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tax questions

Discussion in 'The Taxidermy Industry' started by juli, Jan 15, 2015.

  1. Jan 15, 2015 #1
    juli

    juli Active Member

    667
    123
    Ok... I hate the IRS and I hate taxes and I REALLY hate doing taxes. A couple of things that have always confused me.

    Supplies in the COGS vs Supplies in Business expenses.

    Can someone please separate the two for me. I understand things like combs and brushes, paint brushes, sculpting tools are supply expenses (not part of COGS)... but the IRS help page also lists paint, clay, lacquer, and other things I would consider to be part of COGS and inventory...

    someone please give me an example of raw materials and supplies in COGS vs Supplies (in the business expenses section)

    I am using Turbotax, btw.

    Thank you!
     
  3. Jan 15, 2015 #2
    EA

    EA Well-Known Member

    19,529
    4,838
    Southwestern Pennsylvania
    If I am understanding the articles I read, the difference is your tools are used to make the product, but are not part of what makes up the product.

    As you use your paints, etc, they go into the product and are part of the COGS. The tools do not deplete. Although a tool is necessary to make the product, Unless it breaks, you start with 1 sculpting tool, you end with 1 sculpting tool.
    Same can't be said for your clay, paint, foam, etc.

    Could be wrong, but that is what I get out of it.
     

  5. Jan 16, 2015 #3
    TomR

    TomR New Member

    71
    0
    Abingdon, MD
    EA said it right. The items which go into the mount are business supplies. The tools you use can be depreciated, either one-time or on a schedule (depends upon the value of the tools and how you wish to depreciate).
     
  6. Jan 16, 2015 #4
    michael p.

    michael p. Getting better with age :)

    25,278
    11
    Texas Damnit!!
    I pay a CPA to worry about things like that for me, I'm a taxidermist, not an accountant.
     
  7. Jan 16, 2015 #5
    tmpatton22

    tmpatton22 Member

    244
    7
    Loveland, Ohio
    X2 on that Michael P.
     
  8. Jan 16, 2015 #6
    tmpatton22

    tmpatton22 Member

    244
    7
    Loveland, Ohio
    X2
     
  9. Jan 16, 2015 #7
    pir^2h

    pir^2h Retrievers give you the bird

    4,684
    5,055
    Tennessee
    You got that right! Why would anyone trust a business tax return to TurboTax? For that matter even someplace like H&R Block or one of those quick tax places. You need to consult with a tax professional. (My opinion)

    Vic
     
  10. Jan 16, 2015 #8
    juli

    juli Active Member

    667
    123
    I appreciate everyone's responses.

    I knew I would get the 'consult a pro' response and I completely understand that pov - but since this is a first yr business, my expenses are really not that much. Not at all like a shop bringing in a hundred thousand dollars in 'work'. I think next year will be a different story. I know there are others out there who manage their own books who can answer my questions.

    And for those that don't think TT is worth trusting. I have used it for years for personal taxes and it is one of the easiest programs out there to use. They just don't have a lot of answers for 'taxidermy' related expenses. LOL
     
  11. Jan 16, 2015 #9
    code6202

    code6202 Active Member

    1,990
    7
    Cape Girardeau Missouri
    My tax lady puts the cheaper hand tools (screwdrivers, paintbrushes) as well as paint, clay, apoxie, etc, as a supply cost. We don't do "inventory" because those items are not for resale. She does it all for me, because I am not smart enough to do taxes (math).
     
  12. Jan 17, 2015 #10
    bailey-outdoors

    bailey-outdoors New Member

    127
    2
    You aren't reselling anything its just supplies that are needed for you to provide a service . Unless you are listing all these on your invoice and marking them up for a proffet all that is just a shop expense .
    I don't know just my 2 cents and that's how I do it .
     
  13. Jan 17, 2015 #11
    Non-Typical_IL

    Non-Typical_IL Member

    164
    0
    We use a CPA, makes it a lot easier with the farm too!!! I have everything in order and they just punch in the final numbers. Doesn't cost me over $300.
     
  14. Jan 17, 2015 #12
    juli

    juli Active Member

    667
    123
    I want to thank everyone for the help and information. The resale stuff makes the most sense to me - if you would mark it up to sell it, it would be COG... The good news is that I did finish the business part of my taxes yesterday - This year I do have a new plan for keeping inventory of materials and supplies. All part of the learning curve. Thankfully, like I said above, I don't or didn't have tens or hundreds of thousands of dollars in materials and supplies to go through. I expect this year to be different.