Okay -- I make jewelry --- to make said jewelry, I have to by stones, findings, etc. Are the stones, etc, considered inventory since I will (hopefully) turn around and sell a finished product from such? And thus not tax-deductible (actually considered an asset?)Also, tools I need to buy to make jewelry - is that a deductible business expense? Trying to figure out how to enter items into my business accounting software.
The tools might be deductible, but probably they need to be capitalized also (treated as an asset) and depreciated. That said, it's likely that you can deduct them in year #1 that you use them by taking a Section 179 election.
Correct, the materials for the jewelry will count as inventory cost. Once you start making sales, the cost will come through as deduction for Cost of Goods Sold.
If you have other questions, feel free to pm me.
I went to the irs site and downloaded the pub about depreciating property... will read it and then as questions :)
Taxes, I hate em! hahaha.. Such a money racket... I wanted to be able to accept checks and money orders with my business. In order to do so I needed a business account at the bank since they will not allow me to deposit such that is made payable to my business name into my personal account. To get a business account at the bank I have to show either a business permit or state tax I.D
I goto city hall to inquire about a business permit for a home based, internet based business. Seems I have to have a State tax I.D number, $3000.00 bond and go before the city council to get permission to operate a home business in a residentially zoned area. So I decided heck with a permit and applied for a state tax id number. In my state I have to get a bond in order to recieve a tax id number because my business is " Home based" They say that if I was in a office or some sort of commercial building no bond would be required. What a money racket.
I suppose I will not accept checks or money orders made payable to my business name for the time being. I am a poor man trying to find the ladder to climb out of the poor pit.
Good luck with your taxes
Jerry
Section 179 permits a business to write off up to $100,000 in equipment purchased for use in the business in the year of purchase. For example, say you buy a new computer for your business for $2,000. Rather than depreciating it over five years, you may elect to write off the full $2,000 in the year you purchase it.
Going back to the question of your stones, etc...being inventory. It will be a bit more complex than just recording inventory and then removing it once sold. Each stone, etc. will be inventory that will then roll up into the final product, which will also be inventory until sold. When I say "roll up"...I am referring to a "manufacturing process" where all the separate inventory items are combined to create the piece of jewelry. Thus the cost of the piece of jewelry becomes the cost of all the parts put into the piece. QB has a great manufacturing program that does this process seamlessly. Hope this helps..if not feel free to PM me.
