cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Community Explorer **

How do we include the 'cost of sales' formula in Quickbooks? (deducting value of stock at end of year to calculate allowable expenses for tax return)

Hi, I'm new to QB and still working out what categories to use for my expenses etc and how things work.

At the end of the year I need to do a stock take and deduct the value of what I still have in stock away from the 'Cost of goods for resale' ammount (to make sure I'm only claiming allowable expenses). Is there a way of telling QB that a certain amount of my 'Cost of goods for resale' is DISALLOWABLE in the end of year calculations? Or is there another way of doing this?

Cheers Kate

Solved
Best answer 03-08-2019

Accepted Solutions
Established Community Backer ***

Re: How do we include the 'cost of sales' formula in Quickbooks? (deducting value of stock at end of year to calculate allowable expenses for tax return)

I'll need to calculate the stock value and deduct it from COGS myself by manually excluding some of the expenses at the end of the year, to the total of the ammount I can't claim for?

 

Yes you can do that, and that will work for taxes.

 

But if an audit occurs, You would need to document what you did and how you got that valuation, since QB expense would be different than tax expense.  You would think that since tax net income is higher than QB as a result, so more taxes are paid, that they would not care.  But some auditors can be a real stickler

5 REPLIES 5
Established Community Backer ***

Re: How do we include the 'cost of sales' formula in Quickbooks? (deducting value of stock at end of year to calculate allowable expenses for tax return)

There are a lot of things QBSE does not do, and inventory is one of them

 

No you can not do COGS in QBSE simply because QBSE forces you to expense every purchase, and there is no balance sheet nor can you create an asset account to post on hand value to

 


QBSE does not allow for any new accounts (categories) to be created
QBSE does not keep a customer listing
QBSE does not have a balance sheet so you can not enter the cost or the depreciation for a car/equipment
QBSE does not do inventory or cost of goods sold
QBSE can not do payroll
QBSE does not do any associated IRS forms, like home office deductions or depreciation

QBSE does not do sales tax either (not schedule C related but critical to a business)

Community Explorer **

Re: How do we include the 'cost of sales' formula in Quickbooks? (deducting value of stock at end of year to calculate allowable expenses for tax return)

So I guess the result of that is that I can't use QB to actually do my tax return for me as the category figures will be wrong. I just need to use it for helping me keep my accounts in order and use these figures to do the tax return myself. I'll need to calculate the stock value and deduct it from COGS myself by manually excluding some of the expenses at the end of the year, to the total of the ammount I can't claim for?

Established Community Backer ***

Re: How do we include the 'cost of sales' formula in Quickbooks? (deducting value of stock at end of year to calculate allowable expenses for tax return)

I'll need to calculate the stock value and deduct it from COGS myself by manually excluding some of the expenses at the end of the year, to the total of the ammount I can't claim for?

 

Yes you can do that, and that will work for taxes.

 

But if an audit occurs, You would need to document what you did and how you got that valuation, since QB expense would be different than tax expense.  You would think that since tax net income is higher than QB as a result, so more taxes are paid, that they would not care.  But some auditors can be a real stickler

Community Explorer **

Re: How do we include the 'cost of sales' formula in Quickbooks? (deducting value of stock at end of year to calculate allowable expenses for tax return)

Yes that's a useful point! Thank you for your help.

K

Established Community Backer ***

Re: How do we include the 'cost of sales' formula in Quickbooks? (deducting value of stock at end of year to calculate allowable expenses for tax return)

You're Welcome