Year end inventory count for Shopify: a dated checklist

Your accountant needs one thing from a year end inventory count: for every item, how many units you held on a stated date and what each unit cost you. Start nine weeks before the date. Write one page of cut-off rules for orders, deliveries and returns, count in one short window, and send the count with its unit costs.

The dates below assume a year end of Thursday 31 December 2026. Shift them if yours differs.

What the count is used for#

At year end the count sets your closing stock value. That value goes into one sum:

opening stock + purchases - closing stock = cost of goods sold

Cost of goods sold (COGS) is what the goods you sold cost you. Here is an example with invented numbers:

42,000 + 118,500 - 47,250 = 113,250

So COGS is $113,250. Now say the count was wrong and closing stock was entered as $50,250, which is $3,000 too high:

42,000 + 118,500 - 50,250 = 110,250

COGS drops to $110,250, so profit looks $3,000 better than it is, and the tax worked out on that profit is too high as well. The error does not stay in one year either. This year's closing stock is next year's opening stock.

For a US business, IRS Publication 334 describes the same structure: it says businesses generally must account for inventory at the beginning and end of the tax year, and its cost of goods sold section starts from beginning inventory, adds purchases and other costs, and subtracts ending inventory. It also mentions that some small businesses may choose not to keep inventory. We opened it on 14 October 2026 (IRS Publication 334). Rules differ by country and by business type, and this article is not tax advice. Your accountant decides the valuation method and what counts as stock.

The checklist, nine weeks out to count day#

Monday 26 October: ask your accountant five things#

Send these in one email so the answers come back together:

1. What is the count date, and is a count a day or two off the date acceptable?
2. Which valuation method do you want me to use for unit costs?
3. How should I treat stock in transit, stock at a warehouse or fulfillment partner, and consigned stock?
4. How should damaged or unsellable stock be reported?
5. What file format do you want, and which columns?

By Friday 20 November: fix the costs#

Closing value is quantity times unit cost. A variant with no cost recorded is worth $0 in that sum, so it makes closing stock too low. Export your variants, filter for blank or zero cost, and fill them in from supplier invoices. Check the oddly cheap and oddly dear lines too, such as a $0.04 cost on a $40 item.

Monday 30 November to Friday 4 December: tidy the stock room#

Give each product one home. Remove empty boxes. Label bins. Set up a quarantine shelf for damaged goods and for returns waiting for inspection, and tell everyone that nothing on that shelf goes back into the main count until someone has looked at it.

Monday 7 December: write the cut-off page#

One page, shared with everyone who ships, receives or processes returns. The rules are in the next section.

Monday 7 to Friday 18 December: pre-count the items that matter most#

Count the top 20% of products by sales value in the two weeks before. Fix the differences then, while the cause is fresh. On count day those lines will be close, and you can do a quick check instead of a long hunt. Our cycle count schedule shows how to pick that group.

Monday 14 December: plan the count#

Cut the store into slices a person can finish in an hour or two (our stocktake guide has the basic steps): a shelf, a bay, a supplier's goods. Name who counts each slice. Charge the phones, test the scanners, print a paper backup sheet.

Monday 28 December: tell your suppliers#

Ask each one which deliveries will land by Wednesday 30 December. Anything later waits until the new year. Put the late ones on the open purchase order list.

Wednesday 30 December: cut-off day#

• Last receiving at 3 pm. Everything that arrived is opened, received and put away, or it stays sealed and out of the count.
• Last returns inspected and sorted by 3 pm.
• Ship every paid order you can. Write down the number of the last order shipped. Orders that arrive after that wait until the count ends.
• Last stock transfer between locations is received by the end of the day.

Thursday 31 December: count#

The hour by hour plan is two sections down.

Friday 1 January to Friday 15 January: close it out#

Review, apply, value, write off and send. The last three sections cover each step.

Set the cut-off rules on one page#

A cut-off rule says which movements count in this year's stock and which wait for next year. Without one, the same carton can be counted twice or not at all.

Orders. Shopify's help center says on hand is the total of available, committed and unavailable units, and that committed units include those in unfulfilled orders (Understanding inventory states, checked 14 October 2026). So a packed order that has not shipped is still on your shelf, but it is not in the available number. If your count tool compares the shelf with available, those units show up as false differences. Ship them or move them to a separate table before you count.

Then decide with your accountant whether a paid order that has not shipped at the cut-off belongs in sales or in stock, and use the same rule every year. Write down the number of the last order shipped, so anyone can check later.

Receiving. A delivery is either fully received and counted, or untouched and not counted. A half-opened carton is the worst case. If a truck arrives at 4 pm on the 30th, leave it sealed, write "arrived 30 Dec, received 4 Jan" on the packing slip, and add it to the open order list.

Returns. A return counts as stock only when it is at your door, inspected and fit to sell. Everything else sits on the quarantine shelf. A refund for a return that has not arrived yet is a question for your accountant, so list those as well.

Transfers. If you hold stock at more than one location, a transfer has to be shipped and received by the cut-off. A transfer that is still on the road belongs on the in-transit list, not on either location's count.

Count day, hour by hour#

A full count of 600 variants at 2 minutes a line (an assumed speed, so time yourself) is 600 x 2 = 1,200 minutes, or 20 hours. Four people with a slice each need 20 / 4 = 5 hours. That is the reason for the pre-count: it takes lines off the day.

A plan for Thursday 31 December, with four counters:

• 7:30. Confirm nothing was received or shipped since the cut-off, and that no packed orders are left on the shelves. Hand out slices.
• 8:00. Start counting. Back room first, because shelves in the shop get refilled from it.
• 10:30. First review. Sort the differences by size and recount the big ones with a different person, without showing them the first number.
• 12:30. Check that every slice is done and that no line is missing. A shelf nobody counted is an easy gap to miss.
• 13:30. Apply. Then confirm in Shopify that the changed lines match your count.

Do not spread the count over several days and apply at the end. A team counts the back room on Monday, the shop on Tuesday, and applies on Wednesday, and by then the Monday numbers are two days old. Sales and receipts moved them. Apply each slice when it is done, or choose a method that keeps the changes made after each line was counted.

If you count after the year end date#

You may prefer to count on 2 January because 31 December is busy. That is fine if you roll the number back to the date. Take what you counted, add the units sold since year end, and subtract the units received.

Example: you count 40 units of one product on 2 January. Since the end of 31 December you sold 6 and received 10.

40 + 6 - 10 = 36

The year end quantity is 36. Your sales and receiving history gives you the 6 and the 10. Keep the working for each line that you change, because your accountant may ask how you got there.

After the count: apply, value, write off#

Review before you apply. A typo of 100 for 10 goes straight into Shopify if nobody looks. Read the biggest differences first. Our variance and recount rules give a way to decide which ones to recount.

Value the stock. For each line, quantity times unit cost. A short example, with invented costs:

340 mugs x $4.10 = $1,394.00
120 plates x $6.30 = $756.00
$1,394.00 + $756.00 = $2,150.00

Add every line and you have the closing stock value. Check it against the stock value your system reports, and chase any gap before you send it.

Write off what is gone. Damaged, expired or lost units become adjustments with a reason. Record the reason on each, because "other" teaches you nothing next year. Ask your accountant how to value damaged goods that can still be sold at a discount. Items that count fine but have not sold for months are a separate question, and our page on dead stock shows how to find them before the year closes.

Send a hand-off pack. Five items:

1. The valuation list: SKU, quantity at the count date, unit cost, line value.
2. The count export with the differences, before and after.
3. Your list of write-offs, with the reason for each.
4. The cut-off page, with the number of the last order shipped.
5. The open purchase order list, and statements from any warehouse or partner that holds your stock.

Keep copies. Next year's opening quantities start from this count.

Stock that is not on your shelf#

In transit from a supplier. Leave it out of the count and list it. Whether you own goods in transit at year end depends on the shipping terms in your order. Your accountant makes that call.

At a fulfillment partner. Ask for a stock report dated at your year end, and compare it with what your system says. The partner's counting rules are theirs, and so are their errors.

Consigned stock. Goods you hold but do not own, or own but do not hold, are usually reported separately. Ask which way your accountant wants it.

Stock at events, with staff, or out on approval. Count it by phone or photo on the day, and list who holds it.

Where this approach falls short#

A single count date does not suit a store with thousands of variants and two helpers. At that size you cannot finish in a morning, and a rolling count all year, plus a short year end check, gets closer to a true number. We also cannot tell you whether your tax office accepts a rolling count in place of a year end one. Ask.

Pick your count date this week, and send the five questions on 26 October.

Frequently asked questions#

When should I do my year end inventory count?

Count as close to your year end date as you can, and tell your accountant which day you picked. If you count after the date, roll the numbers back by adding the units sold since the date and subtracting the units received. The worked example below shows the sum.

Do I have to stop selling while I count?

Not for the whole day. Pause shipping from the cut-off until the count ends, and let the store keep taking orders. Make sure the way you apply the count keeps the sales that land while you count, or you will overwrite them.

What do I do with stock that is on its way from a supplier?

Leave it out of the count. Keep a list of the open purchase orders with their expected dates, and give it to your accountant. Whether goods in transit are yours at year end depends on the shipping terms, so ask.

What do I send my accountant after the count?

Send a list with SKU, quantity at the count date, unit cost and total value, plus the count export showing the differences, your list of write-offs with reasons, and the one page of cut-off rules. Ask them which format they prefer before you start.

How does a wrong count change my profit?

If closing stock is too high, cost of goods sold comes out too low and profit comes out too high by the same amount. A $3,000 error in closing stock moves profit by $3,000, and so does the tax calculated on it.