Entering shipping costs from vendors

[Redfishbluefish]

Hi there,

When receiving goods, I've been adding the shipping costs to the wholesale price of my goods when entering the cost into square. Is there a separate place to enter the shipping where I can deduct it as a cost for tax purposes? It occurred to me that when I do inventory for tax purposes, I am paying tax on the item and the shipping. I'm talking about shipping from vendors, not shipping to customers.

[Candlestore]

I am not aware of any place in Square to add the ship from suppliers cost as Square is more of a CC processor and not into the entire Financials of a business like an accounting software package is.  This is also why you cannot record your Electric bill in Square as an expense to be written off as an expense.

This is why there are numerous threads in this forum about Tax software and integrations with Square. 

Which Software is right for you may not be right for someone else.  You may want to first ask your accountant which Financial Software you should use for your business.  If you use the same one your accountant uses, they might be able to help you set it up and give you pointers plus may save you when they do your taxes.  If they know the software and where to get the information from quickly, their Time expense to do your Taxes might be less.   

Time is $$$ 

[Redfishbluefish]

Thanks for taking the time to answer.  I use the retail plus package which I use for more than a credit card processor. So when you receive goods into square, do you split each transaction as you put it into your bookkeeping software (some as freight and some as items for resale) and then use the wholesale price without the shipping cost as the "cost"?

[Candlestore]

@Redfishbluefish ;

In QuickBooks I split the numbers and in Square they are combined. ( <-- short answer)

Long answer what I do:

I also use the Square for Retail, but for accounting I use QuickBooks Desktop.  So I created a google sheets spreadsheet that I enter the cost, quantity, total price for all goods and a shipping cost.  So what I have done in the spread sheet was tried to do calculations that takes the Total cost of the items and get an estimate of how much of the shipping is allocated to each item based on its cost.  So with this estimate is what I fill in for my cost per item in Square.  Now in Quick Books I put in the cost of the item and the shipping cost as a flat expense for my accountant to handle.   My COGS in Square and QuickBooks never match and it could be because of this.   I use Squares number more as a guideline for me to set my sales price.  

When I place an order to a vendor I may have  50 of item A, 75 of Item B etc.... but get it shipped LTL.  So I do not want to divide shipping cost by the number of items since some items might cost $5 and others $30, weights and size of boxes also come into play.   By doing the spreadsheet calculation extrapolation based on dollar value, I get a way I can 'guess' at shipping per Item to add in to the cost.  This might be off a few cents off probably due to rounding.  

Now I am not an accountant, just telling you what I do.  Which is why I let you know Square is meant for a Credit Card processor but not for accounting which is what the COGS report comes under more so, IMO.

My calculation ends up being something like:

Item A has 50 items and the Purchase price for all of Item A was say $250

All Items in this shipment are $2000

Shipping was $135

 so my total invoice is $2135.00

I take the 250 / 2000 = .125 (% dollar value of this item compared to rest of order)

then I take the .125 * 135 =$16.875 ( The Total Shipping for Item A)

then I take the 16.875 / 50 = $0.3375 (shipping cost for each item A)

So my Cost for Item A is 250 / 50 = $5 plus the .3375 or $5.34 per item A in Square.

Now your gonna say that is a lot of math, but all I enter is my vendors Price per Item, Qty I ordered and then the total price and shipping cost.  The other numbers are calculated in the spreadsheet and I only see $5.3375 or $5.34 after its rounded.  Then for any other items I just have to enter my cost and qty of items ordered.  The 5.3375 to $5.34 is the rounding errors that can add up to a inflated COG, but I use this COG to calculate my selling price and keep track of what the minimum I can sell a non selling item for without a loss.

I hope this makes sense.

[Redfishbluefish]

Hi Keith,

Thanks for that. That's basically what I do except for the quickbooks part. I haven't been splitting the entries on QB which is fine as far as my line item in my tax form as far as money spent on "items for resale". I'm getting the deduction on the freight because it's included in the "items for resale" line item. However, when using square for inventory, which I am, all my costs in square include shipping so when I total my inventory$ amount, it will include the shipping. Now I'm paying tax on not just the inventory but the shipping. I guess it's a wash because I'm deducting the shipping as part of the "items for resale".......I've decided that I'm probably going to separate the actual cost of the items and the shipping as a split transaction in quickbooks. And then I'll put the costs of the items in square as the actual wholesale cost without the shipping. I can get the cost of goods report on quickbooks as well as on square. But....I'd like to get an accurate cost of goods sold AND an accurate inventory dollar amount on square and should be able to for the money I pay.