What is landed cost and how do I track it for imported goods?
Landed cost is the true total cost of getting a product from your supplier to your warehouse, ready to sell. It includes the product cost on the supplier invoice plus freight charges, customs duties, insurance, port handling fees, drayage, and any broker fees. That full number is what your inventory cost per unit should reflect, not just the purchase price alone.
The reason this matters is straightforward. If you record only the supplier invoice price as your inventory cost and expense freight and duties separately, your cost of goods sold will be understated. Your gross margins will look better than they actually are. That distortion grows as shipping and duty costs increase, and it can lead you to believe a product line is profitable when it’s barely breaking even once you factor in everything it cost to land those goods.
To calculate landed cost on a shipment, add up every cost tied to getting the goods in your door. Then allocate that total across the individual SKUs in the shipment. Most wholesalers and importers allocate proportionally based on each item’s share of the total product cost. So if a SKU represents 20% of the shipment’s product value, it absorbs 20% of the freight, duties, and other costs. Some businesses allocate by weight or volume instead, depending on what actually drives their freight costs.
QuickBooks Online does not have a native landed cost calculator. You can enter a unit cost when receiving inventory, but QBO won’t automatically pull in freight and duties and spread them across your items. The most common workaround is a spreadsheet. Build a template for each shipment that lists every SKU with quantity and supplier cost, then adds columns for each additional cost category. Calculate each item’s share of those costs and arrive at a per-unit landed cost. Enter that fully loaded number into QuickBooks as your inventory cost. Some importers use add-on apps like inFlow or Cin7 to automate this allocation, which saves time if you’re processing shipments frequently.
Keep your landed cost spreadsheets organized by shipment and date. They become your backup documentation for inventory valuations and are essential if your accountant or the IRS ever questions your COGS figures. Consistency in how you allocate costs across shipments is just as important as getting the math right on any single one.
If you’re importing regularly and struggling to keep landed costs accurate, working with bookkeepers in Buena Park who understand inventory accounting can help you set up a repeatable system. Getting this right from the start saves you from margin surprises and messy inventory adjustments down the road.
Orange County's Small Business Bookkeeper
The Next Step:
A Short Conversation
Tell us about your business and what you need help with. We'll listen, ask a few questions, and give you a straightforward quote with no surprises.
More Questions
How do I handle shipping costs in bookkeeping — expense them or include in COGS?
It depends on the direction. Inbound shipping from your supplier should be included in inventory cost and flow into COGS. Outbound shipping to customers can be a separate expense or part of COGS, but pick one approach and stick with it.
Read answerHow do I track purchase orders and vendor payments for a wholesale business?
Use QuickBooks Online to create purchase orders, receive inventory, and match vendor bills. Track PO status, vendor payment terms, and early payment discounts. Run A/P aging reports regularly because large orders can tie up cash for 60 to 90 days before you sell through.
Read answerHow do I track cash sales and prevent theft in a retail business?
Cash-heavy retail businesses need daily cash counts, POS reconciliation, same-day bank deposits, and surprise audits. In QuickBooks Online, record daily cash deposits and compare them to your POS cash sales report. Any variance over $5 per day signals a problem worth investigating.
Read answerWhat is catch-up bookkeeping and how long does it take to get my books current?
Catch-up bookkeeping means bringing months or years of neglected financial records up to date. Timeline depends on how far behind you are. Three to six months can typically be caught up in one to two weeks, while a full year usually takes two to four weeks.
Read answerHow do I manage accounts payable for multiple food vendors with different payment terms?
Set up each vendor in QuickBooks Online with their specific payment terms and batch your payments into weekly A/P runs instead of paying bills one at a time. Separate COD vendors from Net 7 and Net 30 vendors so you never miss a delivery, and track vendor credits for returned or damaged product.
Read answerWhat is California use tax and when does my business need to pay it?
Use tax is California's complement to sales tax. You owe it when you buy tangible goods and the seller doesn't collect California sales tax, most commonly from out-of-state vendors. The rate is the same as your local sales tax rate.
Read answer
