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How to use the Cost of Goods Sold feature

Understanding how COGS tracking works

Daniel Little avatar
Written by Daniel Little
Updated over a week ago

Cost of Goods Sold (COGS) tracking is a feature in Link My Books that lets you track the cost of the units sold during each settlement period. This helps ensure that your financial reports in Xero or QuickBooks accurately reflect inventory costs as products are sold.


In This Guide:

How the COGS Feature Works

Once enabled, Link My Books will automatically calculate the total value of products sold in each payout by using the landed product costs you’ve entered on the Product Costs page.

Please visit these help articles for further options on how to add your Product Costs;

Here’s how it works:

  1. For each payout, we generate a list of SKUs sold.

  2. We calculate the total cost of those items using your entered unit costs.

  3. We then create a COGS bill that moves the inventory value from your Inventory Asset account to your COGS (Direct Costs) account.

In Xero that would look something like this:

A digital invoice from "Go to Link My Books" with a "Paid" status displayed at the top left. The invoice is dated "8 Feb 2022" with a "Due Date" of "22 Feb 2022," issued from "Amazon.co.uk" (no address provided, with an "Add address" link). The total amount at the top right is "0.00".  The invoice details are presented in a table with the following columns: "Item Code," "Description," "Quantity," "Unit Price," "Account," "Tax Rate," "LMB Marketplace..." (likely Link My Books Marketplace), and "Amount GBP."  Two line items are listed:  Inventory Deduction From Fulfillment by Amazon (FBA): Quantity 1.00, Unit Price (303.00), Account "Amazon Inventory," Tax Rate "No VAT," LMB Marketplace "UK," Amount GBP (303.00). The negative unit price and amount indicate a deduction.  Cost of Goods Sold Fulfillment by Amazon (FBA): Quantity 1.00, Unit Price 303.00, Account "Amazon Cost of Goods Sold," Tax Rate "No VAT," LMB Marketplace "UK," Amount GBP 303.00.  The bottom right of the invoice shows:  Subtotal: 0.00  Total No VAT: 0.00  TOTAL: 0.00  Above the totals, a note states "Amounts are Tax Exclusive." In the top right corner of the page, there are buttons for "Print PDF," an icon for attachments (showing "1" attached), and "Bill Options."

Let's break down the lines of the above bill for clarity.

Line 1 - "Inventory Deduction From Fulfilment by Amazon (FBA)" is the COGS figure being deducted from an asset account, in this case, "Amazon Inventory".

Line 2 - "Cost of Goods Sold Fulfilment by Amazon (FBA)" is the COGS figure being added to a direct costs account, in this case, "Amazon Cost Of Goods Sold".

The bill will always balance to zero. We are simply moving value between accounts to reflect inventory movement as cost.

How to Set Up and Turn On COGS

Step 1: Enter Your Product Costs

Go to the Product Costs page in Link My Books. You can enter product costs directly into the table;

A screenshot of the "Product Costs" section within the "LINK MY BOOKS" application.  The page is titled "Product Costs" and includes a search icon and a toggle switch labeled "SHOW ONLY SKUS WITH NO COST" (currently off).  Below the title, there are several control elements:  BULK UPLOAD button.  A dropdown for currency, currently set to "USD $".  A "Sort by" dropdown, currently set to "SKU" with an ascending/descending toggle.  Further down, there are two tabs: "Product Costs" (currently selected) and "Settings".  Under the "Product Costs" tab, three product entries are visible, each in a separate row:  SKU: "test-a"  Product Name: "Test product A"  On the right, an empty input field is labeled "US $", presumably for entering the product cost.  SKU: "test-b"  Product Name: "Test product B"  On the right, an empty input field is labeled "US $".  SKU: "test-c"  Product Name: "Test product C"  On the right, an empty input field is labeled "US $".  The top navigation bar shows "LMB Shop (Demo UK)" as the current account.

or use the bulk upload option for faster entry;

A screenshot of the "Product Costs" section within the "LINK MY BOOKS" application.  A "Bulk Upload COGS" (Cost of Goods Sold) modal dialog box is open in the center of the screen, overlaying the main content. This modal has two main sections:  Download Template File: Text reads "Fill in your landed costs, save and then upload below." with a "DOWNLOAD" button (and download icon).  Upload File: Text reads "Drag & drop file here, or click" within a dashed-line box, with an "UPLOAD" button (and upload icon). The modal has a close "X" icon in its top right corner.  In the background, the "Product Costs" page is visible, with its title "Product Costs," a search icon, and a "SHOW ONLY SKUS WITH NO COST" toggle. The "BULK UPLOAD" button on this page is highlighted with a red rectangle, indicating it was clicked to open the modal.  Below this, the "Product Costs" tab is selected, and three product entries are partially visible: "test-a", "test-b", and "test-c", each with a "Product Name" and an empty "US $" input field for cost.  The top navigation bar shows "LMB Shop (Demo UK)" as the current account.

What to Include in Landed Cost:

This depends on how you account for inventory in your bookkeeping software:

Option A: You include all landed costs in your inventory asset account
Include:

  • Supplier product cost

  • Shipping to FBA or your warehouse

  • Import duty

Example:

  • Product cost: £5.50

  • Shipping: £0.18

  • Import duty: £0.40
    Total landed cost to enter: £6.08

Option B: You only include supplier cost in your inventory asset account
Only enter the product cost from the supplier.
In this case: £5.50

📝 Tip: Match your Link My Books product cost values to your accounting method in Xero or QuickBooks.


Step 2: Turn On COGS & Select Accounts

Head to the Settlement Settings page and toggle on COGS. You’ll then be prompted to:

  1. Select your Inventory (credit) account – where product costs are deducted from

  2. Select your COGS (debit) account – where costs are added as items are sold

If you don’t have these accounts set up yet, Link My Books can create default accounts for you.

🛒 Amazon Users: You’ll set different accounts for each fulfilment type (FBA, FBM, Non-Amazon Orders).
🛍️ eBay, Shopify, and Etsy Users: You’ll only need to set one inventory and one COGS account.

You can also choose which COGS sources to include (e.g. exclude Non-Amazon orders if needed);

A screenshot from a software interface titled "COGS Debit & Credit Accounts." The page displays settings for how different fulfillment types should map to accounts for Cost of Goods Sold (COGS) calculations, presumably for integration with QuickBooks.  The introductory text states: "If you choose to use our default (LMB20 and LMB21 accounts below, we will create them in QuickBooks for you."  The page is structured with columns for:  Fulfillment Type: Describes the type of order fulfillment.  CREDIT ACCOUNT (ASSET ACCOUNT): Contains a dropdown for the "Account Name" to be used as the credit/asset account.  DEBIT ACCOUNT (EXPENSE ACCOUNT): Contains a dropdown for the "Account Name" to be used as the debit/expense account.  INCLUDE IN COGS CALCULATIONS: Contains a dropdown to specify whether this fulfillment type should be "Included" or "Excluded" from COGS calculations.  There are three fulfillment types listed, and for each, the default "LMB20: LMB Inventory" is selected as the Credit Account and "LMB21: LMB Cost of Goods Sold" as the Debit Account, and "Included" for COGS calculations:  Amazon orders Fulfilled by Amazon (FBA)  Credit Account: LMB20: LMB Inventory  Debit Account: LMB21: LMB Cost of Goods Sold  Include/Exclude: Included  Amazon orders Fulfilled by Merchant (FBM)  Credit Account: LMB20: LMB Inventory  Debit Account: LMB21: LMB Cost of Goods Sold  Include/Exclude: Included  Non-Amazon orders  Credit Account: LMB20: LMB Inventory  Debit Account: LMB21: LMB Cost of Goods Sold  Include/Exclude: Included

Once set up, settlements not yet sent will be refreshed automatically. For those already sent, you’ll need to roll back and resend to apply COGS;

Cost of Goods Sold in Analytics Only

For users who wish to keep their Cost of Goods Sold (COGS) data separate from their primary accounting software, we offer an "Analytics Only COGS" option.

When this setting is enabled, all your COGS details will be visible and accessible within the dedicated analytics section of our application. Either within the settlement details;

Or directly within the Analytics tab;

A screenshot of the "Analytics" dashboard within the "LINK MY BOOKS" application. The "Analytics" tab in the top navigation bar is highlighted with a red rectangle.  The dashboard displays several key performance indicators and charts:  Top Left Card: Shows "£4,232" for the "Current period" with a decrease of "↓£801 vs previous period". Below this, a bar chart compares "Current" (blue bar, £4,232) and "Previous" (orange bar, £5,033) periods.  Second Card (from left): Shows "11.54% of sales" for the "Current period" with an increase of "+4.85% vs previous period". Below this, a bar chart compares "Current" (blue bar, £488) and "Previous" (orange bar, £825) periods.  Third Card (from left): Shows "£2,374" for the "Current period" with an increase of "↑£72 vs previous period".  Profit margin: Displays "61%" for the "Current period" with a "↑9% vs previous period".  Return on Investment: Shows "2,640%".  Right Panel (Detailed Breakdown):  Revenue: £3,881.67  Sales: £4,232.47  Refunds: -£488.22  Shipping: £137.42  Shipping Refunds: £0.00  Inventory Reimbursement: £0.00  Expenses: £1,508.07  Fees: £548.28  Fulfillment Fees: £655.05  Storage Fees: £43.94  Advertising Fees: £170.89  Cost of Goods Sold: £89.91 (highlighted with a red rectangle).  Other partially visible sections include "Time saved" and "Total VAT liability". The top right corner shows "LMB Shop (Demo UK)" as the current account.

This allows you to gain valuable insights into your product profitability and cost management directly within our platform.

Crucially, selecting this option means that your COGS data will not be posted to Xero or QuickBooks alongside your other settlement information. This provides flexibility for businesses that prefer to manage COGS internally or through other means, while still benefiting from the analytical capabilities of our system.

A screenshot of the "Analytics Only COGS" section within a financial management application's settings. It shows a checkbox labeled "Show COGS in analytics only," which is currently unchecked. Below the checkbox, there's a description: "COGS will not be posted to Xero with settlements but their data will be reflected in Link My Books analytics." At the bottom, a "SAVE SETTINGS" button is visible.

Once changes are made, all settlements that haven't been sent will automatically be refreshed. Any settlements that have been sent will need to be rolled back and resent with the new adjusted COGS details.

👉Tip: For eBay, Shopify & Etsy accounts you will only need to set one credit and debit account:

A screenshot of the "Settings" page in the "LINK MY BOOKS" application, specifically focusing on Cost of Goods Sold (COGS) configurations.  At the top, there are two radio button options:  "Turn off Cost of Goods Sold (Default)" (unchecked)  "Turn on Cost of Goods Sold" (checked).  Below this, under "COGS Debit & Credit Accounts," there's a note: "If you choose to use our default LMB20 and LMB21 accounts below, we will create them in Xero for you." A table-like section shows:  Fulfillment Type: (empty dropdown)  CREDIT ACCOUNT (ASSET ACCOUNT): "Account Name" set to "LMB20: LMB Inventory"  DEBIT ACCOUNT (EXPENSE ACCOUNT): "Account Name" set to "LMB21: LMB Cost of Goods Sold"  Further down, under "Product Cost Settings":  A checkbox "Enter product costs as an average and update them regularly as required (default)" is checked. Below it, text reads: "Settlements will be posted once all sold items costs have been entered."  A checkbox "Enter product costs monthly" is unchecked. Below it, text reads: "Settlements will only be posted once costs are entered for that specific month."  The top right corner shows "LMB Shop (Demo UK)" as the current account, and a notification icon with a red circle containing the number "2" is visible at the very bottom right.

Once you complete the 2 steps above we will refresh all of your settlements (excluding ones that have already been sent to Xero/QuickBooks) and you will see a new COGS tab on the view settlement pages, as shown below:

A screenshot of the "Settlement Details" page in the "LINK MY BOOKS" application, with the "Cost of Goods Sold" tab selected and highlighted by a red rectangle.  The page displays information about a COGS Bill: "1 Cost of Goods Sold Bill has been created for this settlement for US $29.97". A note below states: "All SKUs sold during this settlement period have landed costs assigned to them. You can update them below or on the Product Costs settings page."  A summary section shows:  Bill to: "lmbshop" with a logo.  Bill date: "Jul 19, 2025"  Period covered: "July 19 - July 25, 2025"  Status: "Ready to send" (indicated by a blue dot).  Bill total: "US $ 29.97"  A "SEND COGS BILL TO XERO" button with a dropdown arrow.  Below this, two product entries are visible in a table format:  SKU: "test-a"  FBA: 0  MFN: 0  Non-Amazon: 1  LANDED COST (PER UNIT): "US $ 9.99" (with a refresh icon).  TOTAL COST: "US $ 9.99"  SKU: "test-b"  FBA: 0  MFN: 0  Non-Amazon: 1  LANDED COST (PER UNIT): "US $ 9.99" (with a refresh icon).  TOTAL COST: "US $ 9.99"  The top navigation bar shows "LMB Shop (Demo UK)" as the current account.

If you expand open a COGS bill you can check that the landed cost of each product SKU is accurate and update it if needed as shown below.


If you need to change the currency of your landed costs or want to update all of your products in bulk you can do so from the Product Costs page.

Once COGS is turned on, we will from then on send both the Sales & Fees Invoice and the COGS Bill to Xero/QuickBooks when you click Send Settlement.

Managing SKUs: Manual Creation, Hiding, and Date Filters

Link My Books automatically detects SKUs based on your settlement data, but we also provide extra tools to help you manage your SKUs more precisely — especially for handling inactive, future, or yet-to-be-detected SKUs.

👁️ Hiding Old or Inactive SKUs

You can hide SKUs from your active SKU list if they're no longer in use — for example, if you're no longer selling a particular product.

🔧 Manually Creating SKUs

If you want to prepare for new product launches or set rules for SKUs that haven’t yet appeared in settlement data, you can enable the 'Allow SKU Creation' toggle which will allow you to set VAT rates before the first sale comes in.

A screenshot of the "Product Costs" section within the "LINK MY BOOKS" application, with the "Settings" tab selected.  The page displays options related to product list management:  Product List  A description states: "The product list is used for both the product costs page and product groups page."  SHOW ALL SKUS button.  Below it, explanatory text reads: "All SKUs shown from all reports we import from the sales channel."  HIDE INACTIVE SKUS button.  Below it, explanatory text reads: "Hide all SKUs that are not found in payout settlement reports."  Allow Manual Product Creation  A description states: "Turn on this option to allow new products to be uploaded via the bulk upload in advance of them being detected automatically."  Below this, there's a toggle switch labeled "Allow sku creation," which is currently in the off position.  In the bottom right corner, there are two floating icons: a gift box and a notification icon with a red circle containing the number "2". The top navigation bar shows "LMB Shop (Demo UK)" as the current account.

If you have any questions about this article or feedback on how we could make it better please reach out to the support team via the blue chat icon on the bottom right of the page or via email to [email protected].



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