Trading Corp: Accounting for Expenses

R

Ripley

1) How do I account for trading related materials, books, VHS etc that I buy from eBay, Amazon.com? etc?

I know I can expense it when I incur the expense. But, what happens when I decide to sell them back? do I need to take an account of that? because who is going to know I sold it back or not? and what if I kept it for one year before I sell them back.

2) Electric Bill? I use 3/5 ths of my apartment as an office. Thus, I think I should write 3/5 ths of my $150 electric bill as a cost of doing business. Or maybe it should be more since I have 3 comps running, with 6 screens and a TV. I think I should write off the whole electric bill.
 
1)

When you buy books:
Debit: Training Expense
Credit: Cash

When you Sell Books:
Debit: Cash
Credit: Training Expense

2) You have to first elect a home office deduction. But I'm not sure it's even worth it for your electric bill. Just pay the bill personally, not through the business.
 
Quote from Cramerholic:

When you buy books:
Debit: Training Expense
Credit: Cash

When you Sell Books:
Debit: Cash
Credit: Training Expense
More...

Thats the point. Who is going to know, if I sell the book back or not? Because I buy books to keep them forever. There has to be a limit on how much % of the profits you can invest in education related materials.


2) You have to first elect a home office deduction. But I'm not sure it's even worth it for your electric bill. Just pay the bill personally, not through the business.
More...

No. Every bill I have to pay for the Corporation (not trader status), I pay from my own pocket. And I deduct whatever I think was a business expense. Heating your office using electricity is indeed an expense. So, I am going to deduct 3/5 * $150 from my trading income/revenue. Thats the only right thing you can do. If IRS doesn't think thats the right thing to do, they can come find me.
 
utilities for you home/office are accounted for under the home office deduction.
you can do whatever you want to as long as you dont get audited. if you do that is when the fun starts.
 
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