How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Anne Your Own Question
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2336
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Type Your Tax Question Here...
Anne is online now
A new question is answered every 9 seconds

self employed - Graphic designer, but I also occasionally source

Resolved Question:

self employed - Graphic designer, but I also occasionally source products for folks in China. How do I show the cost of goods as an expense or as inventory?
Submitted: 7 years ago.
Category: Tax
Expert:  Anne replied 7 years ago.
HiCustomerbr />
Thank you for using justanswer. There is something called "pass thru inventory". For example, one of my clients sells carpeting. He doesn't have a store where he has carpets on display. He has samples that he physically takes to potential customers so that they can really see how the carpet will look next to their furniture. He then orders exactly what he has "presold"....both his beginning and ending inventory are 0

Inventory is defined as either raw materials (plus labor costs if any) to create a product you are selling, or the finished product you sell.

Supplies would be more along the lines of the samples for the carpet seller, brochures, invoices, etc

Regardless of whether you use the "pass thru inventory" method or you record these costs as supplies, your botXXXXX XXXXXne figure remains the same.

I use the "pass thru inventory" because it is more "politically correct". Since I'm not 100% sure of what you mean when you say you are a graphic designer (do you sell blueprints for ex?) I will let you make this call since you know exactly what your business entails.

I hope this helps.

Anne and 2 other Tax Specialists are ready to help you

Related Tax Questions