schedule C inventory

Taxes General Forum - Tax professionals meeting place and answers to queries. (Moderated) 

Yahoo!   Google   Windows Live   del.icio.us   digg   Netscape

Subject Author Date schedule C inventory maecenasaliquam 01-23-2007  Re: schedule C inventory lurker 01-24-2007  Re: schedule C inventory Paul Thomas, CPA 01-24-2007  Re: schedule C inventory Harlan Lunsford 01-24-2007
Posted by maecenasaliquam on January 23, 2007, 2:23 am Please log in for more thread options I have a small business & I am trying to figure out how to do the inventory for my schedule C. As I understand it, I'm supposed to figure the cost of the inventory I have at the end of the year. I had quite a lot of inventory at the end of the year, but I don't know how to figure the cost. I make small figurines and other knickknacks out of bins of beads, hardware items and other things I find in stores (and sometimes on the street). Each piece is unique, each one costs me a different amount & frankly, I don't know how much each costs. "Cost," as I understand it, is how much it costs me to make them. I assign them prices based on my labor & what I can recall of the costs. I know, not very scientific, but what can I do. I'm afraid I'm just going to have to guess the cost of the goods sold... perhaps a percentage. I'm just wondering if there is an easier way. Is there? I don't know why I can't just take my earnings & subtract from them what I spent this year (the first year I've begun keeping careful records) & call that my profit & just claim that! Mae << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >> Posted by lurker on January 24, 2007, 2:15 am Please log in for more thread options maecenasaliquam@yahoo.com wrote: > I have a small business & I am trying to figure out how to > do the inventory for my schedule C. > > As I understand it, I'm supposed to figure the cost of the > inventory I have at the end of the year. I had quite a lot > of inventory at the end of the year, but I don't know how to > figure the cost. > > I make small figurines and other knickknacks out of bins of > beads, hardware items and other things I find in stores (and > sometimes on the street). Each piece is unique, each one > costs me a different amount & frankly, I don't know how much > each costs. "Cost," as I understand it, is how much it > costs me to make them. > > I assign them prices based on my labor & what I can recall > of the costs. I know, not very scientific, but what can I > do. > > I'm afraid I'm just going to have to guess the cost of the > goods sold... perhaps a percentage. I'm just wondering if > there is an easier way. Is there? > > I don't know why I can't just take my earnings & subtract > from them what I spent this year (the first year I've begun > keeping careful records) & call that my profit & just claim > that! Are you saying that you do not have receipts for what you paid? My observations using QuickBooks is that prices change through the year on the "same" item, or as I switch sources. There are two important number that QuickBooks must present. 1) Year end total cost (for tax and profit/loss determinations) 2) Average cost per item (for resale profit/loss margins per item.) I find that often, as a source changes, the part number also changes. Since tax time is about item number (1), it makes perfect sense that the sum of all the parts is used. Documentation is a separate issue. << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >> Posted by Paul Thomas, CPA on January 24, 2007, 2:15 am Please log in for more thread options > I'm afraid I'm just going to have to guess the cost of the > goods sold... perhaps a percentage. I'm just wondering if > there is an easier way. Is there? To be honest, for a business like yours, that's what they have to do for a bulk of the inventory when there are "loose parts". You can however, nail down any unopened bulk items of materials and "inventory" as it's just a matter of counting boxes x your cost in each. But, unless your sales are more than one million, you can account for your inventory using the cash method, meaning that you can deduct your purchases. See Rev. Proc. 2001-10. -- Paul Thomas, CPA paulthomascpapc@bellsouth.net << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >> Posted by Harlan Lunsford on January 24, 2007, 2:34 am Please log in for more thread options maecenasaliquam@yahoo.com wrote: > I have a small business & I am trying to figure out how to > do the inventory for my schedule C. > > As I understand it, I'm supposed to figure the cost of the > inventory I have at the end of the year. I had quite a lot > of inventory at the end of the year, but I don't know how to > figure the cost. > > I make small figurines and other knickknacks out of bins of > beads, hardware items and other things I find in stores (and > sometimes on the street). Each piece is unique, each one > costs me a different amount & frankly, I don't know how much > each costs. "Cost," as I understand it, is how much it > costs me to make them. > > I assign them prices based on my labor & what I can recall > of the costs. I know, not very scientific, but what can I > do. > > I'm afraid I'm just going to have to guess the cost of the > goods sold... perhaps a percentage. I'm just wondering if > there is an easier way. Is there? > > I don't know why I can't just take my earnings & subtract > from them what I spent this year (the first year I've begun > keeping careful records) & call that my profit & just claim > that! In a situation like yours, I would NOT include value of "my" labor; just the actual material costs, which probably can't be much, right? I think it reasonable to look at a piece and use the "eye estimation method". (Oh.. about.. uh.. say... 67 cents in materials!) ChEAr$, Harlan Lunsford, EA n LA << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >> Similar Threads Posted Inventory at Sale of Business June 23, 2006, 3:10 am Where do I report dividends paid on Form 5471 Schedule C or Schedule F March 12, 2008, 9:23 am Schedule C or Form 4137 + Schedule U ? March 30, 2007, 4:35 am schedule C February 27, 2007, 10:30 pm Re: LLC did not give schedule K-1 November 1, 2006, 4:52 pm Re: LLC did not give schedule K-1 November 2, 2006, 12:48 am Re: LLC did not give schedule K-1 November 2, 2006, 11:56 pm Schedule K-1 for IRA holding? March 16, 2007, 10:35 pm Schedule C Depreciation March 19, 2007, 11:12 am Schedule M-3 for 1065 March 30, 2007, 4:35 am