Accounting 101

[Tilted]

This is the first time I've sold a set that I have purchased multiple times at different prices, so I'm wondering if I should calculate the average cost or opt for a method like First In First Out. Any thoughts? Thanks in advance.

[Talon]

LIFO, FIFO, Average all have different tax consequences. Personally I prefer LIFO as I tend to purchase a few sets at the end of life and those are usually the most expensive of the ones I've purchased. The first set in (or maybe more) never gets sold and is usually cheaper. Average is a pain in the butt because you have to recalculate every time you purchase a given set, not a problem if you only buy one of two of a set. The problem I have is usually the cheapest sets are somewhere in the middle of the set life time, but occasionally it is at the end of life if I happen to see clearance sales. You should pick one method and use it every year to make it easier on you.

[pickleboy]

LIFO, FIFO, Average all have different tax consequences. Personally I prefer LIFO as I tend to purchase a few sets at the end of life and those are usually the most expensive of the ones I've purchased. The first set in (or maybe more) never gets sold and is usually cheaper. Average is a pain in the butt because you have to recalculate every time you purchase a given set, not a problem if you only buy one of two of a set.

The problem I have is usually the cheapest sets are somewhere in the middle of the set life time, but occasionally it is at the end of life if I happen to see clearance sales.

You should pick one method and use it every year to make it easier on you.

I never even thought about that...great points.

I operate much more like a store than your traditional investor. I have not gone through a full year as a LLC but I am just figuring out expenses vs profit. I spend x amount this month and made this much this month...at the end of the year, I'll look at the totals and I'll file taxes. I am sure this is going to bite me in the ass....sometimes you just have to dive with an educated guess to figure **** out.

Any advice telling me how dumb I am by doing this would be appreciated. I started/bought myself a llc this xmas so if I am doing it wrong, now's the time to figure it out while I can still fix it.