Inventory Archives

Flexible Inventory Tracking: From Basic Counts to Item-Level Detail

Seller Ledger on September 11, 2026

Let’s face it – inventory tracking is the hardest, most laborious part of eCommerce accounting and bookkeeping. Many small sellers choose to skip it altogether, using the cash-based method of writing off every inventory item as cost of goods sold as soon as they make the purchases. Others try tracking the cost of every item purchased all the way through to sale. And yet, most of those sellers still have trouble keeping up with the tracking required to do so.

Well, now there’s a more flexible inventory tracking option: periodic inventory.

What is Periodic Inventory tracking?

Periodic inventory tracking is the most flexible inventory tracking option available to merchants because, instead of tracking every single inventory transaction, you can simply take “periodic” counts of your unsold inventory, update your inventory balance, and calculate cost of goods sold based on a simple formula that matches IRS tax forms:

Cost of Goods Sold = Beginning balance + Purchases - Ending balance

For a deep dive into period inventory tracking, feel free to check out our support article.

A simple example

Let’s say, on your last year’s tax return, you filed an ending inventory balance of $5,000. Let’s also say that, for this entire current tax year, you buy another $10,000 in inventory. Rather than trying to track every item coming in an out, you simply wait until the end of the year and count up all of your unsold inventory. And let’s say you discover that all of your unsold inventory cost $2,500. That means that the cost of all of the items you sold this year was $12,500

$12,500 (cost of goods sold) = $5,000 (beginning balance) + $10,000 (purchases) - $2,500 (ending balance)

It makes sense, right? If you have less inventory at the end of the year than you did at the beginning of the year, you must have sold more than you purchased.

Counting up your inventory once per year is a lot less work that trying to track the ins and outs of every item purchase and sale. But it also gives you much better insight into your business performance than just writing off all of your purchases using the cash-based method.

Let’s take the example above. Let’s say you sold $25,000 worth of goods for the year. Under the cash-based inventory method, you would have claimed $10,000 in cost of goods sold. Using that number to calculate your gross profit and margin for the year, you would think you made $15,000 in gross profit, or 60% ($15k profit divided by $25k in sales).

But the periodic method shows your cost of goods sold as $12,500. In that scenario, you would know that you actually made a gross profit of $12,500, or 50% ($12.5k profit divided by $25k in sales).

And using the cash-based inventory method also means that there will be other years where you were less profitable than you realized.

For the cost of counting up your inventory at least one time per year, you get a much more accurate view into your business.

Cash vs Periodic: They are closer than you think

If you want to see just how close cash and period inventory are, just check out this blog post. Hint – the only difference is whether you track an inventory balance at all.

How it works in Seller Ledger

If you are interested in trying periodic inventory tracking in Seller Ledger, it’s quite simple to turn on. Click on the Inventory tab and, in the upper right, click the “Change” button next to your current inventory tracking method.

This brings up a screen where you can now explicitly choose periodic as an option.

Click the button to switch to periodic and then enter the starting date and balance.

You’ll now see a very similar inventory balances page showing you the totals.

Because you’ve switched to periodic, you are no longer writing off all of your purchases as cost of goods sold, so that amount is no longer showing there. Instead, you need to count up your inventory in order to calculate the cost of goods sold.

One of the great things about periodic inventory is that you don’t HAVE to wait until the end of the year to count up your inventory. You can do it at any time. Let’s say you go and count up your unsold inventory right now, and discover you have $2,500 worth. Here’s where the magic happens. Just click the “Update balance” button in the upper right to bring up the following screen. Type in the amount that you just counted and Seller Ledger does the math for you to determine what your cost of goods sold needs to be.

Click Save and watch your inventory formula update automatically. Your balance has been updated, as has your cost of goods sold so far for the year.

What if I want to track the cost of some individual items?

As it turns out, periodic inventory actually lets you track anywhere from no item level details, all the way up to complete item level detail.

See that “Sold” sub-tab? Click on there to see your recent item sales. Let’s say you know you paid $40 for the most recent sale listed. Click the “Add costs” button next to it.

Now enter your $40 cost.

Click Save and we’ll now show you the gross profit on just that item sale.

But here’s the cool part. Click back on the Balances tab. Because the sale you entered the cost for occurred before the balance update you just provided, the cost of goods sold total remains unchanged. However, click on that number and you’ll see something very interesting.

Seller Ledger keeps track of costs that you entered directly, as well as the amount that was calculated based on a balance update. Going forward, you can choose to track the costs of some item sales and we’ll update your cost of goods sold as you go. Then, when you get to the end of the year, you can do a final inventory count, update your balance, and we’ll figure out the cost of items you didn’t bother to record individually.

Wrapping up

If you are ready to take your inventory tracking to something beyond cash-based, but are not quite ready to sign up for perfect detail tracking, this option is for you. It’s even a great option for folks who want to track most of their item details, but just have trouble staying 100% current.

As we do with all new features, we do want to say that there might be some near-term bugs/issues, but email us and we’ll fix them as quickly as we hear about them.

Happy tracking!

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Track Cost of Goods Sold for Product Bundles and Kits

Seller Ledger on September 8, 2026

With all the recent simplifications and improvements we’ve been making to inventory tracking in Seller Ledger, it’s time to roll out something that many sellers have been asking for: the ability to track cost of goods sold for product bundles and kits.

If you use continuous inventory tracking in Seller Ledger, you likely already have the individual costs of various items you have listed for sale.

But what if you decide to offer several of those items for sale in a bundle, at a discounted price?
If that bundle sells, how do you remove the multiple individual items from inventory and make sure they show up in cost of goods sold?
And then how do you look at profit for that bundled order, or those individual items?

Fortunately, Seller Ledger now helps you with all of this.

Tying a bundle sale back to its underlying products

To link a sold product bundle with its individual items, simply go to Inventory -> Sold, find the sale for the bundled product, and click “Add costs”.

You’ll see a new option in the list, called “Match multiple items”. Click that option to bring up a dialog box where you can select and add each item from inventory that belongs in that bundle.

Click “Save” and Seller Ledger will remove those items from inventory and update your cost of goods sold total.

See your profit per order

Now, when you go back into your marketplace account, click “Expand” on the bundled order. You’ll see how much money you actually make on that order.

eBay Bundle Discounts

As it so happens, this update is particularly well-timed. eBay announced its bundle discount feature as part of its September 2026 Seller Update.

Thanks again to all of our customers who requested this functionality. Stay tuned for more product updates.

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Just Type in Item Costs to See Your Profit

Seller Ledger on August 11, 2026

A lot of sellers would love to see how much profit they make on each product, but aren’t so excited to track every inventory purchase from acquisition through sale.

To help those customers, we’re pleased to announce a new option that allows any seller to simply type in item costs and see their profit on any sale, after it’s already been made.

How can I enter my item costs?

To be able to take advantage of this feature, you do need to turn on inventory tracking. While you will technically be using the “continuous” inventory approach, you can skip a lot of the steps.

Once you have inventory tracking turned on, simply go to Inventory -> Sold and you’ll see a list of your recent sales, with an “Add costs” button in each row. Click on that button for a sale and choose the bottom option: “Enter a cost”

This will bring up a simple form where you can just record the amount you paid for that item, and we’ll handle the rest. You can also assign a specific vendor name and change the purchase date, but it’s your choice. If you want to simply type in the costs of as many items as you can, as quickly as you can – you can now do so.

As soon as you click “Save”, you’ll instantly see your gross profit. And your cost of goods sold will increase by the amount you entered.

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Load Inventory Costs from Your Spreadsheet

Seller Ledger on August 5, 2026

If you have built or bought a spreadsheet template for tracking your product purchases and costs, you can now use that to get a jump start on automating your eCommerce accounting and getting better insights into your net profits. Seller Ledger now lets you upload inventory costs from your spreadsheet.

To start, this feature only works if you have inventory tracking turned on and want to see your profits at the item-level. If you are writing off cost of goods sold as you go, you’ll be more interested in just uploading a list of expenses.

However, if you’ve already been tracking each purchase and sale, you’ve made the investment to see your profitability per item.

How to upload your existing inventory costs from your spreadsheet

Just go to the Inventory tab in Seller Ledger, and you will see a new “Inventory uploads” sub-tab. Next, open your existing inventory purchase spreadsheet and save it as a new file, in a CSV format. And make sure to rename any of the columns to match our layout.

Pro tip

If you don’t already have unique SKUs for each item in your spreadsheet, we strongly recommend adding them. They are the secret to automating the matching of sales to cost, reducing inventory and calculating cost of goods sold.

That’s it. You’ve just jump-started your switch to a more automated method for tracking your profits on each sale/item.

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See Your Profit on Each Item Sale

Seller Ledger on July 26, 2026

Perhaps the most important financial metric for any eCommerce business, and one of the hardest to calculate at scale, is the net profit you make on every item sold.

Well, Seller Ledger has just rolled out the “holy grail” of eCommerce reports – the ability to see your profit on each item sale.

Do you know which products are actually making you money?

Net profit per item sale is what you’re left with after subtracting all directly-linked expenses from the income you produce by selling an item. It’s the ultimate bottom line.

But figuring out this number is incredibly difficult, particularly if you sell on more than one channel. You need to account for so many potential numbers, which vary widely by channel:

Sales price
Any discounts offered
Shipping charges you may collect from the buyer
Sales commissions paid to the listing platform
Potential payment processing fees
Advertising/promotion/boosting fees
Potential inventory storage fees
and many more

And while each platform provides these numbers, they are not always presented together in a single view.

Then, there’s what is often the single biggest determination of your profit – cost of goods sold. Most platforms don’t know this, and a lot of sellers prefer not to share it (for good reason – given concerns about platforms using that data against them.)

The classic solution—spreadsheets!

Sellers have been using spreadsheets to try to figure this out for decades. In fact, there are lots of experienced sellers and influencers across the web offering spreadsheet templates to help sellers track these numbers.

While very good at calculating the numbers you want to see, there is one massive limitation in these spreadsheets: the amount of time to keep them up to date. If only these spreadsheets could update themselves.

Well, that’s basically what Seller Ledger now does. And we allow you to get a head start by uploading your current spreadsheet.

Actual profit, for every product, by channel—all in one place

If you go to the Reports tab, you will see a new sub-tab called “Gross and Net Profit”. This replaces and expands the prior “Gross Profit” report. Click into it to see your full profit picture by product.

You can view by individual channel or by all of them. If you have sold the same product in multiple channels, you’ll be able to expand that row and see and compare the profit numbers between those channels.

In addition, for those sellers with a LOT of inventory, you can search both by product name and SKU.

What you can do with this information

Knowing how much you make on each item, on each channel, gives you the power to make smarter decisions in your business:

Source better products: You are now armed with the most accurate information on which items generate the most profit. Find more of them.
Spend your ad dollars better: Make sure your advertising/promotional spend is paying off for you
Change your pricing on each channel: You can now factor in all costs from a channel to see if pricing needs to be adjusted.
Allocate inventory differently: Prioritize the channel/product combinations that make you the most profit.
Stop losing money: Identify any products on any specific channels and stop selling them.

How to get the most from this report

In order to get set up to have this information at your fingertips, there a few things that will help tremendously when using Seller Ledger.

Connect your sales channels: first, you need to connect your sales channel/platform to Seller Ledger. You can find our most current list here, and know that it is likely to continue growing.
Turn on inventory tracking: If you are just writing off “cost of goods sold” as you buy inventory, this level of insight won’t be available to you. But if you’d like to get this report, go to the Inventory tab and change your method to “Inventory Tracking.” We’ve also made it very easy to switch back if you prefer not to continue.
Load your item costs into Seller Ledger: Make sure you include unique SKUs for each item. As a reminder, you can add them individually, upload a receipt or even a CSV file.
Include SKU when listing your item: most platforms make this pretty obvious when listing, while others may require an extra step.

Not all platforms support automatic SKU matching

The following connected platforms don’t provide support for SKU fields: Mercari, Depop, Manapool

However, we do provide the ability to match sold items to inventory after-the-fact, so you can still get the insights you need.

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Better Manage the Products You Sell

Seller Ledger on July 9, 2026

To better help you manage the products you sell, Seller Ledger has added a new view under the Inventory tab. In addition, for those of you who are not tracking inventory (i.e. using a “cash-based” approach) and writing off cost of goods sold directly, you’ll notice that the Inventory tab now has more useful features.

Finding your products

Clicking into the Inventory tab, you will see a new sub-tab called “Products”. For those of you already tracking inventory, it will show to the right of the other tabs.

For those of you writing off cost of goods directly, you’ll also have access to the new Products tab, just without the extra Inventory tabs:

Editing your products

Click into your products tab to a see a list of every product that you have either sold or loaded purchase/cost information for. We show you each product’s name, SKU, how much has been sold and on what channels.

You can sort by product name, by SKU, number sold or revenue.

If you have multiple copies of the same product that use slightly different names, now you can correct that. The same holds for cases where you are missing SKUs or using the same SKU for different items. Correcting those makes it possible to fully automate your cost of goods sold and see your profit per order.

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See your Walmart Profit per Order

Seller Ledger on February 25, 2026

As we have done with both eBay and Amazon, we also recently released the ability for Walmart customers to view the NET profit on each order.

Walmart profit per order

Click the “>>expand” link next to any order in your Walmart account. Under the category split totals that make up that order, you will see a new “related expenses” section that includes other fees and expenses that are tied to that order. This includes the Walmart commission charged for that order. In addition, if you purchase shipping labels through Walmart, we include that too.

Lastly, as mentioned when rolling out our Gross Profit report, if you track your inventory costs at the item level and use unique SKUs for each of your Walmart items, we will match those costs to the correct item. That, plus the other related expenses, helps you see the true NET profit for each order on Walmart.

If you are a Walmart seller who’d like this kind of visibility and automation in your accounting, give Seller Ledger a try. We offer a 30-day free trial, no credit card required.

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Best Amazon Accounting Software for 2026

Seller Ledger on January 18, 2026

Whether you’re thinking of switching or just getting started, this step-by-step guide will help you choose the right solution for your Amazon business.

Amazon (and eCommerce) accounting comes with a rather unique set of challenges, above and beyond traditional business accounting. In addition to regular income and expense tracking, you can expect to face:

Lots of order transactions (if you’re lucky)
Even more fee transactions
Inventory and cost of goods sold tracking
Reconciling platform payouts vs your bank

The good news is, with modern software, you can shrink the time you spend on accounting for your Amazon business from hours a month to minutes.

How do I choose?

First, let’s assume that you’d like to get your Amazon data into your accounting software with as little customization and setup as possible. That will rule out platforms like Wave Accounting and FreshBooks, which not only don’t have direct integrations with Amazon, but they require using a general-purpose API (application programming interface) tool like Zapier to make it work. That’s a non-starter for most sellers.

Next, the key question becomes – how much (and what kind of) Amazon data do you want to bring into your accounting software. Specifically, do you want all of the transactions from Amazon or just summarized information?

Detailed vs Summarized Amazon Data

So what does it mean, to get detailed vs summarized Amazon data? Let’s take a look at each method:

Detailed transaction data

This means pulling in every order, including line items, discounts, sales tax collected and remitted, shipping collected and fees subtracted. It also means bringing in shipping label transactions, and LOTS of other Amazon fees.

What are the pros and cons of this approach?

Pros:

You get a detailed understanding of your Amazon accounting, not only at the P&L and balance sheet level, but also down to the net profit on every sale (if your solution can pull that off – more on this later.)
You can automate inventory and cost of goods calculations by mapping sales back to the original inventory purchases.
You avoid the issue of payouts that can span different periods (e.g. an early January payout that includes both December and January transactions.)

Cons:

A lot of folks (especially old-school CPAs) worry about “cluttering up” your books with too much detail, which can bog down your accounting platform’s performance. Amazon does produce an enormous number of small transactions.
Reconciling all of those transactions to the payouts and deposits to your bank can be a royal pain in the neck if your solution doesn’t do this for you (again, more on this later.)

Summarized data

Using this approach, instead of bringing in all Amazon transactions, you summarize them outside of your accounting platform, and instead, match the totals to each payout that shows up in your bank account.

The pros and cons of this approach are pretty much the reverse of the above:

Pros:

Reconciliation of all of those Amazon transaction totals to your payouts should be easier.
You avoid “cluttering up” your accounting software with details you may never need to dig into.
The performance of your accounting software remains high by limiting the data you add.

Cons:

You miss out on net profit calculations.
You can’t automate inventory/cost of goods calculations.
Payouts that span multiple months or years are still problematic.

Biased perspective

We’d like to take a quick moment to point out the following observations. We believe two of the most commonly referenced reasons for choosing the “summarized” approach stem from folks dealing with practical limitations of existing solutions.

First, the idea that a lot of data will “clutter up” accounting software is more a reflection of the design of that software than the data itself. Good software design, especially around the user interface, can do an awful lot to hide details until you’re ready to look for them. In addition, when a software solution already has a lot of non-eCommerce features that already “clutter up” the interface, perhaps avoiding those unused features would help.

Second, the argument about performance is equally fascinating. There are many other platforms that process exponentially more data than accounting platforms and yet are still performant. Just ask Google, Amazon, eBay and Shopify (or TaxJar.) So changing your desired behavior because of the scaling limitations of a platform seems suboptimal.

What are the best options?

In addition to looking at the data options from Amazon, you may have some other criteria specific to you and your business. How much do you want to do yourself vs outsource to an accountant or bookkeeper? Do you want something specifically designed for eCommerce? How much do you value simplicity? Are you price conscious?

We’ll go through the leading contenders in the space, based on current (2026) sentiment:

Seller Ledger

Seller Ledger is one of the newer players in the space, created by several of the original team members behind Outright/GoDaddy Bookkeeping and TaxJar. It provides both the accounting platform plus a direct Amazon integration (as well as many others) and chooses the “detailed transactions” approach.

Seller Ledger is specifically designed for eCommerce sellers, so it has a much simpler user interface and setup process that traditional accounting software. It also has a pricing model that starts much lower and grows with the size of your business. Additionally, it does not limit features based on pricing tiers.

Detailed transaction approach

Seller Ledger pulls in all transaction data from Amazon via a custom-built integration. It does not require any third party connectors. And while it does pull in every Amazon transaction, it also ties every single transaction to each payout, and matches those payouts directly to your bank account deposit. This addresses the concerns about payout reconciliation, because it is built into the system, and also avoids the timing issue when a payout occurs around the end of a period.

It groups all transactions related to each Amazon order (including fees, shipping labels, etc) so you can see your net profit per order. That includes cost of goods sold, if you are using unique SKUs. Plus, it can automate inventory levels using the FIFO (first-in, first-out) method.

If you want to outsource your Amazon accounting completely, you can use Seller Ledger and invite your accounting pro to access your data. But bookkeeping services are not included in the price of the software.

Plans start as low as $10/mo for very small sellers and go up based on monthly transaction volume.

Limitations/concerns

As of the time of this writing, Seller Ledger is primarily designed for US eCommerce sellers. It handles US income and sales tax very well, and now provides currency conversion that works really well for North American merchants with sales in MXN and CAD. For sales in other countries, we provide report filters by native currency.

It is also exclusively designed for eCommerce businesses, so if you require invoicing or other features for service-based businesses, you may want to look elsewhere.

QuickBooks Online or Xero + third party connector

The most familiar names in accounting software, these two classic platforms support all kinds of business types, not just Amazon businesses.

QuickBooks is by far the most popular accounting platform in the market. It has a direct integration option with Amazon, though most commentary suggests using a third party connector (A2X, Link My Books, Synder) to properly handle Amazon data. It is also more recommended for US-based businesses. However, QuickBooks is also relatively expensive and is notorious for raising prices (as in, up 35% in the last 3 years as of this writing.)

Xero has no direct integration with Amazon, relying instead on those same third party connectors. It tends to be much more recommended for non-US businesses (especially anyone based in New Zealand or Australia.) And it is quite a bit less expensive than QuickBooks.

Now let’s look at the third party connectors. While there are a lot of more general purpose middleware solutions out there (e.g. Zapier, Webgility, etc,) we are going to focus on the 3 that appear to be the best tailored for eCommerce.

A2X Accounting is well respected for their data accuracy and working especially well with QuickBooks. They use the “summarized” approach to bringing in Amazon data, though they have a creative solution for splitting payouts across periods. They are said to be a bit more complex than other solutions, and more expensive.

Link My Books, which also uses the “summarized” data approach, focuses a bit more on ease of use and VAT compliance. It is also a bit less expensive than A2X Accounting.

Synder is a more broad-based connector, working not only with Amazon and other marketplaces, but also with payment platforms like Stripe, PayPal and Square. They also support the “detailed” approach to Amazon data in your accounting platform. They tend to be a bit more complex, which, given their extra capabilities makes sense. And their pricing is a bit higher.

The combos

Given the performance and “clutter” concerns, and seeing the US vs non-US focuses, it would seem like the choices really come down to:

QuickBooks + A2X Accounting (if you are US-based)
Xero + Link My Books (for non-US businesses.)

In both cases, you will be using the “summarized” Amazon data approach, with the pros and cons mentioned earlier.

Both combinations are also designed very well to work with accounting professionals.

In terms of pricing, QuickBooks Online + A2X Accounting is going to be on the more expensive side, at likely $100-$200/mo to start (depending on how many channels you link and transactions you process.)

Xero + Link My Books appears to start at about half that rate and go up from there.

One additional thought: by using two different applications, it might make for fun customer support inquiries if/when something changes or breaks. And given how often Amazon adds or changes their fees, software updates are inevitable.

Finaloop

Another relatively new option, Finaloop is a “full service” solution for eCommerce businesses looking for software + bookkeeping all in one place. Like Seller Ledger, they provide the accounting platform and a direct integration with Amazon, using the “detailed” data approach. And similar to Synder, they also link to other marketplaces and payment platforms. But their big claim to fame is that their service also comes with team members who will do your bookkeeping for you.

With pricing that starts at $250/mo, the base pricing isn’t that much more expensive than QuickBooks + A2X Accounting. But, prices rise pretty quickly and are based on your business revenue.

Limitations/concerns

Given what happened to Bench Accounting, another startup that tried to build a “software + bookkeeping” business (more broadly than eCommerce,) you’ll want to make sure you can take your data with you if needed.

Summary Comparison

Seller Ledger

Best for:

Small to mid-sized Amazon sellers in the US
Those who want detailed Amazon data
Those who want an affordable option

QuickBooks + A2X Accounting

Best for:

Larger US-based Amazon sellers
Those who want summary level data
Those willing to pay for quality/reputation
Already have an accounting pro that likes this combination

Xero + Link My Books

Best for:

Larger non-US based Amazon sellers
Those who want summary data
Those looking for a more affordable summary solution
Already have an accounting pro that likes this combination

Finaloop

Best for:

Amazon sellers who want to outsource their bookkeeping but don’t already have an accounting pro
Those willing to pay for that outsourcing
Those who want detailed Amazon data

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Track Sales from any Marketplace

Seller Ledger on November 26, 2025

While most of the major eCommerce marketplaces, like Amazon, eBay, Walmart, and Etsy have robust APIs that make it possible for us to automatically import and categorize their transactions, a lot of newer and smaller marketplaces haven’t made that investment.

For some of the more popular ones, like Whatnot, Poshmark, Mercari and Depop, we’ve built a custom import tool for the transactions that they allow you to export. And we continue to evaluate other marketplaces.

But, in the meantime, we’ve recently rolled out the ability to track sales from any marketplace. You can now import order history from any online platform, so long as you can modify their transaction files to match our format. Here’s how it works:

Step 1: Download your transaction history in CSV format

Log into your marketplace and find the place to access your order/transaction history. The more detailed the report, the better. Then, download it in a CSV (comma-separated) format – a very common format for exporting data.

Step 2: Create a new account in Seller Ledger

Follow the steps in our prior blog post to create a new account to track the sales from your marketplace. Name the new account whatever you want (though it’s probably a good idea to include the name of the marketplace in your account name).

Step 3. Reformat the transaction history file

To upload a file with order and refund details, Seller Ledger expects the following fields:

Required:

Order Date
Order ID
Customer Name
Product Name
Quantity
Unit Price
Ship To State
Ship To Zip
Ship To Country

Optional:

SKU
Shipping
Tax
Ship To Address
Ship To City

In fact, it may be easier to simply use our sample format file, which we provide here.

Step 4: Upload the new file to Seller Ledger

Click into your newly created marketplace account from the dashboard and click the “Upload history” tab.

You’ll want to choose the “Upload orders” option on the left. Click the “Choose File” button, select the reformatted file you just created, and click Save. Seller Ledger will begin importing your order history, complete with any product, fee and refund details that are provided.

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Donating Inventory

Seller Ledger on November 14, 2025

Sometimes you may find yourself with inventory that isn’t selling, so you think about donating it in the hopes of writing it off. The question is – can you write off inventory donations? And if so, how?

The good news and the bad news

The good news is: yes, you are permitted to donate unsold inventory. According to the IRS:

How much you can deduct

“the amount you can deduct is the smaller of its FMV on the day you contributed it or its basis”

FMV means “fair market value”, as in, what you could sell the item for. And basis is your full loaded cost for that item.

The bad news, at least for Schedule-C filers, is that you do not get to just write the donations off as part of cost of goods sold. From that same IRS publication:

How to classify donations

“You must remove the amount of your charitable contribution deduction from your opening inventory. It isn’t part of the cost of goods sold.”

What this is basically saying is that, instead of adding those donated items to your cost of goods sold total, you need to remove them from your inventory, then deduct the value of those items on Schedule A of your personal tax return.

Handling Inventory Donations in Seller Ledger

Fortunately, Seller Ledger allows you to remove donated items from inventory. When you click “Remove stock”, simply choose the “Remove for personal use” option.

This removes those items from your inventory without adding them to cost of goods sold. Instead, they will be treated as a “Not for business” expense.

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