Retail shops & boutiques
Bookkeeping for retail shops and boutiques
Retail profit sits on the shelf as much as in the bank. Books that treat inventory as an expense at purchase will never tell you what the store is actually making.
The most common problem in a small retail file is simple: everything bought for resale is expensed the day it is paid for. That makes a month with a big buy look like a loss and the month the goods sell look wonderful, and it makes gross margin meaningless.
Recording inventory as an asset until it sells takes more discipline, but it is what produces a real cost of goods figure — and with it, the margin by category that tells you which part of the shop is carrying the rest.
Where the books go wrong
What we look at first
Inventory expensed on purchase
Buying is not selling. Until goods leave the store, the money is sitting on a shelf as an asset, and treating it otherwise distorts every month.Merchant fees buried in the deposit
Card processors deposit net. If only the net lands in the books, sales are understated and a genuine cost of doing business disappears.Sales tax counted as revenue
Tax collected at the register belongs to the state, not the store. It needs to sit in a liability account so the balance is always visible.Shrinkage that shows up once a year
Theft, damage and miscounts are real costs. A count that happens once, in January, means eleven months of numbers that were quietly wrong.
What we do each month
- Sales recorded gross, with merchant fees shown as their own expense
- Inventory purchases recorded as an asset and relieved as goods sell
- Sales tax collected held in a liability account, with the period's figures prepared for your tax preparer
- Card settlements reconciled to bank deposits, batch by batch
- Vendor bills and payment terms tracked, so early payment discounts are not missed
- Bank, credit card and line of credit accounts reconciled
Setting up QuickBooks for it
QuickBooks Online tracks inventory directly on the Plus and Advanced plans. For a shop with a large SKU count, a dedicated retail point of sale feeding summarized figures into QuickBooks is usually the steadier arrangement.
Whichever way the inventory is counted, the chart of accounts needs separate cost of goods accounts by category to make margin readable.
A recurring monthly journal for shrinkage and adjustments, based on your counts, keeps the inventory asset honest between full physical counts.
Carey is a QuickBooks Online Advanced ProAdvisor, so a file can be set up, cleaned up or migrated as part of the same engagement — see QuickBooks services.
Reporting
The numbers worth watching
Gross margin by category
What each part of the shop earns after cost of goods. It usually surprises owners at least once.Inventory turns
How quickly stock converts back into cash. Slow-turning categories are cash sitting still.Sales per open day
A plainer measure than monthly totals when the number of trading days moves around.
Questions we are asked
We sell in the shop and online. Can both be in one set of books?
Yes, and they should be. Online and in-store sales are recorded as separate revenue streams within the same file, with their own fees and shipping costs, so you can see how each channel performs while the business still has one bottom line.
Do you file our Idaho sales tax return?
We keep the sales tax records and prepare the figures each period, so the return is straightforward to complete. Filing the return itself is tax work, which stays with your tax preparer — see what we do and don't provide.
Start with a conversation
Let's look at your books together
Tell us about your church or business and where your bookkeeping stands. Carey will follow up to arrange a consultation, and you'll receive a written scope before any work begins.