What is Inventory? (And Why It Matters) for Handmade Businesses
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.






![[My Handmade Biz] When does Inventory & COGS hit my bookkeeping? Sometimes it can be 2 or 3 years before you sell an item and get to recognize the COGS. This is why keeping detailed records is important.](https://yarnybookkeeper.com/wp-content/uploads/2020/01/2020-01-27-Inventory-to-COGS.jpg)
