I opened an antique booth in an antique store. I pay a monthly rent and 10% on sales. I have purchased many items for inventory. How do I report this on taxes?

Forum|Forum|7 years ago
June 1, 2019
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TurboTax Deluxe Online

Best answer by PatriciaV

As an antique dealer, you are a self-employed entrepreneur. All activity related to this business is reported on Schedule C under Wages & Income | Business Items. If you are using TurboTax Online, you will be prompted to upgrade to the Home & Business version.

The merchandise you purchased for resale should be entered under Inventory. If you just started your business this year, your beginning inventory is $0 and the ending inventory is the cost of the products that you still have (did not sell). "Tell Us the Cost of Your Goods" will guide you in determining the value of your ending inventory.

Rent expense and commissions are entered under Business Expenses, along with other costs that may reduce your taxable income from this business. Your net income from this business is subject to Self-Employment Tax.

PatriciaVAnswer

Employee

As an antique dealer, you are a self-employed entrepreneur. All activity related to this business is reported on Schedule C under Wages & Income | Business Items. If you are using TurboTax Online, you will be prompted to upgrade to the Home & Business version.

The merchandise you purchased for resale should be entered under Inventory. If you just started your business this year, your beginning inventory is $0 and the ending inventory is the cost of the products that you still have (did not sell). "Tell Us the Cost of Your Goods" will guide you in determining the value of your ending inventory.

Rent expense and commissions are entered under Business Expenses, along with other costs that may reduce your taxable income from this business. Your net income from this business is subject to Self-Employment Tax.

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A

AndyK123

I have a question about inventory. If I am paying taxes on the income i derive from the items i sold, how do i capture the cost of initially purchasing these items that i sold (cost of goods sold/inventory)? This is my first year doing business in the booth and although my beginning inventory for the year was $0, i spend alot of money purchasing items that i sold in 2019. Please help!

DanielV01

Employee

Inventory cost (as part of Cost of Goods Sold), is determined in the following way:

Starting Inventory+Inventory Purchases-Inventory Used for Personal Use-Finishing Inventory=Deductible Inventory Cost

You stated you started the year with $0 inventory (first year). Throughout the year, let's say you purchased $30,000 of inventory items. You personally used $250 for yourself, (non-deductible as an expense), and finished the year with $4750 of remaining inventory. The amount of deductible expense is $25000.

Then, the following year, (after ending with $4750 in inventory), you purchase $45250 of additional inventory, $0 personal use, and finish the year with $2000 inventory in stock. Your deductible inventory cost for that year would be $48,000.

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Carl11_2

Employee

Just work it through the Business Income & Expenses section of the program and read EVERYTHING on each screen presented to you. Then if you have questions, you can make them more specific. Just asking "how do I report business income" would require the reader to write a book to cover all the possible scenarios you may have. Just work it through. You'll see expense categories for rent, as well as for commissions paid. (That 10% you pay to the owner is basically a type of commission) You can also expect to have to issue the owner a 1099-MISC at tax filing time.
Now if your state taxes personal income, this doubles the knowledge you need to acquire. I would highly suggest you seek professional help for at least your first year. When it comes to taxes and reporting business income/expenses that first year, perfection is not an option. It's a requirement. Doing things wrong in the first year can quite easily get exponentially worse as the years pass. Then when you catch the error (if the IRS doesn't catch it first) the cost of fixing it can quite easily bankrupt a new business before it even gets off the ground.