Finance
Inventory
Inventory is goods a business holds for sale. Inventory is recorded as an asset on the balance sheet, not an expense, and only becomes cost of goods sold when the item is sold. Holding inventory in a US state generally creates sales tax nexus there.
In plain terms: Stock you own. An asset until it sells, not a cost when you buy it.
Why it matters
Two consequences founders miss. Buying $40,000 of stock is not a $40,000 deduction in that month. And stock held in a fulfilment warehouse creates tax obligations in that state, sometimes in states you never chose.
Read the full guideBookkeeping