Cost of Goods Sold (COGS)
Cost of Goods Sold (COGS)
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If you produce or resell physical products, COGS is crucial for understanding your profitability. This category covers the direct costs associated with creating or acquiring the goods you sell. It's important to remember that not every business purchase can be immediately deducted. Inventory items, for example, become expenses only when you've sold them. This ensures your expenses align with the revenue they help generate. COGS calculations involve your beginning inventory, purchases throughout the year, and your ending inventory.
Purchases
Purchases
Raw materials
Wholesale products
Products purchased for resale
Packaging supplies
Direct Wage Costs
Direct Wage Costs
Manufacturing labor
Assembly line wages
Production staff salaries
Subcontracts
Subcontracts
Outsourced manufacturing
Freelance product design
Third-party logistics services
Other costs
Other costs
These are costs directly associated with the production of goods or services that don't neatly fit into the other categories.
Disclaimer
Disclaimer
This checklist is intended to provide general guidance and should not be considered a substitute for professional advice. Some of the categories listed may not be deductible in all circumstances or may only be partially deductible. For specific advice on your tax situation, please consult with a qualified tax professional.
In general, if you spent money to make money, it is probably tax deductible.
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