A walk-in customer slides a coffee can across the counter. Inside: thirty-two American Silver Eagles, a sleeve of pre-1965 dimes, and a single one-ounce Krugerrand. They want $14,200 in cash, today. Before you weigh anything, you have already crossed three different regulatory tripwires — and the way you record the transaction in your books determines whether your year-end will be a clean reconciliation or a forensic excavation.
Coin and bullion retail is one of the few small businesses where the accounting policy choices are simultaneously inventory questions, tax questions, anti-money-laundering questions, and customer-trust questions. This guide walks owner-operators of independent coin shops, precious metals bullion dealers, and numismatic rare-coin retailers through the bookkeeping decisions that actually move the needle.
The Revenue Streams Are Not What They Look Like
From the outside, a coin shop looks like a single retail business. The general ledger sees something very different. Under ASC 606, each customer interaction generally separates into distinct performance obligations with distinct margin profiles:
- Spot-priced bullion sales — gold, silver, platinum, and palladium rounds and bars sold at a thin premium over the daily melt price. Margins of 1%–6% are typical, and turnover is everything.
- Numismatic rare-coin sales — graded coins, key dates, and certified slabs where rarity, condition, and population-report scarcity drive price. Markups can range from 10% to 30%, but inventory turns are slow.
- Walk-in buy-side acquisitions — the daily counter business of buying inventory from the public. This is not revenue; it builds inventory at a buy-side cost basis.
- Consignment auction commissions — coins sold on behalf of customers through your storefront or a partnered auction house. Recognize only the commission, not the gross hammer price.
- IRA custodian fulfillment — orders shipped to an IRS-approved depository on behalf of a self-directed IRA custodian. Typically billed and settled separately from the retail till.
- Grading and authentication service revenue — submission fees collected from customers and routed through PCGS, NGC, or ANACS. A pass-through plus a thin service margin.
Mixing these into one undifferentiated "Sales" account is the single most common error owner-operators make. Each stream has different cost behaviors, different sales-tax treatments, and different cash-handling rules.
Inventory: The Spot-Price Problem
Most retail bookkeeping treats inventory as a static cost layer that sits on the balance sheet until something sells. Bullion does not behave that way. The wholesale price of a one-ounce gold round changes every minute the COMEX is open, which means a coin you bought yesterday for $2,418 may be worth $2,453 today and $2,402 tomorrow.
Choosing a Cost Flow Method
You have three practical options:
- FIFO (First-In, First-Out) — straightforward and audit-friendly. In a rising metals market, FIFO surfaces the largest taxable gain.
- LIFO (Last-In, First-Out) — requires a valid election on Form 970 and significant compliance overhead, but defers tax in rising markets. Most small shops find the recordkeeping burden disproportionate to the benefit.
- Specific identification — track each lot, ideally by serial number for bars and by acquisition batch for rounds. This is the gold-standard approach (no pun intended) for numismatic inventory because every graded slab is unique anyway. It also gives you flexibility to harvest losses or defer gains by selecting which lot fills an order.
For bullion-heavy shops, specific identification paired with software that tags every lot to a daily spot-price stamp is the modern best practice. ASC 330-10-35-15 permits a mark-to-market presentation for precious metals "having a fixed monetary value with no substantial cost of marketing," but most non-public dealers stick to cost basis with a lower-of-cost-or-market test at period close.
Why This Matters Practically
A dealer who sold a slow-moving one-ounce gold bar last week needs to know which lot they pulled from. If specific identification points to a 2015 acquisition at $1,180, the realized gain is roughly $1,300 per ounce. If a more recent 2024 lot is selected instead, the gain might be $80. The cash received is identical; the taxable outcome is not. That decision belongs in policy, documented in your accounting manual, applied consistently — not invented at tax time.
The Bank Secrecy Act: 31 CFR Part 1027
Any dealer who purchased more than $50,000 in covered goods and received more than $50,000 in gross proceeds in the prior calendar year qualifies as a "dealer in precious metals, stones, or jewels" under 31 CFR Part 1027. That status carries four practical bookkeeping obligations.
Written AML program. Documented risk assessment, internal controls, designated compliance officer, employee training records, and independent testing. Maintain the written program and supporting evidence for five years.
Form 8300 filing. Any cash received over $10,000 in a single transaction, or in related transactions within a twelve-month period, triggers a Form 8300 filing within fifteen days. "Cash" includes cashier's checks, money orders, and traveler's checks individually under $10,000 — a detail that catches many first-time dealers.
Structuring vigilance. When a customer breaks a $14,200 purchase into a $9,500 transaction on Tuesday and a $4,700 transaction on Friday, that is structuring, and the dealer is required to recognize and report it.
Recordkeeping integrity. Your purchase ledger, customer identification records, and the buy-side equivalent of an acquisition-and-disposition book must reconcile cleanly to bank deposits.
The bookkeeping implication is concrete: design your chart of accounts so that every cash receipt over $10,000 throws a flag the moment it is entered. A separate ledger account such as "Cash Receipts Over Threshold — Pending Form 8300" forces you to clear it deliberately rather than discover it six months later.
1099-B Reporting on Customer Sell-Backs
When a customer sells reportable quantities of bullion to your shop, you must file Form 1099-B. Thanks to negotiations originally led by ICTA and continued by the National Coin & Bullion Association, the IRS has clarified the thresholds:
- Gold bars and rounds at fineness of 0.995 or higher — 1 kilo (32.15 troy oz) or more
- Silver bars and rounds at fineness of 0.999 or higher — 1,000 troy oz or more
- Gold one-ounce Krugerrands, Maple Leafs, and Mexican Onzas — 25 coins or more
- Platinum at fineness of 0.9995 or higher — 25 troy oz or more
- Palladium at fineness of 0.9995 or higher — 100 troy oz or more
American Gold and Silver Eagles, fractional gold coins, and many non-listed foreign coins are explicitly exempt. The bookkeeping wrinkle: your point-of-sale system needs to recognize the reportable item and quantity at the moment of the buy-side transaction, not at year-end reconciliation. A retroactive sweep through twelve months of buy tickets is how shops end up missing filings.
Section 408(m) and the IRA Fulfillment Channel
A growing share of bullion sales flow through self-directed IRA custodians. Section 408(m) of the Internal Revenue Code treats most "collectibles" as a deemed distribution from the IRA, with the entire purchase amount becoming taxable income and a 10% early-withdrawal penalty for owners under age 59½. There are specific exceptions:
- Gold at 99.5% purity or higher (the American Gold Eagle is a statutory exception despite being 91.67%)
- Silver at 99.9% purity or higher
- Platinum and palladium at 99.95% purity or higher
The metals must be held by an IRS-approved trustee at a qualified depository. The customer cannot take possession.
From the dealer's perspective, IRA fulfillment is operationally and accounting-wise different from retail:
- The buyer of record is the custodian, not the individual.
- Settlement terms are typically net wire on confirmation, often with a 24- to 48-hour fund verification period.
- The shipping destination is a depository, not a home address.
- The dealer is responsible for confirming that every SKU on the order qualifies under 408(m). One non-qualifying coin can disqualify the entire transaction and create a chargeback.
Set up the IRA channel as its own customer class in your accounting system. Tag each order with the custodian, the depository destination, and a 408(m) qualification flag. When something goes wrong six months later — a custodian audit, a customer dispute — that tag is what saves you.
State, Local, and Excise Considerations
Sales tax on precious metals is a patchwork. Roughly forty-two states exempt some or all monetized bullion and investment-grade coins, often above a dollar threshold (commonly $1,000 or $1,500 per transaction). Some exempt only legal-tender coins; others exempt unminted bars; a few tax everything. After the Wayfair decision, dealers shipping out of state must monitor economic-nexus thresholds in every destination state. Most states use $100,000 in sales or 200 transactions as their trigger.
Track sales tax by ship-to state, by SKU category (bullion versus numismatic versus supplies versus graded slab), and by transaction-value tier. If your software cannot answer "what were my taxable sales into Texas last quarter at sub-$1,000 ticket sizes?" you have a problem waiting to happen.
Capitalizing the Storefront: Section 179 and the Vault
The physical buildout of a coin shop sits squarely in Section 179 territory. Eligible capitalized assets typically include:
- Vaults and high-security safes (TL-15, TL-30, and TRTL-rated)
- Display cases with laminated security glass
- XRF (X-ray fluorescence) spectrometers for metal authentication
- Coin grading microscopes and digital imaging stations
- Counterfeit-detection equipment, including ultrasonic gold testers
- Cash counters, coin counters, and precious-metal scales
- Surveillance and alarm systems
Section 179 allows immediate expensing up to the annual cap, with a phase-out beginning at higher acquisition levels. Bonus depreciation continues its phase-down schedule. The de minimis safe harbor under Reg §1.263(a)-1(f) lets you expense individual items under $2,500 without capitalization, which simplifies tooling purchases like loupes, calipers, and reference manuals.
Insurance and Loss Reserves
Standard commercial general liability does not cover what a coin shop carries. The market norm is a Jewelers Block policy customized for precious metals, which covers inventory in the vault, in transit, and on display, with separate sub-limits for cash on hand and customer property left for grading submissions. Premiums correlate with declared inventory values and security ratings.
Counterfeit liability is its own line. A shop that resells a fake American Gold Eagle to an unwitting customer can be on the hook for the full sale price plus reputational damage. Maintain a reserve account on the balance sheet — often a small percentage of bullion purchases — that absorbs periodic counterfeit losses without distorting monthly P&L.
Bookkeeping in the Daily Workflow
Day-to-day, the strongest coin shops follow a small set of disciplines:
- Daily spot-price snapshot. At open and close, record gold, silver, platinum, and palladium spot prices, and tag every inventory adjustment to one of those reference points. This makes mark-to-market disclosure trivial later.
- Two-sided ticket numbering. Buy-side tickets and sell-side tickets share a sequential numbering system that ties to the POS, the buy-side acquisition log, and the general-ledger journal entry. A missing ticket number is a missing transaction.
- End-of-day reconciliation. Physical inventory count for high-value categories, especially graded slabs and bullion bars, reconciled to system count and cash drawer.
- Monthly LCM test. For any inventory carried at cost, run a lower-of-cost-or-market test at each period close using the month-end spot price.
- Quarterly AML review. The compliance officer reviews flagged transactions, structuring patterns, and customer due-diligence files, and signs off in writing.
Solid bookkeeping is also how you defend yourself during an IRS exam or FinCEN audit. Examiners look for systematic gaps — months where Form 8300 filings should exist but do not, periods where 1099-B reporting volume drops without explanation. Clean ledgers tell a clean story.
The KPIs That Predict Profit
Dealer-community benchmarks and industry surveys point to a small handful of metrics that separate profitable shops from break-even ones:
- Buy-sell spread — the percentage premium between your buy-side price for a given item and your retail sell price. Bullion shops typically operate on 2%–6% bullion spreads; numismatic shops on 10%–30% rare-coin spreads.
- Inventory turnover by category — bullion should turn six to twelve times per year; numismatic, one to three times per year. Mixing the two without category-level reporting masks under-performing rare-coin inventory.
- Turn-Earn Index — gross-margin percentage multiplied by turnover. A high T/E Index identifies winners; a low T/E Index identifies the inventory you should be liquidating to other dealers rather than holding for retail.
- GMROI (Gross Margin Return on Investment) — gross-margin dollars divided by average inventory investment. A GMROI of 200%–255% is a typical solid-performance band for specialty retail.
- Walk-in conversion — the percentage of walk-in foot traffic that results in a transaction, either buy-side or sell-side. Strong shops track this weekly.
- Cash mix — the percentage of total transaction volume settled in physical cash. A trend line that suddenly spikes can signal a customer-base change worth understanding before regulators notice it for you.
Running these numbers monthly takes a clean chart of accounts and a habit of category-level tagging. Both come from the bookkeeping foundation, not from a spreadsheet bolted on at year-end.
Keep Your Financial Records as Solid as Your Vault
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