Post a daily or weekly sales summary
Your point of sale system reports sales by department, tax collected, payments by type, discounts, returns and gift card activity. Record these summaries instead of every receipt. Compare the card batch totals to your processor deposits and the cash total to your bank deposit. Small differences point to fees, timing or a counting error.
Inventory and cost of goods
Cost of goods sold equals beginning inventory plus purchases minus ending inventory. If your POS tracks inventory, use its valuation report but verify it with a physical count at least once a year. Many shops count by section on a rotating basis. Record freight-in as part of cost, and treat supplies like bags and tags separately.
Shrinkage and markdowns
Shrink is the difference between the expected stock and the counted stock, caused by theft, damage, errors or vendor shortages. Record it as an adjustment and watch the trend. Markdowns and clearance sales reduce revenue but may also signal ordering mistakes. Track them by department to see where you buy poorly.
Vendor terms and open-to-buy
Vendors may offer discounts for fast payment, or require deposits on special orders. Track bills with due dates and pay on a calendar so you capture discounts without hurting cash. Consignment goods belong to the consignor until sold, so they should not sit in your inventory. Customer special orders and layaways are deposits until the customer takes the merchandise.
Gift cards, returns and sales tax
Gift cards sold are liabilities, redeemed amounts become income, and state rules for unredeemed balances vary, so check the unclaimed property rules. Returns reduce sales and may return items to inventory. Sales tax collected is a liability and should reconcile to your return each period. Food, clothing and other categories may be taxed differently depending on the state, so confirm with the tax agency and set POS tax categories accordingly. Review a monthly gross margin by department and compare it with last year, as that figure shows how your pricing and buying decisions are performing.
Seasonality and cash planning
Most stores earn a large share of profit in a few weeks of the year. Plan purchases and payroll against last year's sales by month, and arrange financing before the buying season starts, not during it. Pay attention to inventory turnover, which is cost of goods sold divided by average inventory. Slow items tie up cash and may need a markdown early, when it hurts less.
Separate the roles of ordering, receiving and paying for merchandise where staffing allows. Check each delivery against the purchase order, count cash with two people, and review voids and discounts by employee. Such controls cost little and reduce shrink more than any software feature does.
Keep your lease, sales tax account details and insurance information in one place for quick access.
Common questions
How often should I count inventory?
At least annually for tax and financial statements. A rotating partial count monthly helps catch problems earlier.
Can I deduct inventory when I buy it?
Generally it becomes cost of goods when sold. Ask a CPA about small business rules that may apply.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.