If you run a retail store (mini-mart, clothing shop, café, or any physical store), your accounting focuses on:
- Daily cash and sales tracking
- Managing inventory
- Tracking cost of goods sold (COGS)
- Monitoring store expenses
👉 Compared to e-commerce, retail stores deal more with:
- Cash transactions
- Walk-in customers
- Daily sales volume
✅ Step 1: Set Up Your Income Accounts
Sales (Use Design Income)
Your main revenue account.
Why you need it:
- Tracks all daily sales
- Used for Profit & Loss reporting
👉 Rename “Design Income” to:
- Sales
- Store Sales
Sales Return
Why you need it:
- Tracks refunds or returned items
- Keeps your revenue accurate
👉 Important for stores with frequent returns.
Other Income (Optional)
Examples:
- Commission income
- Small side earnings
Why it’s optional:
- Keeps your sales clean and focused
✅ Step 2: Set Up Your Asset Accounts
Cash
Very important for retail.
Why you need it:
- Tracks daily cash on hand
- Matches your cash drawer
👉 This is one of the most used accounts in retail.
Bank
For deposited money.
Why you need it:
- Tracks funds transferred from cash to bank
- Used for supplier payments
Inventory
Products you sell.
Why you need it:
- Tracks stock levels
- Helps calculate profit
👉 Essential for retail businesses.
Finished Goods Inventory (Optional)
Why you need it:
- If you produce or assemble products
Not needed if:
- You only resell items
Undeposited Funds (Optional)
Why you need it:
- Helps track sales before bank deposit
✅ Step 3: Set Up Cost of Goods Sold (COGS)
Purchases
Cost of buying products.
Why you need it:
- Tracks inventory purchases
- Helps calculate profit
Cost of Goods Sold (Contractor Expenses)
Why you need it:
- Tracks cost of items sold
- Matches sales with actual cost
👉 Without this, your profit will be incorrect.
Freight In and Delivery Expenses
Why you need it:
- Cost of bringing products to your store
✅ Step 4: Set Up Your Liability Accounts
Accounts Payable
Money you owe suppliers.
Why you need it:
- Tracks unpaid inventory purchases
Sales Tax
Why you need it:
- Tracks tax collected from customers
- Prevents overstating income
Expense Claims Payable (Optional)
Why you need it:
- For staff reimbursements
Income Tax Payable
Why you need it:
- Tracks taxes owed
✅ Step 5: Set Up Your Expense Accounts
Rent Expenses
Why you need it:
- Store space rental
Utilities Expenses
Examples:
- Electricity (very important for stores)
- Water
Wage & Salary Expenses
Why you need it:
- Staff salaries (cashiers, helpers)
Cleaning Expenses
Why you need it:
- Store maintenance
Sales & Marketing Expenses
Examples:
- Promotions
- Flyers
Bank Charges
Why you need it:
- Payment processing fees
Office Expenses
Examples:
- Receipts, supplies
❌ Accounts You Usually DON’T Need (And Why)
Accounts Receivable (Usually)
Why not applicable:
- Retail is mostly cash or instant payment
👉 Only needed if you allow credit sales.
Unearned Revenue
Why not applicable:
- Customers usually pay immediately
Complex Project Accounts
Why not applicable:
- Retail is not project-based
Manufacturing Overhead
Why not applicable:
- Not producing goods
⚙️ Optional Advanced (Use Only If Needed)
- Inventory Adjustment → for stock discrepancies
- Purchase Return → returns to suppliers
- Bad Debt → if offering store credit
- Depreciation → for store equipment
🚀 Simple Setup Summary
If you want a clean retail setup, start with:
Income
- Sales
- Sales Return
Assets
- Cash
- Bank
- Inventory
COGS
- Purchases
- Cost of Goods Sold
Liabilities
- Accounts Payable
- Sales Tax
Expenses
- Rent
- Utilities
- Salaries
✨ Final Tip
For retail stores:
Cash + Inventory control = business survival
Most common mistakes:
- Not tracking daily cash properly
- Ignoring inventory movement
- Skipping COGS
👉 This leads to incorrect profit and stock shortages.