This section of the forum is for discussing the business and finance issues of the t-shirt industry. Which business structure to use (sole proprietor, LLC, S Corp, etc), how to handle billing, where to register your business and get the proper licensing, etc.
Unsold inventory is not an expense, it is an asset. It has value and can be sold at a later time.
Learning accounting on a forum is not wise. For one thing you often end up with the blind leading the blind.
Throw all you stuff in a bag and take it to H & R Block or whatever.
Seriously, this is not the place for answers that may come back and bite you by the IRS.
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Thanks, Pete, you make a good disclaimer for this thread, this is no place for tax advice. I think that's good to have in here, in fact, escential for anyone inclined to read this as text.
I'm not basing any of my filing on what is said here, I really did just want to get an idea of what others are doing, or aware of, or what their opinion was of what they saw others doing with regard to this.
You're right, inventory is an asset. I'll have to find out how one can report a net income if one spend's every penny on inventory. I was looking at the expense factor of the inventory. I guess if one uses "cash" method, the expense can be taken without waiting for the sale to offset it. I'll look up more. Thanks for writing back, I appreciate it.
Last edited by Girlzndollz; February 7th, 2008 at 08:15 PM.
Reason: shorten
if you have inventory you cannot use cash accounting
~stomping foot~ Darn, I think you are correct, sir.
I have to re-read everything. Okay, I 'll have to just go get into the nitty gritty with someone for hire. Thanks again for the post, tho, I am growing more confused/concerned every day.
Last edited by Girlzndollz; February 7th, 2008 at 08:15 PM.
To a degree. But you will have to prove it's really a business and not a hobby.
Again, do not get your tax advice from a forum. Not just this forum, any forum. I don't think the IRS will appreciate you telling them that SnottyNosedKid415 on the whatever forum said you could claim that deduction.
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This info is out of the Department of treasury, IRS, publication 583, rev'd 2003, so I better also check for an update:
1. Cash method: report income in the tax year received. Usually deduct or capitalize expenses in the tax year you pay them.
2. Accrual method: generally report income in the tax year you earn it, even though you may receive payment in a later year. You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year.
It then goes on: If you need inventories to show income correctly, you must generally use and accrual method of accounting for purchases and sales. Inventories include goods held for sale in the normal course of business.
Then it adds a "Tip": Certain small business taxpayers can use the cash method of accounting and can also account for inventoriable items as materials and supplies that are not incidental. ~sigh~
Which further goes to show why it is best to hire someone who does this for a living and it's their job to sort all of the above out.
Pete, thanks so much, I always value your posts, and thanks so much to everyone else as well. Much obliged.
PS: I've included the above information not as a tutorial or lesson for anyone's benefit. Only b/c it was brought up in the thread, and since I had just read it for my own benefit, thought I'd share for anyone else interested. My guess is all the experienced business folks in this thread are already well aware of this stuff, just newbies like me, needing to ask and learn.
Re: Ebay Sales and Income Tax 
