# COGS or Supply Expense for Taxes



## Campeon707 (Sep 16, 2011)

For accounting purposes how do you categorize the following items for tax purposes.

Ink? (COGS?)
Emulsion (COGS?)
Chemicals - Reclaimer, Press Wash, Degreaser
Tape
Film Positive

Thanks for any help you can give. Love tax time. Yes I know most of us are not CPA but just looking for what you do. I already know what I have done for three years but just want to get an idea. Yes I know call a CPA but what do you do.


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## Liberty (Jul 18, 2006)

All supplies are expensed to a COGS account when purchased

Office supplies got to an expense account rather than COGS.

Production labor costs should also go to COGS.


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## binki (Jul 16, 2006)

I would say everything in your production is COGS. However, If you call it office supplies and since you are in California, you will pay an annual property tax on your office supplies, between 1.06% and 1.25%, depending on your county. You can either do an inventory and pay based on what you had on hand on Jan 1 or you can take 1/12 of your supplies (keeping a month on hand) purchases and use that as your tax base.


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## KristineH (Jan 23, 2013)

Talk to a tax professional, they should know exactly.


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## Campeon707 (Sep 16, 2011)

Thank you everyone for your responses they are helpful. Yes I know talk to a CPA. However my only issue with CPAs is they give you expert advice. However advice that is all that it is. When you sign the dotted line on your tax for you accept all responsibility regardless if a CPA gave you advice or prepared your taxes. Thus yes I have a CPA that I believe is good it's still always good to hear people's experience that are in the industry considering I'm my CPAs only screen printing.


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