Hi! I'm confused as to how to complete Part III of Form Schedule C: Cost of Goods Sold. I own a mobile food stand and, in the food industry, COGS represents a slightly different principle, often only mentioned as a metric for menu pricing. As the owner of a seasonal/intermittent food business, I do not have "inventory" per se - just partial "inventory" of ingredients (that is, opened). I guess I'm just confused about how the terminology is used.
As I understand it, I just need to enter food costs and any disposable food containers/utensils that go out to the customer under line 38: Materials and Supplies. Do I need to be completing any other sections? I don't think "inventory" here refers to small-scale perishable inventory, such as an open bottle of soy sauce, or something - does it? Thanks!
This varies depending on how you choose to keep track of your inventory but the Cost of Goods Sold is generally defined as expenses for things directly related to and included in the product produced.
In your case that would absolutely be food ingredients and paper products given to the customer as part of their purchase.
However, if you prefer to track these items as 'materials and supplies' you can. It really isn't as important as understanding what you have done so that you can explain it and maintain it. And the bottom line definitely needs to be correct.