As a self employed consultant, is my time included in cost of goods sold?

[mjdonald40]

How do I account for my time?

[Coleen3 · Accepted solution]

No, it is not. Cost of goods sold are exactly what the term describes; goods. Inventory is another word for it. The profit you make from your business apart from COGS is your income from the business.

[Opus 17]

You don't account for your time.  You can't deduct anything for the value of your time.  Presumably, your time and effort are what create the added value (the amount you sell your products for that is more than the cost of goods).  Your time and effort are what create your taxable profit.

[Suzie2017]

Can the cost of goods be the amount it cost me for my real estate broker to give me my portion of a commission check?  A commission is deducted from each check I bring in before I am paid. That deducted amount is included on my 1099- MISC, which I never received.

[Zbucklyo]

No.  Enter the full amount of the 1099-misc as income, then deduct the commission amount as 'Commissions and Fees' on Line 10 of Schedule C.

[Suzie2017]

I didn't actually pay the commissions, this is a expense retained by broker, cost of goods sold with explanation?   I do see line 10 as a place for commissions paid, looking for another way to not increase my expenses. Probably doesn't really matter, just looking for another way if possible. Thank you.

[Zbucklyo]

No, cost of goods sold refers to physical goods held in inventory.  I know you didn't actually pay the commissions, but the idea is that this is an expense that was included in the 1099-misc.  Say the 1099-misc shows $20,000 but you only received $15,000.  You would report $20,000 as your gross income, but deduct the $5,000 as Commissions and Fees.