# Tax time and inventory



## gmille39 (Oct 18, 2006)

Ok, my first year doing taxes for my SP(sole proprietorship)

Is vinyl I keep in stock to do shirts considered inventory, or is it just shirts, hoodies, etc. that's considered inventory. If I didn't keep any inventory, I can fill out the schedule c-ez.


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## proworlded (Oct 3, 2006)

Any accountants on the forum?


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## tfalk (Apr 3, 2008)

I only include merchandise in my inventory counts, I expense the vinyl, thread, etc as a consumeable. Otherwise you would probably need to track the vinyl down to the foot as you consume it for each shirt... but I'm not an accountant...


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## debz1959 (Jul 29, 2007)

gmille39 said:


> Ok, my first year doing taxes for my SP(sole proprietorship)
> 
> Is vinyl I keep in stock to do shirts considered inventory, or is it just shirts, hoodies, etc. that's considered inventory. If I didn't keep any inventory, I can fill out the schedule c-ez.


It can be inventory or supply, depending on how you sell it. You say you didn't keep any inventory; shirts, hoodies; but did you buy it and sell it? 

If you made shirts with the vinyl, then it is a supply, but if you just sold the vinyl by itself, then it is inventory.

Tell me what your business is and I will have a better idea of how to answer your question.

Oh, and yes, I'm an accountant.


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## gmille39 (Oct 18, 2006)

tfalk said:


> I only include merchandise in my inventory counts, I expense the vinyl, thread, etc as a consumeable. Otherwise you would probably need to track the vinyl down to the foot as you consume it for each shirt... but I'm not an accountant...


Thanks. That makes sense. This is my first year in business so I really don't have to worry about a profit. My expenses and purchases far outweigh my revenue, but I want to make sure I hit everything I can so I don't send any red flags up the pole.


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## thutch15 (Sep 8, 2008)

I agree with debz1959. The vinyl or ink would be consider a indirect material, because it leaves with the shirt. Something like spray adhesive or cleaner would be considered shop supplies, because it does not leave with the shirt.


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## debz1959 (Jul 29, 2007)

gmille39 said:


> Thanks. That makes sense. This is my first year in business so I really don't have to worry about a profit. My expenses and purchases far outweigh my revenue, but I want to make sure I hit everything I can so I don't send any red flags up the pole.


If you are going to report a net loss, then you can't file the C-EZ. [media]http://www.irs.gov/pub/irs-pdf/f1040sce.pdf[/media]

It says right at the top.


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