that you bought for $30. You think you made $20. But what about shipping, handling, storage, and the three units that got damaged? Your actual margin per sale might be closer to $12. Multiply that across your whole product line and you’re making decisions based on wrong numbers.
Cash Trapped on Shelves
Cash Trapped on Shelves
Without good data, you overorder just in case. Now you have $40,000 in inventory when you only need $25,000. That’s $15,000 sitting on shelves instead of in your operating account. Worse, some of it might be obsolete before you ever sell it.
What Changes
You see your real margins by product and by category. That item you thought was your best seller might actually be your worst performer once you account for all costs. That low-volume product that seemed like an afterthought might be your highest margin item.
Purchasing becomes intentional instead of reactive. You know what’s moving, what’s sitting, and when to reorder. You stop tying up cash in inventory you don’t need while avoiding stockouts on items that actually sell.
Pricing Confidence
Pricing Confidence
When you know your true cost per unit including all the hidden expenses, you can price with confidence. You stop accidentally selling below cost. You identify products that need a price increase and products where you have room to compete on price.
Tax-Ready Records
Tax-Ready Records
Your inventory valuation feeds directly into your tax returns. Accurate records mean accurate cost of goods sold, which means you’re not overpaying taxes on phantom profit or underpaying and inviting IRS attention. The numbers are defensible because they’re documented.
The Treasure Valley's Tax and Accounting Team
The Next Step:
A Short Conversation
Tell us what you're dealing with. We'll listen, answer your questions, and give you a straightforward quote.
