Perishable inventory is brutal. We turn dead stems into deductions, log delivery miles, separate event labor 1099s, and file the right state when you do a destination wedding three states over.
Floral is the trickiest small business for inventory. Fresh stems shrink daily and the IRS wants matching COGS, not a guess. We do it monthly.
Wholesale flowers, greens, foam, ribbon, vases, candles tracked as inventory. Cost of Goods Sold deduction reduces gross income. We use simplified retail method or specific identification depending on shop size, plus year-end count.
IRC §471; Treas. Reg. §1.471-2Roses wilt, hydrangeas crash, the cooler dies overnight. Documented shrinkage and spoilage is a §165 loss against ordinary income. We set up the daily waste log so a bad week doesn't become a year of audit-risk inventory.
IRC §165(a); Treas. Reg. §1.165-1Sprinter van, refrigerated cargo, even a personal SUV used for deliveries. Standard mileage (67¢ 2024) or actual + depreciation. Heavy SUV over 6,000 lb GVWR qualifies for §179 (capped) and bonus. We pick whichever gives the bigger first-year hit.
IRC §179(b)(5); §168(k); Rev. Proc. 2023-14Wedding-week freelance floral designers paid $600+ need a 1099-NEC by Jan 31. Missed filings = $310 per form penalty. We collect W-9s when you book the gig, not the night before the IRS deadline.
IRC §6041; §6722; Rev. Proc. 2023-34Destination weddings in another state can create sales-tax nexus and income-tax filing requirements. We track event days by state, file non-resident returns where needed, and credit your home state for taxes paid elsewhere.
IRC §901; Wayfair v. South Dakota (2018); state nexus rulesOnce the shop nets $100K, S-Corp election usually beats Schedule C. We benchmark reasonable owner comp from BLS floral designer + shop manager data plus your market, then take the rest as distribution free of self-employment tax.
IRC §1402(a); Rev. Rul. 59-221Floral shop + event side, 2 employees, $220K net 2024, occasional destination weddings. We S-Corp elected, fixed inventory accounting, documented shrinkage, §179'd a refrigerated van, and cleaned up 1099 filings.
$14,000 savedFederal + FICA savings on S-Corp split, accurate COGS, shrinkage deduction, vehicle expensing. State savings on top.