Jewellery store bookkeeping: memo goods, repair jobs, and metal bought from the public

Memo and consignment goods are not your inventory

Most independent jewellers carry pieces they do not own. Suppliers send loose stones, mountings, and finished pieces on memo — an approval basis where title stays with the supplier until you buy the piece outright or sell it to a customer. Put memo goods on your balance sheet as inventory and your asset value, your cost of goods sold, and your gross margin all read wrong from day one.

The fix is a separate memo log, not a note in a drawer, tracking:

• the item and the supplier it came from
• the date received and the agreed sale price
• a return-by date, so nothing sits on memo indefinitely

When a memo piece sells, that is the moment you record the purchase and the sale together — cost in, revenue out, in the same entry. Estate pieces a customer leaves with you to sell on consignment work the same way in reverse: the piece is never your inventory, and when it sells you record your commission as revenue and the balance owed to the consignor as a payable, not as your own sale.

Repairs and custom work: split labour from materials

A repair ticket is really two jobs stapled together — the bench time and the parts. Labour and materials need their own lines on the invoice and their own accounts in the books, because materials carry a cost you track to the job while labour is pure margin once the bench is paid. Blend them into one repair revenue line and you lose the ability to tell whether the shop is pricing bench hours correctly or quietly eating the cost of prongs, solder, and replacement stones.

HST applies to the whole invoice — there is no exemption for jewellery repair or appraisal services in Ontario, materials included. Custom orders that run for weeks need work-in-process tracking: a deposit taken up front is not revenue yet, and the job’s materials and labour accumulate in a WIP account until the piece is delivered and the final invoice closes it out.

Buying gold, diamonds, and estate pieces from the public

Buying precious metal and estate jewellery from walk-in sellers is common for independent jewellers, and it comes with paperwork that has nothing to do with accounting and everything to do with staying compliant. Every purchase needs a record: seller identification, a description of the piece, weight and purity where known, price paid, and the date — a log we help set up alongside the books, not instead of one.

Businesses that buy or sell precious metals, precious stones, or jewellery are generally captured by FINTRAC’s rules for dealers in precious metals and stones, and a single cash transaction of $10,000 or more can trigger a large cash transaction report — a threshold we flag for every client in this trade, because the reporting obligation sits with the business, not with us. We treat this as a compliance flag to raise early, not a service we provide directly; a specialist familiar with FINTRAC registration should confirm exactly what applies to your buying activity.

On the accounting side, what you pay becomes your inventory cost once the piece is cleaned up and returned to the case, or the cost basis for scrap you sell on to a refiner when it is not resaleable as jewellery.

Layaway, deposits, and shrink on a case full of small, expensive things

Layaway and custom deposits are deferred revenue, not sales — the money sits as a liability until the final payment clears and the customer takes the piece. HST timing follows the cash: a deposit generally makes the GST/HST on that portion payable when you receive it, even though the sale itself is not complete, so the books need to track deposit revenue and sale revenue as two separate events that reconcile, rather than one entry trying to do both jobs at once.

Shrink in a jewellery store is not a percentage problem, it is a per-piece problem. One missing ring can outweigh a week of shrink at a grocery store, so we track high-value stock by SKU against a physical count on a set schedule, and reconcile that count to the jewellers block insurance schedule your policy is priced against — an outdated schedule means you are either overpaying premiums on pieces you no longer hold or underinsured on what is actually in the case. Our bookkeeping services page covers the monthly close in full, our guide to inventory and cost of goods sold walks through the costing logic behind all of this, and if US suppliers or estate exports are part of your buying, see our jewellery cross-border tax guide.