"Pre-"categorizing In-Flow

I own a business that buys a lot of Apple products and then laser engraves them.  Thus, when I take money in, a large percentage of it is going right back out to Apple.  I feel like it makes sense to split the inflow into a 'cost of goods sold' category and only put my actual profit into the 'to be budgeted' category.  I've already noticed it helps me see how much (how little :() of the total I get to keep for myself.  Any negatives to this method? 

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  • from a cash management perspective, this works great! just be sure to  track your "real" income and "real" expenses for tax time. while you'll deduct the COGS from your total income (along with other expenses), you'll have to declare the total income received (assuming you are not an S-Corp!). definitely check with your tax preparer to be sure you are able to provide the full information they need to see!

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      • Sara G
      • Lasering and printing all the things
      • inaflashlaser
      • 2 yrs ago
      • 1
      • Reported - view

      I guess cash management is what I'm going for!

      I have Xero for real accounting records, 8 years worth now. I like YNAB better. I set up two separate budgets, one personal, one business, we'll see if I get sick of updating both it and Xero.  I'm an S-Corp starting this year so I began paying myself via W-2 a few months ago (already had payroll set up for other employees). I'm still getting used to that, I often feel like the business doesn't have the cash flow to pay me 'that much', but it's very nice to have my taxes come out with each check.

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    • Sara G  Xero is a great option! I use it with my clients and really like the interface and usability. If you stay on top of it, I do recommend keeping both updated as they fill different needs in your business. Congrats on the S-Corp! Having it all run through payroll is helpful :-) 

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