Claiming existing stock when starting a new business?

[giser]

Hi, newbie user here. I've been thinking about a side business doing some online selling through EBay and some other sites of inventory I have been acquiring through private sales via Kijiji, etc, and some of my own personal purchases over the last couple of years. I never really thought about starting a business, but I think it might have the potential to make about $1000 to $3000 / month in sales.

My question is, since I have not kept any receipts or even received receipts for a lot of the items that I have purchased, is there any way to claim this startup inventory as a business expense? I have kept track of how much everything has cost me, but without receipts am I going to have to pay tax on the whole sale without the cost of the inventory offsetting it? Can I get an "appraisal" of the stock and use that value to claim for startup costs?

Any advice would be much appreciated!

giser

[vangogh]

First know that I'm not an accountant. Please don't assume what I'm about to say is automatically true. Your best bet is to ask an accountant, who'll know far better than I will.

I'm pretty sure you can count your existing inventory as an expense. Here's a page on the IRS.gov website about how to value inventory (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Inventory-Manufacturing-Tax-Tips). If I've understood correctly you made the purchases as you personally. Now the business is buying the inventory from you the person.

As far as the value is concerned, I'm guessing we're not talking about millions of dollars of inventory. I'm guessing it's more like a few hundred or few thousand dollars worth of inventory at most. Ideally you'd have all the receipts to be able to prove the value of the inventory, but if you've kept track of how much you spent and the money you're talking about is a few thousand at most, I wouldn't think there would be a problem.

Again, I'm not an accountant and that's really who you should be asking. However, I'm pretty sure if you're reasonable about the value of the expenses you'll be fine claiming them as business expenses. You probably shouldn't count something as an expense if you purchases it 10 years ago, but if you bought something and a few months later are going to use that something in your business, you should be fine.