Cost of Goods Sold vs. Supplies: Which Bucket Does My Paddle Belong In?

A Simple Guide for Adventure Gear and Rental Inventory

If you run a kayak rental, paddleboard shop, or outdoor adventure company, you've probably stared at QuickBooks wondering:

"Does this paddle go under 'Cost of Goods Sold' or 'Supplies'?"

Great question. And you’re not alone. A lot of outdoor business owners get tangled in this accounting net. So, let’s break it down in plain, river-friendly language.

First, What the Heck is “Cost of Goods Sold” (COGS)?

Cost of Goods Sold (COGS) is the cost of the stuff you sell. That’s right—COGS only applies to items you purchase with the intention to resell to your customers.

Example: You run a little shop by the lake and you sell paddles to customers heading out on their own adventures. Those paddles? COGS. Because you bought them to sell them.

COGS = Resale Gear.

And What About “Supplies”?

Supplies are things you buy to run your business—things that don’t leave with your customers.

Example: You buy paddles so your rental kayaks are fully equipped. These paddles aren’t going anywhere (unless a customer “accidentally” forgets to return one... but that's another blog post). These are rental supplies.

Supplies = Used by you, not sold.

So Where Does My Paddle Belong?

Here’s the magic paddle test:

Question	If YES…	If NO…
Are you selling this paddle to customers?	It’s COGS.	Move to next question.
Is this paddle staying with your rentals for customer use?	It’s Supplies (or Rental Equipment).	You might need a new paddle...

Bonus Tip: Big-ticket rental gear (like kayaks, SUP boards, bikes) may be categorized as Assets, not Supplies—because they last several years and need to be depreciated. But small things like paddles, helmets, or life jackets? Usually Supplies.

Why Does This Matter?

Because your taxes care. COGS affects your gross profit. Supplies are overhead. Mixing these up can make your profit margin look weird...or raise red flags with the IRS.

Plus, knowing the difference helps you price rentals, track costs properly, and actually see which part of your business makes you money.

The Bottom Line (So You Can Get Back on the Water)

If you sell it, it’s COGS. If you use it, it’s Supplies (or Equipment).

When in doubt, paddle your way over to your bookkeeper (hey, like me!) or accountant to make sure your gear's floating in the right bucket.

Stay balanced out there, friend. On the water and in your books.