Year end inventory

[tamsoycandles]

I guess the real question then (especially for the person doing his/her own taxes) would be which method would provide the most benefit in tax savings? I guess if you are good at keeping track of your inventory and cost of finished goods and having this information easily accessible, then using the accrual method would be the most accurate. If you have a good list of what went out vs. what came in, then cash method is good. For kicks, I'm going to run the number both ways. Luckily, I started my biz late in the year (October), so I don't have many records to figure in. I actually managed to not lose any receipts and have records for all my expenses.

Tony

[mommyof1]

And I'll throw in the confusing item that I don't do inventory at all - my taxes are coded as cash basis, and since I am under $1M gross income (I'm pretty sure I'm under that lol) my CPA told me I don't have to do inventory. Just put down income for the year, expenses for the year, subtract to get net, no cost of goods sold..

Every CPA seems to say something different though, so go with what your CPA tells you - they're the one that will be going with you to an audit

I'm a little late to the game on this one, but my CPA told me the same thing as Robyn's. In my case, though, he just happens to be my husband as well, lol.

[slow-burn]

Mine is somewhat the same as Robins (I think, lol). Take mine to a CPA, he took all my receipts. I have different categories: Money in, supplies (wax, wicks, fo's, colors, butters, oils) packaging (jars, containers, labels, bags) Materials (items needed for buisness that don't leave, like printer, molds, computer, shelving costs) Then I also do seperate categories for what I paid to have items shipped in, and what I paid to ship out. I give him these receipts (already tallied on paper) and he does his magic, lol!

Now that I think about it, he mentioned something about a "ghost" invetory. And looking at my taxes, it seems that he did do that. However, the back of my sheet is empty. What I believe he did was estimated how much I had left at the end of the year. He said that right now, I don't have to invetory, however it may be beneficial in the future if your profit is too much.

For those that were wondering about a loss. From my understanding, your items sold, shipping paid in & out, materials (items that stay with you-these depriciate) rentals (booth fees and such) a portion of your utility bills (phone, internet, trash, electric, heat) and your mileage, all go up and are compared to what you spent and have on hand. I put a ton of miles on my van, and it really showed up on taxes.

[wthomas57]

Inventory when you make your own items is SO critical to be successful long term anyway.... so might as well do it correctly from the beginning which means you have all the info you need to deduct COGS correctly come tax time. Its a lot of work upfront to put your current inventory numbers all together and add in all the inventory you bought leading up to that point.. but after that, its pretty simple to manage. And when I say inventory, Ia m referring to not just finished products, but all the ingreidents and supplies that go into to your finished products (other than outgoing shipping materials)