Wanting to start business, Inventory Tax Question

[brians34]

I am thinking about starting a small business in my area and have a question about inventory.

I'm looking at the products I want to stock and when I buy these in large quantity to start my business, I will be getting almost a 30% discount due to the high volume I'd be ordering.

Future orders of the same products, I won't be getting this same discount because of smaller ordering.

How do I keep up with cost during inventory with the discount price being in place? Do I just inventory at the cost without the discount?

[dave@businessecon.org]

If this is high volume inventory like candy bars, use the average costing method, if large ticket items like a car, then use the individual costing methods to account for costs. I'm sure you are somewhere in between, so I would use the first in first out method to evaluate the margin on the profit statement. For tax purposes, you may use the last in first out method to keep your tax profit down. This allows you to defer the tax obligation to a later date.

Dave