Helping handmade, creative and craft business owners learn to handle their bookkeeping, one step at a time!
Helping handmade, creative and craft business owners learn to handle their bookkeeping, one step at a time!
Confused about when inventory and Cost of Goods Sold actually affect your taxes? This post breaks down when inventory becomes COGS, why your profit can feel “off,” and how it all shows up on your Schedule C—without accounting jargon or panic.
This post was originally written & published 1/27/2020 and has been updated.
COGS doesn’t have to feel like a mystery novel. Here’s how to calculate cost of goods sold for one handmade item using a crochet amigurumi witch—materials, selling fees, and the bookkeeping flow. PLUS there’s a video showing how this is done using the 10-Minute Bookkeeper system including the Handmade Product Pricing & COGS Calculator. Part 7 of the Inventory + COGS for Handmade Businesses series.
Tracking Cost of Goods Sold (COGS) and inventory can feel confusing because bookkeeping, pricing, and taxes all use them differently. This post breaks down the 3 real reasons handmade sellers need to track COGS + inventory — with a full start-to-finish example so your numbers (and profit) finally make sense.
Finished items inventory isn’t just what’s sitting on your shelves—it’s money tied up in your handmade business. In this post, you’ll learn how to track finished items inventory using a simple spreadsheet system, what actually needs tracking, and how to avoid the spreadsheet overwhelm that trips up so many makers.
Materials inventory tracking can feel like a brain-melter for handmade business owners — especially if you’re using spreadsheets. In this post, you’ll learn what you actually need to track (and why), where spreadsheets get complicated fast, and how to make it easier with a system that has the formulas built in.
Inventory is one of the most misunderstood parts of running a handmade business — and it directly affects your expenses, pricing, and taxes. In this post, we’ll break down what inventory actually is, why you can’t deduct materials when you buy them, and which makers truly need to track it. No accounting jargon, no overwhelm — just clear explanations that finally make inventory make sense.
Originally written & published in 2020 – updated in 2026 for clarity.
