Cost of Goods Sold Report - Incorrect Margin

[lawwley]

Hi All, 

Back again with another question hoping someone with more experience can shine some light. 

We are using square a few months now and have had some issues but only recently started looking at making proper use of their reporting functionality. 

I went to look at a report for september today to realise the profit margin generated by Square is way lower than we normally trade at. So i dug a little deeper. It appears that Square is using the Cost of Goods(CoG) inclusing Tax when it should be using the CoG without Tax. 

Whe it is then calculating the margin it is taking the Net Sale (Excluding Sales Tax - VAT in Ireland) and calculating the profit margin based off of the Gross Cost ( Including sales Tax - VAT). 

Example: 

I buy an item for €100 and sell it for €200 (50% margin).

My actual gross cost for that item is €123 (23% VAT - Sales Tax). €23 is collected by government. When I sell it I will actually be selling it for €246 (Again 23% tax added to the item for government). 

When I am purchasing items it is taking the Gross (inc. Tax) but it is calculating my revenue as Net (ex Tax). No problem with this other than its messing up my margin reports. Does anyone know if there is a way for me to fix this in square or will it need to be done on a separate CSV export and report?

[Candlestore]

@lawwley ;

Not sure if you use an accounting software package for your business.  I found out about these issues too and since Square was meant to keep track of sales and income, Square falls short on the Accounting parts sometimes.  Now Square does try to add features like the COGS report but they do have flaws there sometimes.  I export my Sales Transactions and import the sales data into my accounting software.  I let Square handle what they know.... Taking Credit Card Payments.... and let my accounting software do what they know.  I use Squares reports for quick reference and a general idea how sales are trending, but again for deeper analysis I use the accounting software.  You stated you get items shipped to you, which Square has no way to really record the shipping costs of goods to you which could be a factor for your COGS.  This is why you should also use an accounting package along with Square.  In my accounting software I have 2 Shipping accounts, one is set for when I receive goods as a COGS and the other as an expense for when I sell my items online and ship them.   I would check with your accountant on how to set all this up and get the best advice.  Along with the shipping costs you can also have an account for your VAT to be subtracted from your calculations in your accounting package.  

[lawwley]

Hey Keith,

Thanks for the reply. Yeah the accounting software can do it too but the one we are using does not integrate with Square so we are left with a manual entry for each item sold (Admin team handle it). I was just hoping for a quick on the fly report without someone having to spend time compiling it.

[Candlestore]

@lawwley ;

Can your Accounting software import CSV files? 

I download my Transactions CSV and Transactions Items Details CSV, then use Power Query to edit and merge the data automatically to export to enter each Transaction as a Sales Receipt in quickbooks.    For 1300 transacation it took about a min to have it in the one csv file with excels power query and ready to import.  The Import process took maybe 5-10 min.  This is all after everything was setup.  The first few times it took me a while to figure out what data I wanted to show on a sales receipt, and then figure out the account header name that I wanted the Square name to go to.  Then the Tax (VAX) settings etc.  

If your accounting software allows for a csv import that might be easier and also less human error if you have had that.