Business Expense/ COGS

Hello

COGS is for cost directly related to the sales of your product or service, meaning direct cost.  Normally, it does not specify the items because each business is different. 

 

If you are selling T-shirts then your direct cost (COGS) is the purchase of your T-Shirts, plus shipping & handling.  If you have any embroidered in the T-Shirts then that will be also a direct cost (COGS).   

 

Direct cost (COGS) is anything you pay to have your product or service ready for sale.  If you are manufacturing the product (T-shirt) then the materials are the direct cost (COGS), such as thread, fabric, etc.

 

Direct cost (COGS) is not administrative expenses.  Administrative expenses are anything that is not direct cost of the product.  Examples of the administrative expenses are.

• Advertising
• Payroll
• Commissions
• Contract labor
• Utilities
• Rent
• Etc.

To report on the cost of goods and services:

1. Login into your TurboTax Account
2. Go to Self-employment income
3. Select Inventory/Cost of Good Sold
4. Select Yes “Did you use the cost method to value inventory?”
5. Enter your beginning Inventory and Ending Inventory, then continue
6. Enter “Cost of Purchases”
7. Enter “Labor Cost”
8. Enter “Materials and supplies”
9. Enter “Other Costs to prepare for Sale”
10. Continue

If you do not know how to report your expense, then you can report your expenses in the Miscellaneous section or other expense, and you can write a description of the expense.

 

Thank you for your question.