To figure Cost of Goods Sold in Self-Employed,
1.Go to Inventory/Cost of Goods Sold and click Start or Update.
2.Say Yes, I have inventory to report.
3.Answer the question about how you value your inventory.
4.Enter the inventory at the beginning and end of the year.
5.Enter on the next screen the costs that you had for the year in purchasing or making your inventory.
Cost of goods sold is figured automatically and put on the second page of your Schedule C. It is equal to
Purchases for the year + beginning inventory – ending inventory.
That number goes to page 1 of your Schedule C, on line 4. That gets subtracted from line 1, gross receipts, to get your gross profit, which is line 5 of your Schedule C.
