To clarify, I am trying to not cheat the government of taxes that I owe them, but I'm a tiny business (a couple thousand per year), and I have two other %26quot;real%26quot; jobs so complicated paper work would actually be a reason to quit making crafts. When I close my business, I will sell my craft supplies from my business to myself for asset liquidation. I appreciate any advice.
How do I change my inventory method for a small craft business or do I even need to?
if you don;t keep inventory, then your cost of goods sold would be the total of your %26quot;raw materials%26quot; purchases.
just keep doing it that way - ignore the %26quot;finished goods%26quot; inventory.
you can still have a finished goods %26quot;inventory%26quot; for the online store - that's just for the shoppers benefit - you can ignore it for accounting purposes
when you close the business and sell off any unused raw material, those sales would just be considered regular sales. if you decided to close your business on Dec 31, 2009 and then you sold off all your raw materials in January 2010 for say $200, your sales for 2010 would be $200 and your cost of goods sold would be ZERO, and profit would be $200
