Upgrading to TurboTax Self Employed will be needed to report all the income and expenses.
Since this is the first year of operations, the beginning inventory should be 0. Instead, put the $23,500 as Purchases or Cost of Purchases and do not include anything else in inventory if you no longer have inventory.
This is because of an interaction between financial statements for a business.
In a nutshell, the Balance Sheet keeps track of what you own, less what you owe, to calculate what you are worth. In contrast, the Income Statement captures all the earnings for one year les all the expenses for that year to result in a net income that is then taxed.
Inventory is stored on the balance sheet because it still is what you own. Only the cost of goods actually sold is brought over to the Income Statement and is subtracted from Revenue.
The formula is:
Beginning Inventory
Plus Purchases or Cost of Purchases
Less Ending Inventory
Equals Cost of Goods Sold
What has happened is:
24,000 for Gross Revenue
24,000 + 23,500 - 0 = 47,500 for Cost of Goods Sold.
-23,500 for Net Loss
Click here for more details: Tax Guide for the Self-Employed: Everything You Need to Know
