How about we add yarn to the question....I decided to turn my hobby into a business as well and trying to get a grip on taxes. I did my inventory of completed items (62 hats) and I have receipts for all the yarn bought in 2013 but I don't have # of skeins of yarn at each price point. It sounds like I need to add my finished product inventory AND my yarn stash? Plus if I make my own hats, how do I know how to value them--I know it is one price to buy them and a different to sell them but should I give a fixed price to each size and use that as my cost?
