A reseller buys from several suppliers, holds some stock, sells through one or more channels, and lives on a margin that is often under twenty per cent. That leaves no room for accounts that only tell you the answer in June.
Cost of goods sold is the whole game
Revenue minus purchases is not your margin. The cost that belongs against a sale is the cost of the specific goods sold, including what it cost to land them: supplier price, freight, customs duty, and any non-recoverable import charges. Stock still sitting in the warehouse is an asset, not an expense, and treating it as one distorts both your profit and your tax position.
Once that is set up properly you can answer the questions that matter: which supplier is actually cheapest after freight, which product line carries the business, and which one has been quietly loss-making since the last price rise.
Stock valuation
Stock is valued at the lower of cost and net realisable value. That second half matters for resellers holding seasonal or fast-moving goods: if a line will only sell at a discount, it should be written down when that becomes clear, not when it eventually sells. Doing it properly makes the annual report accurate and stops a bad quarter from hiding inside the balance sheet.
Import VAT and duty
Goods brought in from outside the EU carry import VAT, which is generally recoverable if you are VAT registered and the goods are for your business, and customs duty, which is not recoverable and belongs in the cost of the goods. Mixing the two is a common and expensive error: duty added to input VAT is a reclaim that will be reversed, while duty left out of stock cost understates what your products actually cost you.
If your accountant cannot tell you the landed cost per unit, they cannot tell you your margin, and neither can you.
Supplier credit and terms
Volume rebates, settlement discounts and credit notes all change the cost of goods you already sold. They should be matched back to the purchases they relate to rather than dropped in as miscellaneous income, otherwise your margin looks worse than it is during the year and better than it is at the end.
Selling through several channels
Own webshop, a marketplace, wholesale to trade customers and occasional retail all carry different VAT treatment, different fee structures and different payment timing. They need to be visible separately in the accounts, because the profitable one is rarely the one that feels busiest.
What we set up for resellers
- Cost of goods sold with landed cost, so margin figures are real.
- Stock valuation that survives the annual report and any audit.
- Purchases matched to supplier invoices, credit notes and rebates.
- Sales split by channel, and by destination country where OSS applies.
- Import VAT and duty separated correctly.
- A monthly margin report by product line, not just a profit total.
Frequently asked questions
Do I need inventory accounting if I only hold a little stock?
If you hold any stock at a year end, it has to be valued and shown on the balance sheet. Even small quantities affect the reported profit, and therefore what you can distribute.
Is customs duty recoverable in Estonia?
No. Import VAT is generally recoverable for a VAT-registered business, but customs duty is not. Duty forms part of the cost of the goods.
How do I know which product line is profitable?
You need cost of goods sold calculated on landed cost and sales analysed by line. Without both, a profit total tells you the business made money but not which part of it did.
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General information, not tax advice
This article reflects Estonian law as it stands on the date shown. Rules change and individual circumstances differ - confirm your own position with us before acting.