![]() Pay attention to whether you can deduct the full cost of software in the year of purchase, or if you must deduct it over several years.For instance, any labor costs deducted under “cost of goods sold” cannot also be deducted under salary and wages-you’ll have to decide which category best suits your business, so it’s best to seek advice from a tax professional. There are many factors that need to be considered when determining this deduction. Price of starting inventory + cost of materials for items sold - price of ending inventory = cost of goods sold In order to find out your annual cost of goods sold, you’ll need to follow this very simplified equation: ![]() This includes whatever you pay for raw materials or preproduced parts, shipping (from the actual shipping service to the containers you ship product in), utilities in your manufacturing facility, and labor costs. If your business produces a product-say, if you’re a furnituremaker-the costs of manufacturing that product is tax-deductible.
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