To track inventory purchase costs from store receipts, keep one row per receipt as your purchase log, then split each receipt into the things you will resell, the supplies you use up and anything personal. Give every inventory line its share of the sales tax and shipping, divide by the number of units, and leave personal items out of purchases.
A store receipt is not an inventory cost. It is a pile of different things with tax and delivery spread across all of them. Below are the IRS rules for what counts, then three real looking receipts worked through to a cost per item.
What counts as inventory cost
For merchandise you buy during the year, IRS Publication 538 says cost means "the invoice price minus appropriate discounts plus transportation or other charges incurred in acquiring the goods" (IRS Publication 538). In practice that gives you three rules:
- Use the price you paid. Trade or quantity discounts, like a coupon at the register, reduce inventory cost. Cash discounts for paying early can either reduce cost or be counted as income, as long as you do it the same way every year.
- Add freight-in. IRS Publication 334 lists freight-in on merchandise you purchase for sale as part of cost of goods sold (IRS Publication 334). Shipping on the goods you resell belongs in their cost.
- Take personal items out. Schedule C line 36 is "Purchases less cost of items withdrawn for personal use". Returns and allowances on purchases also come off.
Sales tax depends on your state. If you buy stock with a resale certificate you may not be charged tax at all, so check your state's rules. This article is not tax advice.
A worked example: three receipts for a candle seller
This is example data. The receipts are made up for a small candle seller who pays 9.25% sales tax on store purchases:
- Costco, October 3, $234.79 (tax $19.88): 3 bags of soy wax, 4 twelve packs of glass jars, a case of printer paper and a pack of paper towels for home.
- Michaels, October 7, $78.14 (tax $6.62): 2 packs of wicks and 6 bottles of fragrance oil at $7.59 each after a 20% coupon. The coupon is a trade discount, so the cost is the price paid.
- Uline online order, October 12, $127.80 (no tax, $19.80 shipping): 2 packs of shipping boxes and one 24 case of glass jars.
Each line gets a share of the receipt's tax and shipping in proportion to its price. On the Costco receipt the tax shares round to one cent too many, so one cent comes off the biggest line (the wax) and the shares add back to $19.88.
| Receipt | Item | Qty | Paid | Bucket | Tax share | Freight share | Landed cost | Per unit |
|---|---|---|---|---|---|---|---|---|
| Costco 2026-10-03 | Soy wax flakes 10 lb | 3 | $74.97 | inventory | $6.93 | $0.00 | $81.90 | $27.30 per bag |
| Costco 2026-10-03 | Glass jars 12-pack | 4 | $73.96 | inventory | $6.84 | $0.00 | $80.80 | $1.68 per jar |
| Costco 2026-10-03 | Printer paper case | 1 | $42.99 | supplies | $3.98 | $0.00 | $46.97 | |
| Costco 2026-10-03 | Paper towels | 1 | $22.99 | personal | $2.13 | $0.00 | $25.12 | |
| Michaels 2026-10-07 | Cotton wicks 100-pack | 2 | $25.98 | inventory | $2.40 | $0.00 | $28.38 | $14.19 per pack |
| Michaels 2026-10-07 | Fragrance oil 4 oz (after 20% coupon) | 6 | $45.54 | inventory | $4.22 | $0.00 | $49.76 | $8.29 per bottle |
| Uline (online order) 2026-10-12 | Shipping boxes 25-pack | 2 | $62.00 | shipping supplies | $0.00 | $11.37 | $73.37 | |
| Uline (online order) 2026-10-12 | Glass jars 24-case | 1 | $46.00 | inventory | $0.00 | $8.43 | $54.43 | $2.27 per jar |
Sorted into buckets, only two thirds of the money was inventory:
| Bucket | Amount | Where it goes |
|---|---|---|
| Inventory (wax, jars, wicks, fragrance) | $295.27 | Purchases, then cost of goods sold as candles sell |
| Shipping supplies (boxes) | $73.37 | Business expense, not inventory |
| Supplies (printer paper) | $46.97 | Business expense, not inventory |
| Personal (paper towels) | $25.12 | Stays out of purchases |
| Total of the three receipts | $440.73 |
The jar that looked cheaper
The online case of jars was $46.00 for 24, which reads as $1.92 a jar. The store twelve packs were $18.49 for 12, about $1.54 a jar on the shelf. But the online order carried $19.80 of shipping, and $8.43 of it belongs to the jars. With that freight in, the online jars cost $2.27 a jar. The Costco jars, with their share of sales tax, cost $1.68 a jar.
If you had left the shipping out, you would think each candle's jar cost $1.92 and price your candles on a number 35 cents too low. That is the whole reason to track landed cost per item and not the shelf price.
Where Slipsheet fits
Slipsheet reads each receipt you upload (JPG, PNG, HEIC or PDF) or forward by email on a paid plan, and gives you one row per receipt. The export is one CSV with nine columns. That is your purchase log, and the file_name column links each row back to the image. Here are the three example receipts as rows:
| date | merchant | total_amount | currency | tax_amount | category | client_tag | notes | file_name |
|---|---|---|---|---|---|---|---|---|
| 2026-10-03 | Costco | 234.79 | USD | 19.88 | Inventory purchases | candles | mixed receipt: split in Inventory tab (R1) | r1-costco.jpg |
| 2026-10-07 | Michaels | 78.14 | USD | 6.62 | Inventory purchases | candles | mixed receipt: split in Inventory tab (R2) | r2-michaels.jpg |
| 2026-10-12 | Uline (online order) | 127.80 | USD | 0.00 | Shipping supplies | candles | mixed receipt: split in Inventory tab (R3) | r3-uline.jpg |
Slipsheet does not export line items. The per item split above is a second tab you build from these rows: one line per item, with the receipt's date and merchant so you can find it again. Two columns help. Use notes for "mixed receipt: split in Inventory tab" so you know a row has been split, and client_tag for a product line, here "candles".
For getting the rows into a spreadsheet, see how to convert receipts to a spreadsheet. For a category list that keeps stock, supplies and shipping apart, see how to organize receipts by category. Long store receipts with codes and abbreviations are covered in how to read supermarket receipts.
The CSV opens in any spreadsheet and imports into QuickBooks or Xero as a CSV. On the Pro plan, rows can also sync to Google Sheets. Starter is $5 a month for 250 receipts and Pro is $12 a month for 1,500, both with a 14-day free trial and no card. Start a free trial.
At year end
- Your purchases figure is the inventory bucket, less anything you took for personal use.
- Freight-in on stock you bought to sell is part of cost of goods sold.
- Purchase returns and allowances come off purchases.
- Count what is left on the shelf for ending inventory, unless your tax pro says your business can use the small business option in the FAQ below.
FAQ
Does shipping count as inventory cost?
Yes, when it is shipping on goods you bought to sell. IRS Publication 334 lists freight-in on merchandise you purchase for sale as part of cost of goods sold. On a mixed order, give the inventory lines their share of the shipping and the rest goes with the other items.
What do I do with personal items on a business receipt?
Keep them out of your purchases. Split the receipt, give the personal line its share of the tax, and leave that amount out of your inventory and expense totals. Schedule C line 36 is purchases less the cost of items withdrawn for personal use, so personal items never belong in that number.
Do I have to keep an inventory as a small seller?
Not always. IRS Publication 334 lets a small business taxpayer, with average annual gross receipts of $31 million or less over the prior 3 years and not a tax shelter, treat inventory as non-incidental materials and supplies or follow its books. Ask your tax pro which method fits you.
Can Slipsheet split a receipt into line items?
No. Slipsheet gives you one row per receipt with date, merchant, total, tax, category, client_tag, notes and the file name. That row is your purchase log and your link back to the image. The per item split is a second tab you build in your spreadsheet from those rows.