Shopify closing inventory value for taxes: what your accountant needs at year-end
Run Shopify's Month-end inventory value report for the last day of your tax year: it gives units on hand and their value at Cost per item. That value is your ending inventory, Schedule C line 41, and next year's beginning inventory, line 35. Before you hand it over, check that Cost per item is what you really paid: the report multiplies by that field, and Shopify does not update it when stock arrives. Since 1 October 2026 the report counts On hand units, including units committed to unfulfilled orders.
The Schedule C lines
| Line | What |
|---|---|
| 35 | Inventory at beginning of year |
| 36 | Purchases less cost of items withdrawn for personal use |
| 37 | Cost of labor |
| 38 | Materials and supplies |
| 39 | Other costs, including freight-in |
| 40 | Add lines 35 through 39 |
| 41 | Inventory at end of year |
| 42 | Cost of goods sold |
Corporations and partnerships report cost of goods sold on Form 1125-A with their return.
Getting the figure from Shopify
- Go to Analytics > Reports > Month-end inventory value.
- Set the date to the last day of your tax year.
- Note the Summary row, units and value, and export the report.
What the report counts (Shopify Help, inventory reports):
- On hand units from 1 October 2026; days before that still show Available.
- Each variant's units × its Cost per item.
- Untracked variants, variants without a cost, and variants at zero or below count as 0.
- The report lists at most 1,000 rows. Details in On hand vs Available.
Six checks before you send it
- Cost per item is current, and includes freight-in if your books do.
- No variants without a cost: they count as 0.
- No stock below zero: it counts as 0. Fix the counts first.
- A count, if you took one. Use your physical count where it differs, and adjust Shopify.
- Beginning = last year's ending. The IRS says they are usually identical; a difference must be explained in a schedule attached to your return.
- Keep the export with your tax records.
A worked example
| Variant | On hand | Cost per item | Value |
|---|---|---|---|
| Mug | 800 | $12.50 | $10,000.00 |
| Tote | 1,375 | $8.00 | $11,000.00 |
| Ending inventory (line 41) | $21,000.00 |
| Line | Amount |
|---|---|
| 35 Beginning inventory | $18,400.00 |
| 36 Purchases | $52,000.00 |
| 39 Freight-in | $2,600.00 |
| 40 Total | $73,000.00 |
| 41 Ending inventory | $21,000.00 |
| 42 Cost of goods sold | $52,000.00 |
If the mug's real cost is $13.00, not $12.50, ending inventory is $400.00 higher and cost of goods sold $400.00 lower. A stale Cost per item moves tax figures.
How True COGS helps at year-end
- Inventory value at what you paid, on Shopify's On hand count, next to Shopify's own figure and the difference. On the Free plan.
- Month-end close for each month: opening inventory, purchases with freight and duty, revaluations, closing inventory and declared stock losses.
- Every price is kept with its date, so your accountant can trace any value to its delivery.
Related guides
Questions merchants ask
Which Shopify report shows ending inventory for taxes?
Month-end inventory value, in Analytics > Reports. Set the date to the last day of your tax year.
Does Shopify's inventory value include unfulfilled orders?
Since 1 October 2026, yes. The report counts On hand units, which include units committed to unfulfilled orders.
What if my beginning inventory doesn't match last year's ending inventory?
The IRS says opening inventory is usually identical to the closing inventory of the year before, and any difference must be explained in a schedule attached to your return.
Can I use Shopify's Cost per item for my tax inventory value?
Only if it is what you really paid. The report multiplies by Cost per item, which Shopify does not update when stock arrives. Your accountant decides the costing method.
What do corporations use instead of Schedule C?
Corporations and partnerships report cost of goods sold on Form 1125-A, attached to their return.
Try True COGS free. True COGS is an inventory costing app for Shopify by Nexus Logic Systems. It records the price you paid on every delivery (a received purchase order or a transfer), with its share of freight and duty on paid plans, keeps every price with its date, and writes your moving weighted average cost, or FIFO cost on a paid plan, to Shopify's Cost per item. It is free for up to 25 variants with a cost on record; paid plans start at $29 a month or $290 a year.
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