General Ledger + Converter in one subscription.
See pricingINDUSTRIES · MANUFACTURING
Manufacturing accounting software has to carry raw materials, work in progress and finished goods as assets, and turn purchases, production labor and shop overhead into cost of goods sold. ZeraBooks is a general ledger with AI bookkeeping that does this from your statements and bills, with inventory adjusted to each count. It holds dollar values, not stock quantities.
7-day trial · card required, nothing charged for 7 days · then $79/month billed annually or $149 monthly
DEFINITION
What the products you sold in a period cost to make: opening inventory, plus materials bought, production labor and shop overhead, minus closing inventory. Sales less cost of goods sold is gross profit.
THE REQUIREMENTS
A shop that makes things holds part of its money on the floor and the shelves. The books have to count it.
Raw materials waiting to be used, work in progress on the shop floor and finished goods ready to ship. Each is an asset until it is sold.
Materials, the wages of people who build the product and shop costs such as rent and power go to cost of revenue. Office rent, sales and admin wages stay in operating expenses.
Whatever the shelves hold at period end is the real inventory. The books are adjusted to match, and the difference flows into cost of goods sold.
Lumber, hardware, finishes and freight arrive as invoices. Each one has to land in the right category and be matched to the payment.
Saws, CNC machines and compressors are assets written off over their useful life. See how to calculate depreciation.
We set you up and catch up your past months for free. Then ZeraBooks keeps your books done.
AN HONEST FIT CHECK
ZeraBooks is the general ledger. Unit counts, recipes and job tickets stay in your shop or inventory system, and their dollar totals come into the books.
| What the shop needs | How it works in ZeraBooks | Detail kept |
|---|---|---|
| Inventory value | Asset sub-categories for raw materials, work in progress and finished goods, adjusted by journal entry after each count | Quantities and unit costs on your count sheet or inventory system |
| Materials purchases | Supplier bills uploaded as PDF, read, approved and matched to the payment that settled them | In the ledger |
| Production labor and overhead | Cost of Revenue categories, so gross profit is right on the Profit & Loss | In the ledger |
| What you sell | Products & Services with SKU, sell price and income category, used on invoices | No stock on hand is counted |
| Equipment | Autopilot records straight-line depreciation each month once the categories exist | Tax depreciation stays with your preparer |
| Gross margin | Percentages of Income on the Profit & Loss shows each cost as a share of sales | Margin by job or product line needs separate income and cost categories |
WORKED EXAMPLE
Fernhill Woodworks is a fictional custom cabinet shop, an S corporation, so its cost of goods sold goes on Form 1125-A. Here is its 2026 year, line by line, straight from the ledger.
| Form 1125-A line | From the books | Amount |
|---|---|---|
| 1 | Inventory at beginning of year: raw 28,100.00 + WIP 6,900.00 + finished 11,300.00 | 46,300.00 |
| 2 | Purchases: lumber, sheet goods, hardware, finishes | 212,450.00 |
| 3 | Cost of labor: wages of the production crew | 138,600.00 |
| 4 | Additional section 263A costs (none: small business taxpayer) | 0.00 |
| 5 | Other costs: shop rent 24,000.00 + shop utilities 9,850.00 + consumables 7,400.00 | 41,250.00 |
| 6 | Total of lines 1 through 5 | 438,600.00 |
| 7 | Inventory at end of year: raw 31,400.00 + WIP 8,200.00 + finished 13,300.00 | 52,900.00 |
| 8 | Cost of goods sold: 438,600.00 − 52,900.00 | 385,700.00 |
Against sales of 612,000.00, gross profit is 226,300.00, a margin of 37.0%. Your preparer decides which shop costs belong in cost of goods sold for tax and which inventory method to use; the books just need each cost in its own category so the choice is easy.
THE COUNT
During the year Fernhill posted every purchase and production cost to cost of revenue, and inventory sat at last year’s 46,300.00. The December 31 count says 52,900.00. One journal entry closes the gap.
| Category | Book balance | Counted | Debit | Credit |
|---|---|---|---|---|
| Inventory › Raw materials | 28,100.00 | 31,400.00 | 3,300.00 | |
| Inventory › Work in progress | 6,900.00 | 8,200.00 | 1,300.00 | |
| Inventory › Finished goods | 11,300.00 | 13,300.00 | 2,000.00 | |
| Cost of revenue › Inventory change | 6,600.00 | |||
| Totals | 46,300.00 | 52,900.00 | 6,600.00 | 6,600.00 |
On the Profit & Loss, cost of revenue becomes 212,450.00 + 138,600.00 + 41,250.00 − 6,600.00 = 385,700.00, the same figure as line 8. If the count had come in lower than the books, the entry reverses and cost of goods sold goes up. Counting monthly and booking the same entry each month gives you a true gross margin every month instead of once a year.
SETUP
A morning for a small shop with a checking account, a card and a few regular suppliers.
In Banks & Cards, add each by name. ZeraBooks never guesses your accounts.
In Accounting › Category Manager, click Generate with AI and describe the shop, for example “custom cabinet maker, production crew of six, sells to builders and homeowners”. Add inventory sub-categories for raw materials, work in progress and finished goods, and cost of revenue categories for materials, production labor, shop overhead and inventory change. A chart of accounts template shows the rest of the structure.
Import last year’s closing trial balance so the inventory sub-categories start at your last count.
Upload each month’s statements and drop supplier invoices into Bills. Each statement is checked against its printed balances, and each bill is matched to the payment that settled it.
After each count, add one journal entry in Accounting › Ledger moving each inventory sub-category to the counted value, with the difference to inventory change.
Finalize the month in Reconciliations once every account ties. A month-end close checklist keeps the count and the close in the same order every time.
WHERE ZERABOOKS FITS
ZeraBooks keeps the books a manufacturer’s owner, lender and preparer read. Unit counts, bills of materials and job tickets stay in your shop system or on the count sheet.
THE GENERAL LEDGER
Purchases, production wages and shop overhead land in cost of revenue, so the profit and loss statement shows a gross profit you can trust. Every bank and card statement has to agree with the ledger before its month ties.
Upload a billOR HAND IT OVER
The ZeraBooks team can keep the books, book your counts and close each month while you run the floor. You upload statements, bills and the count sheet and see the work in a read-only dashboard. From $150 a month (USD), quoted after a free call.
Record a journal entryMORE INDUSTRIES
One that keeps inventory as an asset, puts production costs in cost of goods sold and proves every account monthly. ZeraBooks does that as an AI-native general ledger from your statements and bills, so the gross margin your lender sees is built on reconciled numbers.
No. ZeraBooks holds inventory as dollar balances and adjusts them to your count with one journal entry. Quantities and unit costs stay on your count sheet or in your inventory system.
Not as features. A shop with a few clear product lines can give each its own income and cost categories, and the Profit & Loss shows each line’s margin. There are no classes or departments on reports.
At least at year end for the tax return. Counting monthly, even just the costly materials, gives a true gross margin each month and catches waste early. Restaurants read food cost against sales each month for the same reason; see restaurant accounting software.
In the books, the shop’s share usually goes to cost of revenue and the office’s share to operating expenses. For tax, your preparer decides what is included on Form 1125-A or Schedule C.
$79 a month billed annually or $149 monthly, after a 7-day trial. See ZeraBooks pricing.
FREE SETUP + CATCH-UP
Set up the inventory categories, upload a month and book your last count. 7 days, then $79 a month billed annually. Or let our bookkeeping services team keep the books from your statements and bills.