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Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2439
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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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: 8 years ago.
Category: Tax
Expert:  Anne replied 8 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.

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