Year-End Inventory Count for Resellers: How to Do It, What to Include, and Why It Matters

A year-end inventory count is a record of every item you own for resale on December 31 and what you paid for it. Resellers need it because your cost of goods sold for the year is generally calculated as beginning inventory plus purchases minus ending inventory. Count everything in your booth, storage, and online listings, record the cost of each item (not the price tag), and save the list with your tax records. This post walks through how to do it in an afternoon. It is general information, not tax advice; a tax professional can tell you how the rules apply to your business.

Why the Count Matters

When you buy inventory, you generally do not deduct it right away. You deduct the cost of the items you actually sold during the year. The usual formula is:

• Beginning inventory (your count from last December 31)
• plus purchases of inventory during the year
• minus ending inventory (this year's December 31 count)
• equals cost of goods sold

Example: you started 2026 with $3,000 of inventory at cost, bought $9,000 more during the year, and end with $4,000 on the shelves and in storage. Your cost of goods sold is $3,000 + $9,000 − $4,000 = $8,000. If you skip the count and guess low, you overstate your cost of goods and understate your profit. If you guess high, you pay tax on profit you did not earn this year. For a fuller explanation, see our post on COGS vs. expenses.

Some small businesses may qualify for simpler ways to account for inventory. Whether that applies to you depends on your business and current rules, so ask a tax professional before choosing a method, and use the same method consistently.

When to Count

December 31, 2026 is a Thursday. Most booth sellers cannot count on the exact day, so pick a quiet day close to it. Count, then adjust for anything that sells or comes in between the count and December 31. Many vendors count the morning of December 30 or 31, or on January 1 and back out any New Year's Day sales. Whatever you choose, write down the date and use the same approach every year.

What to Include

• Everything in your booth, cases, and on the floor
• Items in storage: garage, basement, storage unit, or car trunk
• Items listed online but not yet sold
• Items bought but not yet cleaned, priced, or listed
• Seasonal stock you packed away (the Christmas boxes count too)
• Items at a repair shop, consignment shop, or show that you still own

What to leave out

• Items sold but not yet shipped. If the sale happened in 2026, it belongs in 2026 sales, not inventory.
• Consigned items you sell for someone else. You never owned them. Record them separately.
• Display props and fixtures. Shelves, lights, and cases are business equipment or supplies, not inventory, unless they are tagged for sale.
• Personal items you have decided to keep.

How to Count: Step by Step

1. Gather your purchase records. Receipts, estate sale tickets, auction invoices, and your sourcing notes.
2. Work one area at a time. Booth shelf by shelf, then each storage bin. Label bins as counted.
3. Record each item: description, quantity, date bought if known, and cost.
4. Use cost, not retail. A Pyrex bowl tagged $36 that you paid $6 for goes on the list at $6.
5. Allocate lot costs. If you paid $40 for a box of 20 items, spread that cost across the items. Equal shares ($2 each) is simplest; weighting by expected value is more accurate. Pick one approach and stay consistent.
6. Mark damaged or unsellable items. Note anything broken, stained, or missing parts. Ask your tax professional how to treat items you will not be able to sell at normal prices.
7. Total by category and overall.
8. Save it with your tax records: a spreadsheet, app export, or signed paper list.

Speed Tips for a Big Booth

• Count with a partner. One person calls out items, the other records.
• Use tag codes. If your price tags carry a cost code or item number, counting becomes a matter of reading tags.
• Photograph shelves first. Photos help you finish at home if the mall closes or you run out of time.
• Count small-lot items by group. For instance, “48 records, average cost $1.50, total $72,” if your records support the average.
• Count storage before the booth. Storage does not change while you work; the booth might.

Keep a Running Inventory Instead

The easiest year-end count is the one you mostly did during the year. If every item is recorded with its cost when you buy it, and marked sold when it sells, your December count becomes a check rather than a rebuild. You walk the booth, confirm what is there, and fix the handful of items that were missed or walked off.

PocketPrice's inventory tracking stores each item's cost and price, records sales as they happen, and keeps a running total of what is still on hand. Pair it with expense tracking and you have your purchases, sales, and costs in one place when you meet your tax preparer. Our booth inventory management guide covers the day-to-day habits.

Reconcile With Your Sales

After counting, compare your list with what your records say should be there. Missing items usually fall into a few groups: sold but not recorded, moved to storage and forgotten, broken and thrown out, or stolen. Each one tells you something. Unrecorded sales mean your sales total may be low. Theft and breakage are real business losses; a tax professional can explain how to document and treat them. Our post on preventing booth shoplifting has ideas if losses seem high.

Year-End Inventory Checklist

• Count date chosen and written down
• Booth, storage, unlisted, and online items all counted
• Consigned items, sold-but-unshipped items, and fixtures excluded
• Each item recorded at cost; lot purchases allocated
• Damaged and unsellable items noted
• Totals by category and overall
• Count reconciled with sales and purchase records
• List saved with your tax records and a copy backed up
• Beginning inventory for 2027 noted as this year's ending number

Common Mistakes

• Using retail prices. Inventory is recorded at cost. Using price tags overstates inventory and understates cost of goods sold.
• Forgetting storage. The boxes in the garage are inventory, even if they are not priced.
• Counting once and never again. Next year's cost of goods depends on this year's ending number.
• Mixing personal and business items. Decide what is for sale and keep the rest separate.
• No paper trail. Keep receipts or notes showing what you paid. Estimates should be reasonable and documented.

Need to put a value on a box of unpriced finds before you count them? Snap a photo with PocketPrice to get a selling price for your market, then record your cost in your inventory. For the bigger tax picture, read the year-end tax checklist for resellers.