Taxes and quickbooks ?

[klingsdesigns]

A vinyl roll is inventory correct.
When you purchase a roll from a company, what account in quickbooks do you put it under? Not supplies?

 

[BIG EASY DOES IT]

Everything used to make a sign is supplies once the sign is finished that is a sellable item and the item itself is put into inventory. When we make a sign we put that finished sign into inventory. With a couple exceptions when we take in precut blanks we inventory them. But aluminum sheets are supplies that are then cut and made into and inventory item.

 

[klingsdesigns]

Everything used to make a sign is supplies once the sign is finished that is a sellable item and the item itself is put into inventory. When we make a sign we put that finished sign into inventory. With a couple exceptions when we take in precut blanks we inventory them. But aluminum sheets are supplies that are then cut and made into and inventory item.

So at the end of the year you don't count all your vinyl rolls as inventory?

 

[BIG EASY DOES IT]

We do but very loosely. We don't have to for tax purposes because we pay tax on all our vinyl because half is used for internal and half is sold as signage. So we just pay the tax to save the hassle of separating what is used for what. We do however add up the vinyl stock that we have at the end of the year so we know where we stand as far as revenue and profits go.

 

[Desert_Signs]

So at the end of the year you don't count all your vinyl rolls as inventory?

You may not have to. The IRS does not require businesses that have annual gross receipts of under $1 million average for the last 3 years. If you're a small shop, you just record it as materials (COGS) when you buy it and that's it.

IRS Publication 334 (sorry for the formatting, click the link to read yourself) https://www.irs.gov/pub/irs-pdf/p334.pdf

Generally, if you produce, purchase, or sell merchandisein your business, you must keep an inventory and use theaccrual method for purchases and sales of merchandise.However, the following taxpayers can use the cashmethod of accounting even if they produce, purchase, orsell merchandise. These taxpayers can also account forinventoriable items as materials and supplies that are notincidental (discussed later).1. A qualifying taxpayer under Revenue Procedure2001-10 in Internal Revenue Bulletin 2001-2.2. A qualifying small business taxpayer under RevenueProcedure 2002-28 in Internal Revenue Bulletin2002-18.Qualifying taxpayer. You are a qualifying taxpayer if:Your average annual gross receipts for each prior taxyear ending on or after December 17, 1998, is $1 millionor less. (Your average annual gross receipts for a tax year is figured by adding the gross receipts for thattax year and the 2 preceding tax years and dividing by3.)Your business is not a tax shelter, as defined undersection 448(d)(3) of the Internal Revenue Code.Qualifying small business taxpayer. You are a qualifyingsmall business taxpayer if:Your average annual gross receipts for each prior taxyear ending on or after December 31, 2000, is morethan $1 million but not more than $10 million. (Youraverage annual gross receipts for a tax year is figuredby adding the gross receipts for that tax year and the 2preceding tax years and dividing the total by 3.)You are not prohibited from using the cash methodunder section 448 of the Internal Revenue Code.Your principal business activity is an eligible business(described in Publication 538 and Revenue Procedure2002-28).