Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?
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Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?

 
6 Replies
Level 4

Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?

Where you enter the materials depends on how you sell them.  If you are using the supplies as part of a repair they would be entered in the expenses section as supplies.  If you are installing a new bathroom, for instance, you may count the fixtures as inventory.  

Another consideration is how you purchase the materials.  Do you have a inventory of sinks, faucets, and other fixtures on hand that the customer can select?  If so this is more like inventory.  If you purchase the items as needed for a job then they could still be inventory, but the are more likely supplies.  If you do not have any materials left over at the end of the year the effect on your tax return will be the same if you call them inventory or supplies.

Any small parts (like screws, o-rings, sealant, caulk, etc.) used should be considered supplies and entered as an expense.

Level 2

Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?

Now Hold on a second!

 

forget the "depends on how you sell it" thing. As of 2019 unless you make over 25 million, you don't have to do inventory unless you want to or it just makes sense to.  So, for a plumber, all material is inventory. ie, copper pipe, fittings, and fixtures, things bought at a Plumbing Supply House.  We by it; it gets left at the place of installment; we get reimbursed for it.  However, while I appreciate the flexibility, that we now don’t have to do inventory it gets confusing. Confusing because all things bought and eventually left and functionalized at a place of installment are material and now technically- legally- screws, joint compound, glue ect are supplies.

 

If then allowed, it is completely a dis-benefit to do inventory for a plumber because we buy a lot of material. Material that does not go into a job would sit on the property un-deducted- at a cost -until it's sold. So, unless you’re lucky enough to do a million and now 25 million, then expense it.

 

 My problem with your answer is this: If one makes over a million, they shouldn't be asking you this question they would have an office team. so the answer is definitely for a guy or girl like me, on a budget and a self-doer. your answer is vague and everywhere I look on line this answer is continuously vague.   

 

If you say "If you are using the supplies as part of a repair they would be entered in the expenses" and that's allowed, where is the section in Turbotax that says: this is where you enter material sold on a job, and here are examples. Some of the examples given on Turbotax, whether expensing supply house purchases or inventorying make me second guess what i'm doing.

 

 Once again, if they are asking, then they don't make over 25 million. So, your advice should be: 1. don't do inventorying, and 2. here is how and this is where you enter it. 

 

 So Now the question: "Where do I enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?" But now really, supplies or assets? this is what the original questioner should have asked and or you should have guided. 

 

Supplies or assets? 

I and we plumbers all have material bought and used, and then material bought and kept. while it is clear to deduct material bought and used it is not instructed well in Turbotax where to put it. As for bought and kept, asset or expense? If asset, once again, the examples make me feel like- no- but also do we have to really itemize every board and fitting and section of pipe. I would just like say Supply house 1. $1200 Supply house 2. $564 ect...

 

In Other word, since via advice on line and the IRS, I don’t have to do inventorying because we don’t make over 25 million, what then do I do with the money we lost this year sitting in the garage.  No one says just exactly what to do since you don’t have to.  

Level 1

Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?

So how did you end up filing?? Should you list every vendor once and the total amount spent all year? We use over 25 vendors and It would be well over the $200 per vendor suggested in the "supply" cost examples they give you. 

Employee Tax Expert

Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?

As mentioned above, as a small business, you can include it in supplies.

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Level 1

Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?

I was asking how to label them as supplies. Should I lump purchases together into like four or five groups for the yearly costs? Or do I list by vendor and describe what was purchased? My example is we have a medical device repair company. This is the first year we made decent money. Our supplies are roughly 20k but they fall under supplies because we buy materials and parts used to repair and don’t have inventory. Should I list fifteen vendors and the yearly costs on each line? Or should I lump all electronics in one group consisting of several vendors and optics consisting of several vendors in another? How do I group and what do I need to write?

Employee Tax Expert

Where do i enter the cost of material for a plumbing business that have already been sold? Is it supplies or inventory?

You can group the vendors into categories. There is no set policy on how they should be grouped.

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