With Cost of Goods Sold, taxomate calculates the cost of the items you have sold on Shopify for each payout period.
taxomate sends the total amount as a summarized invoice to your accounting system. This allows you to record changes in inventory and sales costs accurately and provide you with a clear view of your profit margins in your accounting software.
What method does taxomate's Cost of Goods Sold feature use?
taxomate uses the average cost method.
Costs can be updated on a per payout basis and you can apply default costs to any payout period.
👉 COGS = (Items Sold - Items Returned) X Cost Per Unit
Here is a quick example of how we calculate COGS:
Let's say you sold $1677 worth of product in a payout period.
If you are using the default accounts we set up, taxomate sends an invoice that will credit the Shopify Inventory (asset) account $1677, which will cause the Shopify Inventory account to decrease by $1677.
The invoice will also debit $1677 from the Shopify Cost of Goods Sold (expense) account, which will cause the Shopify Cost of Goods Sold account to increase by $1677.
Should I use the Cost of Goods Sold Feature?
This really depends on whether you are using accrual or cash basis accounting. If you are using accrual accounting you may want to use the COGS feature. It you are uncertain, we definitely recommend you speak with your accountant.
Does Taxomate integrate directly with QuickBooks's or Xero's inventory features?
No, but we are working on a solution. Stay tuned!
How do I get started using the Cost of Goods Sold features?
Check out this article to get started.