In short

Tax support for retailers covers the entity or Schedule C return, inventory valuation and cost of goods sold, depreciation of fixtures and point-of-sale equipment, sales tax records, and cash reporting requirements such as Form 8300 for large cash transactions. Owners of pass-through stores also need year-to-date profit for estimated payments.

Inventory on the return

Cost of goods sold depends on beginning inventory, purchases and ending inventory. Publication 334 explains how businesses figure it, and Publication 538 covers inventory methods and the options available to some small businesses. A reconciled year-end count gives your preparer a defensible figure.

Fixtures and equipment

Shelving, displays, POS hardware and leasehold improvements are depreciated or expensed under the rules in Publication 946. We keep costs and dates organized.

Sales tax is separate

Sales tax is filed with your state, not on your income tax return. We keep tax collected in a liability account and reconcile it to state filings, so it never inflates revenue. Your state's rules are linked from our state guides.

Large cash payments

A business that receives more than $10,000 in cash in one transaction or related transactions must file Form 8300. We flag large cash receipts when we see them in deposits.

Estimated payments

Store owners taxed on pass-through income often owe estimated taxes; we provide year-to-date figures before each installment.

Records we request

Year-end inventory counts, sales tax returns, fixture purchases and point-of-sale annual summaries.

We also review shrinkage adjustments and markdowns recorded during the year, since they affect cost of goods sold and should be supported by count records.

Key terms

Definitions for terms used on this page:

  • Cost of Goods Sold: Cost of goods sold is the direct cost of the products a business sold during a period.
  • Depreciation: Depreciation spreads the cost of a long-lived business asset over the years it is used, rather than deducting it all at once.

Retail Stores problems this addresses

  • Daily POS totals must be matched to card batches and cash deposits
  • Inventory is the largest asset and shrink is hard to see
  • Sales tax collected must be kept out of revenue
  • Seasonal buying ties up cash months before the selling season
  • Discounts, returns and gift cards distort reported sales