The cost of goods sold, or COGS, refers to the direct costs that go into producing the goods or products that a company sells. Direct costs include the financial resources required to manufacture the product, such as raw materials and labor. The COGS definition is simply the sum of the costs incurred in the production of a good. Indirect costs such as distribution are not included in the cost of goods sold.
To calculate COGS, add the cost of initial inventory to the additional material and labor costs. The value of the inventory that needs to be sold is subtracted from that.
The tax laws are very complex. Our short blog articles cannot cover in full all the nuances of the rules. Your specific facts may hold various opportunities and possible risks that only trained, experienced, and highly qualified tax specialists can spot. We encourage you to find such help, rather than trying to figure it all out on your own. Consider giving this marketplace a try by posting your project and signing up here.
If you are a licensed tax professional and are interested in helping others either part or full-time, or ad hoc, come on in! Happy to have you. Our marketplace has the full suite of tools to communicate with clients including compliance calendars, task and message management, and billing. You can also quickly connect to knowledgeable colleagues who can complement your services with the ones you do not provide. Register here.