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Level 2
posted Jan 9, 2023 5:15:36 PM

Gifts/Giveaways

I sell Color Street Nails, when people purchase nails I usually send a few extra goodies with the nails or I will advertise a purchase this weekend will get a free set or something like that. Are all my additional goodies that I send as little gifts like facial masks, nail files, lotions, etc considered a business supply or advertising expense? Also, all the sets that I purchase are not technically considered inventory because I could be giving them away so do I count those as an inventory or just supplies? I've also seen where if I don't sell a huge amount then I should use the cash method of accounting and just put my inventory under supplies? 

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1 Replies
Level 15
Jan 9, 2023 7:39:23 PM

The net result of deducting the cost as supplies or advertising is the same but advertising seems more appropriate. But don’t deduct the same cost twice.