I started with a direct sales company in December 2016 (LuLaRoe). I purchased inventory and supplies in December 2016. However, I did not receive the inventory and start selling until January 2017.

1 reply
17 views

I did receive a 1099 (I think that what it was) from LuLaRoe. It says I purchased inventory, but made $0 since I did not sell anything in 2016. Do I file as a small business or claim everything next year?

TurboTax Free Edition Online

Anonymous

If you had no sales in 2016, then your inventory purchases will not be deductible in 2016. Other expenses that you may have paid will be, though.

If you have a business that purchases items for resale and has a constant stock of items (like LuLaRoe), you are able to deduct the cost of the items only when they are sold. Any stock on-hand is considered inventory, and is not deductible when purchased.

There is no specific amount of gross income (money coming in) or profit that you must meet in order for your other expenses to be deductible.

Important note: You are only able to deduct your expenses in the year that you paid them - you cannot save them for a future year.

To get to the input screens for your business:

Once signed into your account, click on Search at the top of the screen
Input "schedule c" into the search box and hit Enter
The first link available should be Jump to schedule c - click on this link
You will be taken to the screens to enter your income, business information, and expenses

When you come to the input screen for your income, simply do not enter anything. Work through the other screens that come up (business information, etc.) and then you will be able to enter your expenses.