%20(1)%20(1).png)
One blog post closer to clean books.
Each blog post from the Castle team is packed with practical tips, real-world experience, and clear answers to common bookkeeping questions. Whether you're sorting expenses or planning for tax time, you'll find guidance to help you run your business with clarity and confidence.
Terms of Service
Welcome to Castle! These terms of service outline the rules and regulations for the use of our bookkeeping services.
By accessing this website and using our services, you accept these terms and conditions in full. Do not continue to use Castle services if you do not accept all of the terms and conditions stated on this page.
Castle offers professional bookkeeping services including transaction categorization, reconciliations, financial reporting, GST/HST filing, and other related services as agreed upon with the client.
2. Billing and Payments
All services provided by Castle are billed on a recurring basis unless otherwise
agreed upon. Payments are due upon receipt of invoice. We accept payment via credit card, debit card, and electronic funds transfer.
3. Cancellation and Refund Policy
Clients may cancel services at any time by providing 30 days’ notice in writing or via email. Refunds for prepaid services will be prorated based on the remaining unused portion of the services.
4. Privacy Policy
Our privacy policy outlines how we collect, use, and protect your personal information. We do not sell or share your information with third parties without your consent, except as required by law.
5. Liability
Castle will perform all services with reasonable care and skill. However, we do not accept liability for losses resulting from acts of nature, third-party errors, or misuse of financial information or reports by the client.
6. Amendments
Castle reserves the right to amend these terms of service at any time. Amendments will be effective immediately upon posting on this website.
7. Contact Us
If you have any questions about this privacy policy or our privacy practices, please contact us at:
Castle
316 1st Ave NE
Phone: 587-872-0602
Email: info@bookwithcastle.com
One blog post closer to clean books.
Each blog post from the Castle team is packed with practical tips, real-world experience, and clear answers to common bookkeeping questions. Whether you're sorting expenses or planning for tax time, you'll find guidance to help you run your business with clarity and confidence.
Inventory & Cost of Goods Sold — The Rules Every Product-Based Business Must Know
If you sell physical products — whether online, retail, or on job sites — inventory is one of the most important areas of your bookkeeping.
It directly affects your profit.
It directly affects your taxes.
And it’s one of the first things CRA looks at in an audit.
This guide gives you a clean and accurate way to track inventory and calculate Cost of Goods Sold (COGS) — the Castle way.
What Counts as Inventory?
Inventory is anything you buy to sell:
- finished goods
- raw materials
- ingredients
- packaging that becomes part of the product
- supplies used directly to create the product
Examples:
- Beef gelatin for Joey’s Naturals
- Fertilizer and material for resale in Happy Grass jobs
- Bottles and labels for a retail product
- Merchandise in a storefront
- E-commerce inventory in storage
If you intend to resell it, it’s inventory — not a deductible expense (yet).
Why Inventory Is NOT Fully Deductible Immediately
Here’s where many business owners get tripped up:
When you buy inventory, you cannot deduct it right away.
It becomes an asset until the moment it’s sold.
Only when the product is sold does the cost move into COGS (Cost of Goods Sold).
This keeps your income and expenses aligned properly.
How COGS Works (Simple Formula)
COGS =
Opening Inventory
- Purchases During the Year
− Closing Inventory
Example:
ItemAmountOpening inventory$6,000Purchases$25,000Closing inventory$8,500COGS Deduction$22,500
You only deduct what you sold — not what’s still on shelves.
Why Year-End Inventory Counts Matter
At your fiscal year-end, you must count:
- quantity of each product on hand
- cost per unit
- total cost value
This count is required by the CRA.
If you don’t have a year-end value, CRA can:
❌ deny your COGS
❌ change your profit
❌ reassess your taxes
Castle clients receive step-by-step inventory templates so nothing gets missed.
What Goes Into Cost of Each Item?
Include:
- purchase price
- freight-in / shipping
- customs & duty
- packaging needed to sell the product
Do NOT include:
- marketing costs
- damaged / obsolete items (write-off separately)
- shipping to customers (that’s shipping expense)
Common Inventory Mistakes That Get Businesses in Trouble
🚫 Recording inventory purchases directly as expenses
🚫 No year-end count or dollar value support
🚫 Guessing or averaging costs
🚫 Including labour when labour should be tracked separately
🚫 Personal use of inventory not recorded as an owner withdrawal
🚫 No tracking of shrinkage / loss / expired stock
The CRA denies deductions quickly in these cases.
How Service Businesses Should Treat Job Materials
If you install the materials (e.g., trades, renovations, lawn care upgrades), materials are often treated as COGS as well, because they are part of fulfilling the service.
Example:
Fertilizer for a fertilizer treatment job = COGS
Batteries for your leaf blower = Operating Expense
COGS relate to earning that specific revenue.
Software, Tracking & Why It Matters
Manual inventory tracking is painful — and risky.
Castle helps clients choose systems that match their scale:
- QuickBooks + app add-ons
- Shopify built-in tracking
- Square / Clover + inventory reports
- Structured Google Sheets for early stages
When your system is right, your year-end becomes effortless.
%20(1).png)
