When entering expenses for my sole proprietorship business, I am stuck when it comes to Inventory vs. Supplies. Under Inventory, I see “ If you are a small business taxpayer (have average annual gross receipts of $26 million or less for the 3 prior tax years, and not a tax shelter as defined in Section 448(d)(3)), you are not required to report inventory. If you have inventory records, it may benefit you to report them for your taxes.”
Directly above the question regarding if I have inventory, it states “If you're not reporting inventory, but had material or supply expenses, enter them as supplies under expenses.”
Not tracking all the inventory usage for my business would be way less time-consuming on my part (which for clarity is a crochet business that includes yarn, safety eyes, poly-fil, etc.). However, I don’t quite understand adding it in the Supplies section as this section says, “Job-related expenses aren't deductible on your federal return.” It seems like there would be a benefit to track the full Inventory vs. Supplies or am I understanding this incorrectly (assuming of course that Inventory then is deductible on a federal return)?
Is there a way to track my costs under Inventory that would incur the cost in the year it was purchased that doesn’t require me to keep exact counts/weights from each of my products that are sold?
