Retail Accounting Services

Retail accounting turns on three things that generic bookkeeping treats as ordinary. Cost of goods sold depends on an inventory method chosen and applied consistently. Processors deposit sales after deducting fees, refunds and chargebacks. Sales tax collected at the register belongs to the state, not to the business. Generic bookkeeping records all of that as deposits and expenses. Retail accounting separates gross sales, fees, refunds and tax collected.

We build and run retail books for storefronts, e-commerce sellers, and the growing number of businesses that are both at once.

What our retail accounting services include

• Inventory accounting and cost of goods sold, with the method (FIFO, weighted average, or the retail method) chosen for your mix and documented.
• Channel and processor reconciliation: Shopify, Square, Amazon, and card settlements tied to gross sales, fees, refunds, and chargebacks.
• New York sales tax: registration, correct product taxability at the register, and the quarterly returns with their clothing schedules.
• Form 1099-K matching, so what processors report to the IRS agrees with what your books and returns say.
• Monthly close with margin reporting by product line, so you can see which products earn and which do not.
• Daily ledger upkeep through our bookkeeping practice, and year-end handoff into the business tax return.

New York sales tax for retailers and the $110 clothing exemption

New York exempts clothing and footwear priced under $110 per item from the state’s 4 percent sales tax, and New York City exempts its local share too, so an eligible $109 item rings up tax-free in the five boroughs while a $115 one is taxed on the full price. The threshold applies to each item separately, and outside the city the local rate varies county by county. The item-level rules are set out in our guide to the under-$110 exemption. The accounting job is making sure your point of sale and your online store both apply them, on every SKU, in every county you ship to.

One item at $109 and one at $115 are taxed differently, on the full price.

Getting the setting wrong costs money in both directions. Overcharge and you lose price-sensitive sales. Undercharge and the shortfall plus penalties is yours at audit. The seller owes the tax either way, whether it was collected and not remitted or never collected at all.

How we set up retail books, step by step

1. Map the channels. Every selling channel and processor is connected and mapped to the chart of accounts, with settlement accounts kept separate from revenue so deposits are no longer recorded as sales.
2. Settle the inventory method. We pick and document the costing method, establish opening inventory, and set the count-and-adjust cadence that keeps cost of goods sold accurate between physical counts.
3. Run the monthly close. Reconciliations, inventory adjustments, sales tax accruals, and a margin report you can read in five minutes, delivered on the same date every month.

What retail clients say about our accounting work

“If you’re a business owner, make sure to meet with your accountant and discuss your business structure... Review ahead of time with a tax attorney or a CPA what is your business structure and what’s going to be the one that’s most optimal for the type of income that you earn, the state that you’re located in, and how much you earn.”

The finding we make most often when we take over a set of retail books: net processor deposits recorded as revenue, which understates sales by the amount of the processor fees and breaks the match against the processor’s 1099-K. The IRS compares those forms to returns line by line, and a mismatch triggers a notice that takes months to unwind. One mapping fix ends it permanently.

What retail accounting costs

Retail accounting is priced as a flat monthly fee, not by the hour. Five things move the number.

• How many channels and processors you sell through, and whether every one of them has to be reconciled.
• Transaction volume, and how often you file sales tax.
• How many SKUs you carry, and how inventory is tracked today.
• Which states you have customers or stock in.
• How far behind the books are when we start.

These are the factors, not a quote. We price your books and put the monthly figure in writing before any work starts.

Signs your retail books need a specialist

• The profit and loss shows deposits, and nobody can say what gross sales were.
• Inventory has never been counted against the books, or cost of goods sold is a guess made every April.
• Sales tax is being collected, but the last return filed does not match what the register took in.
• The 1099-K from your processor does not tie to the revenue on your tax return.
• You can name your best-selling product but not your most profitable one.

Most of these are resolved within a few weeks of the first properly built month-end close.

Reviewed by George Dimov, CPA, New York, NY. Serving clients in all 50 states, 15+ years advising on retail accounting and taxation. President of George Dimov, CPA, a New York City firm serving clients across the five boroughs and nationwide.