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Question

Can a dropshipping business which holds no inventory file cost of goods sold on taxes?

Forum|Forum|3 years ago
February 22, 2023
1 reply
0 views

I am a partnership LLC which runs an online dropshipping resellers business. We hold no inventory, we purchase from our suppliers who then ship the products directly to our customers. Are we required to file cost of goods sold, and if so what form do we file it with.

TurboTax Business Windows

Based on the information you provided, it doesn't sound like you would have Cost of Goods sold. You are not creating or manufacturing the product, so there wouldn't be costs related to creating or manufacturing the product.

In some cases, cost of labor would count as Cost of Goods sold, but that expense is usually associated with the creating or manufacturing of a product to be sold as well.

Go here to learn what common expenses you can deduct: What self-employed expenses can I deduct?