Cost of goods sold?

Question

If I had a job sellng things on Ebay, would the cost of sending goods to customers, Ebay fees and Paypal fees be included in the cost of sales?

Answer 1

Only if you charge those costs to the customer.

For example if you sold a book to a customer and the customer will pay you for the cost of the book, shipping charges and finance fees then those same items (what you paid for the book, how much it cost you to ship it and how much PayPal charged you) would be in the account "Cost of Goods Sold" or COGS.

Further the name of the account even dictates what belongs there. Think about it... Cost of Goods Sold in other words means the expenses for something you just sold to a customer.

As a rule, if a customer pays you for an expense, it's COGS... if they don't, it's something else.

Answer 2

The actual price you PAID for the products you sold is Cost of Goods Sold.

Ebay fees would be listed under Advertising Expense, Paypal Fees would be Bank Service Charges and the cost of shipping goods to customers would be Postage and Shipping (or Freight).

All still deductible on your taxes, just don't call it COGS.

Answer 3

The items you listed would be Cost of Goods Sold: Gross Sale less freight and taxes, and paypal fees. Cost of Sales is advertising or page fees for the individual item. Ebay and paypal membership is allocated to overhead.

Answer 4

Think of it this way: Whatever you paid to acquire the inventory is figured into the Cost Of Goods Sold. So if a widget cost you $10.00 and you paid $2.00 in shipping fees to Receive it, your COGS is $12.00.

Now whatever fees you have to pay when you sell the inventory is considered an expense. This would include your Ebay fees, Paypal fees, and shipping fees to the customer.

You can offset these expenses by figuring them into your sell price, but they are not a COGS from a pure accounting sense.

Example:

Sold Widget for -------- $25.00 (includes all outgoing fees)
COGS for Widget ------ $12.00 (used from example above)

Gross Profit ------------- $13.00

EXPENSES:
Ebay fees ---------------- $ 1.00
Paypal fees -------------- $ 1.00
Shipping fees ------------ $ 3.00
Other expenses -------- $ 2.00

Net Profit ------------------ $ 6.00

Answer 5

No. The actual cost of the items that you buy for resale is a cost of goods. The fees are expenses.

Answer 6

YES: GOOD QUESTION THIS IS AN OFTEN OVER LOOK BUSINESS EXPENSE THAT NEED TO BE CONSIDERED.

Answer 7

No, nice try! Working on your taxes, eh?