I have a beauty ecommerce business. Are custom Samples (purchased in order to test and determine if the product is an item we want to sell) considered cogs or an expense?
AI accountant’s answer:
Great question! In your case, the cost of custom samples for your beauty ecommerce business would typically be considered a business expense rather than cost of goods sold (COGS). This is because you're buying these samples for testing and decision-making purposes, not for direct resale to your customers.
So, you'd generally deduct these costs in the year you pay for them as a business expense. However, if you end up selling these samples later, you would need to account for that in your income. As always, it's a good idea to keep detailed records of these transactions.
Correct.
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