Accounting for Distributors, Wholesalers & Retailers
Distribution and retail businesses live or die on inventory accuracy and gross margin. The tax issues that follow are inventory valuation, cost of goods sold, and sales tax in every state where you have crossed an economic nexus threshold. Blue Sage handles the books, the returns, and the multi-state exposure that usually goes unnoticed until a state notices first.
What we handle
- Inventory valuation and cost of goods sold
- Gross margin reporting by product line or channel
- Economic nexus review across every state you sell into
- Sales tax registration and filing where required
- Landed cost tracking including freight and duty
- Section 263A uniform capitalisation where it applies
Who this is for
Wholesalers, distributors, brick-and-mortar retailers, and multi-channel sellers who have grown past the point where one spreadsheet covers inventory.
The most common surprise in this industry is a state that decides you have had nexus for three years. Economic nexus thresholds are low and they are met by sales volume alone, with no office and no employee in the state.
Deadlines and rules worth knowing
| Item | What applies |
|---|---|
| Inventory | Must be valued consistently. Method changes generally require IRS consent. |
| Economic nexus | Most states set a revenue or transaction threshold for out-of-state sellers, commonly starting around $100,000 in sales |
| Marketplace sales | Marketplace facilitators often collect sales tax on your behalf, but that does not always remove your registration obligation |
| Section 263A | Requires certain indirect costs to be capitalised into inventory rather than expensed, above a gross receipts threshold |
| Landed cost | Freight, duty, and handling generally belong in inventory cost, not in operating expenses |
How we work
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Review what exists
We read last year’s return and whatever records you have. Most of what needs fixing is visible quickly.
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Fixed quote in writing
Scope and price before anything starts, counting entities, states, and any cleanup needed.
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File and maintain
Returns prepared and filed, notices answered, and a projection before year end.
Questions
When do I have to register for sales tax in another state?
Once you cross that state's economic nexus threshold, which is usually a level of sales revenue or a number of transactions into the state during a defined period. Physical presence u2014 inventory in a warehouse, an employee, a trade show u2014 can also create nexus immediately regardless of sales volume.
Does the marketplace collecting sales tax mean I do not have to file?
Not necessarily. Marketplace facilitator laws shift collection to the platform for sales made through it, but if you also sell direct, or if the state requires a return reporting the facilitated sales, a filing obligation can remain. It has to be checked state by state.
Last reviewed 11 September 2026 by Fahadun Nabi, Founder, Blue Sage Tax and Accounting Inc.. General information, not advice for your specific situation.
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Talk it through before the deadline, not after.
A free consultation call, no obligation, and a fixed quote if you want to go further.