USA How should I record merchandise pruchased from myself, LLC?

[mooseracing]

Single member LLC, I am purchasing some of my Inventory that is for resale, that is first recorded in under Inventory to be sold.

Sometimes I need a tool or consumable I sell, for business use.

A few ways I have done it:
D - AP(Owner Investment)
C - Merchandise Sales

D- Small Tools (Expense)
C - Merchandise Sales

Neither seem 100% correct, I almost think I should be putting them in Sales Discounts instead of Merch. What is the standard way to do it? Also should I being paying sales tax on purchases the business makes from itself?

Thanks

 

[ColinCPA]

A single member LLC is a disregarded entity. Since you are accounting for inventory on the accrual basis, you have not taken a previous deduction for the purchase of the inventory to be resold. When you sell the inventory to yourself, there is no recognition of income.

If you were accounting for inventories under the cash basis, you would have taken a previous deduction when you purchased the inventory, and therefore would need to recognize income for personal use of inventory.

In either case, yes you are required to pay and recognize sales tax if the business has a resale exemption on the inventory and you are now the end consumer of the inventory.

 

[Samir]

In either case, yes you are required to pay and recognize sales tax if the business has a resale exemption on the inventory and you are now the end consumer of the inventory.

And typically this can be a separate tax referred to as 'use tax' or 'consumer use tax'. It is important to note that items purchased via the Internet for use in the business (such as office supplies) where you do not pay tax may also be subject to use tax.