FAQ is a regular blog feature that answers frequently asked questions and makes them available as a growing list of tagged blogs.
The short answer is “yes”, COGS are always 100% deductable. In general, the IRS lets you deduct the cost of creating the goods that you will eventually sell.
But there is a longer answer that you need to be aware of: When we say “always 100% deductible” that comes with the unstated clarification that those costs are reasonable. When the IRS looks at your deductions, they’ll compare your COGS deductions with your income and other expenses. If it seems way out of line, they’ll inquire in order to make sure that you’re not deducting personal purchases or fake purchases. If you can back up your purchases, great. But make sure you can give a good reason!
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FAQ is a regular blog feature that answers frequently asked question and makes them available as a growing list of tagged blogs.
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online bookkeeping Posted in: *F.A.Q's*
FAQ is a regular blog feature that answers frequently asked question and makes them available as a growing list of tagged blogs.
I’ve had more than one user ask this question. Here’s what happens: they buy merchandise that they then resell those goods. That expense would go under your Cost of Goods Sold – Value Added Goods account.
We made the Chart of Accounts as comprehensive as possible but there are a bazillion different types of businesses out there so we also made the Chart of Accounts completely customizable. (Note: “bazillion” is not an official bookkeeping term). You can easily delete, edit and add accounts as you feel necessary. So, if you want to rename “Value Added Goods” to “Products for Resale” or “Merchandise Cost” or “Stuff-I-Buy-Then-Sell-Again”…you can!
