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January 10, 2023
Question

Gifts/Giveaways

  • January 10, 2023
  • 1 reply
  • 0 views

I sell Color Street Nails, when people purchase nails I usually send a few extra goodies with the nails or I will advertise a purchase this weekend will get a free set or something like that. Are all my additional goodies that I send as little gifts like facial masks, nail files, lotions, etc considered a business supply or advertising expense? Also, all the sets that I purchase are not technically considered inventory because I could be giving them away so do I count those as an inventory or just supplies? I've also seen where if I don't sell a huge amount then I should use the cash method of accounting and just put my inventory under supplies? 

1 reply

Employee
January 10, 2023

The net result of deducting the cost as supplies or advertising is the same but advertising seems more appropriate. But don’t deduct the same cost twice.