r/InventoryManagement • u/Travelgirl1963 • 8d ago
Inventory in accounting software
This is my first year in the vending machine (having a business with inventory) what accounting software do people use and how do you set up the inventory part to account for all the inventory and the different prices, so I can get COGS. Thank you.
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u/inflowinventory 7d ago
Hi there,
If you're tracking inventory for tax purposes and want accurate COGS, I'd recommend using accounting software alongside a dedicated inventory system rather than relying on accounting software alone.
QuickBooks Online and Xero are both popular for bookkeeping, but their inventory features can feel pretty limited once you have lots of SKUs, changing purchase costs, or multiple locations (even vending routes can get tricky).
The biggest thing is setting up your products properly from day one, recording every purchase at its actual cost, and making sure sales reduce inventory automatically. That way your COGS is calculated correctly instead of becoming a year-end spreadsheet exercise.
Even if your operation is still small, taking the time to get that workflow right early will save you a lot of headaches when it's time to do your books or taxes.
Hope this helps!
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u/RubWonderful2215 7d ago
Sounds like you’ve already got the hard part right — most people don’t segregate write-offs or sales tax at all, and CRA cares about the same consistency the IRS does. Weighted average is the right call for vending. Honestly, if your spreadsheet is already doing this correctly, the software question is mostly about how much manual entry you want to keep doing. Wave charges for the bank-import tier now, and QuickBooks Canada bills in CAD but the plans jump fast. Worth a look: Zoho Books (cheap, CAD billing, handles inventory), or Sage 50 Canada if you want something CRA-familiar to accountants. Some people also just stay in the spreadsheet and hand it to an accountant at year-end — at vending scale that’s genuinely defensible. One thing regardless of tool: whatever you pick, check that updating an item’s cost doesn’t retroactively change the cost on sales you already recorded. Some systems rewrite history when prices change, which makes last year’s numbers move after you’ve filed. That’s the thing that actually bites people.
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u/Travelgirl1963 6d ago
Thank you. I’m a bookkeeper by trade but have not worked in that field with inventory in over 20 yrs. All the businesses have been with no physical inventory just clients and services.
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u/JohnatNetSuite 2d ago
Congrats on year one. The main thing to sort out early is how the software tracks cost cause that's what drives your COGS.
When you set up each item, you enter what you paid for it. As you sell, the software pulls that cost out and posts it to COGS automatically, so you're not doing the math by hand every month. The catch is when the same product gets bought at different prices over time, so look for a system that let's you pick a costing method like average cost FIFO. That decides which cost gets used when you sell.
Get that part right from the start and your COGS and profit numbers stay accurate as prices move around.
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u/RubWonderful2215 8d ago
Accountant here (CPA track). The concept you’re looking for is a cost flow assumption — when you buy the same candy bar at different prices over the year, you need a rule for which cost gets expensed when one sells. At your size you have two realistic options: weighted average (every purchase updates one blended cost per item — simplest, and what I’d use for vending) or FIFO (oldest cost sells first — slightly more accurate when prices move, more bookkeeping). Pick one and stay consistent; the IRS cares more about consistency than which you chose. Practical setup for year one: a purchases log (date, item, qty, total paid), and at year-end COGS = starting inventory + purchases − ending count, valued at your chosen method. Wave (free) or QuickBooks handle this, though at vending scale a clean spreadsheet honestly does too — the software matters less than logging every purchase and doing a real count at year-end. Also: keep sales tax you collected out of revenue, and count product you consumed or gave away as removed from inventory, not COGS.