Year Ending Inventory

What do you need to do before the end of the year to lower your tax burden? One thing is to dump or donate any inventory you know will not sell. Until inventory is sold, it is an asset, not an expense.

We recommend that you look at all of your inventory that you hold locally and inventory at Amazon's warehouse's and anything that you think won't sell and should be donated should be donated or destroyed.

The next obvious question is how do I know if I should donate or destroy the inventory or try to sell it again next year? If you had an item that was a fad that has died out, more than likely you will not sell that inventory next year. So if you have 400 Zhu Zhu pets or fidget spinners, I would probably say that you can donate or destroy those. Here are some guidelines:

You have had the item over 365 days, and it has been listed for at least three months.
You have tried to sell the item at multiple price points, and you can't get it to sell.
Demand for this item is down, and there is a lot of supply out there.

However, if you had some really great boots and scarves that would probably sell next year and you have a place to store them, then you might want to keep those boots since you might be able to sell them for a good amount of money next year when they are discontinued. We know it isn't easy to give up hope on inventory, however, getting rid of bad inventory clears the way for items that will sell faster and for higher profits.

If the item is at your location, sometimes I just go by what has been listed a long time or has a lot of dust on it. If your item is on Amazon, then you can look at the Inventory Health Report to see how long it has been there (the inventory aged column).

Don't forget the crazy Amazon storage fees in whether or not you want to keep an item or donate it. It cost .15 cents to destroy an item at Amazon and .50 cents to return the item to you.

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