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?
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!