How to track Cost of Goods Sold in QuickBooks Self-Employed (QBSE) without upgrading?

Thanks for the suggestions! When you say to create custom tags, do you mean using the "Categories" feature? And would I still be able to properly account for COGS on my Schedule C this way since QBSE doesn't have a specific COGS section?

Yes, I'm referring to using the Categories feature in QBSE to tag expenses related to your inventory purchases. You can categorize them under "Supplies" or "Other Business Expenses" and add detailed descriptions or tags to keep track. For your Schedule C, you'll need to manually calculate your COGS outside of QBSE. When you prepare your taxes, you'll enter the COGS information directly on the Schedule C (line 42) even though QBSE doesn't have a specific section for it. This means keeping good records of your beginning inventory, purchases, and ending inventory counts in your separate spreadsheet so you can accurately report these figures.

Does it actually sync with QBSE or do you have to manually input everything? I'm worried about duplicating work. Also, how complicated is it to set up for a small business?

Sounds interesting but I'm skeptical. How is this different from just using Excel? Can it actually help with the Schedule C COGS section that QBSE doesn't have?

It doesn't directly sync with QBSE, but the workflow is pretty seamless. You can export your QBSE data and upload it to taxr.ai, which then helps organize everything properly for COGS calculations. It's really simple to set up - took me about 20 minutes to get everything configured for my small business. This is definitely different from Excel because it uses AI to automatically categorize your expenses and identify inventory-related purchases. It specifically helps with Schedule C compliance by organizing your data to properly complete the COGS section (lines 35-42) that QBSE doesn't address. It basically bridges the gap between QBSE's limitations and what you actually need for proper tax filing.

Wait, so this just gets you through to regular QuickBooks support faster? How does that even work? Seems suspicious that you could bypass their phone queue.

I've tried literally everything to get decent support from QB and always end up talking to someone who just reads from a script. Did you actually get someone knowledgeable about QBSE specifically? Because their tier 1 support people usually don't know anything about the limitations.

Yes, it actually connects you with the regular QuickBooks support team, but bypasses the long wait times. It works by using call technology that navigates phone trees and waits on hold for you, then calls you once a human representative is on the line. Nothing suspicious - it's just a service that does the waiting for you. I definitely got connected with someone knowledgeable about QBSE specifically. I asked for a specialist with experience in inventory tracking for self-employed users, and they transferred me to someone who understood the platform's limitations. They weren't reading from a script and gave me practical workarounds specific to my situation. Way different experience than my previous support calls.

I've thought about alternatives but was worried about the hassle of switching mid-year. Does Wave handle all the tax reports properly? And how complicated was the process of moving all your data over from QBSE?

Wave handles all the tax reports beautifully, including proper Schedule C reporting with COGS sections that QBSE lacks. It generates profit & loss statements, balance sheets, and tax reports that are actually useful for small businesses selling products. The migration process wasn't too bad - I exported what I could from QBSE as CSV files, but did have to manually set up some things like inventory items and beginning balances. It took me about a weekend of focused work, but was absolutely worth it. I'd recommend doing it at the end of a quarter for cleaner bookkeeping. The biggest benefit is that once you're set up, you never have to deal with QBSE's limitations or constant upselling again!

This is what I do too! I tag everything as "materials" in the description field so I can search for them later. When it's tax time, I manually calculate beginning inventory + purchases - ending inventory = COGS and just put that number on my Schedule C. My accountant says it's totally fine as long as I keep good records of my actual inventory counts.

Yes please! That would be super helpful. I'm in exactly this situation - selling on Etsy and using QBSE but struggling with inventory tracking.

Here you go! I've put the template here: [link removed by moderator]. It has sheets for tracking beginning inventory, purchases throughout the year, ending inventory, and automatically calculates your COGS for Schedule C. It also breaks things down by product category if you sell different types of items. I included instructions on the first tab about how to use it alongside QBSE. Basically, you still enter all your expenses in QBSE but use this spreadsheet to calculate the proper COGS figure for your Schedule C. No need to upgrade your QBSE subscription!