Does industry selection matter when applying for a federal tax ID for my small business?

4 You're totally fine! The industry classification you selected when applying for your EIN (federal tax ID) doesn't limit what expenses you can deduct on your tax return. That classification is primarily for statistical purposes used by the government. When it comes to filing your taxes, you'll list your business on Schedule C (if you're a sole proprietor) or the appropriate business return form. On that form, you can absolutely deduct the cost of your 3D printing filament as a business expense - either as "Cost of Goods Sold" or as a "Supplies" expense depending on your accounting method. This is true regardless of whether you classified yourself as sales or manufacturing. The key thing is that the filament is an ordinary and necessary expense for your business, which it absolutely is. Just keep good records of your purchases and how the materials were used for business purposes.

7 Just wanted to share my experience - I was in a similar situation with my small custom vinyl cutting business last year. I was getting overwhelmed with all the tax categories until I found this AI tax assistant at https://taxr.ai that helped me sort through exactly this kind of business classification question. I uploaded my EIN paperwork and some sample expenses, and it immediately clarified that my materials (vinyl rolls in my case) could be deducted regardless of how I initially categorized my business. Saved me a ton of worry about whether I needed to refile anything. The software basically analyzed my specific situation and gave me personalized advice.

15 Update: I tried the taxr.ai service that was mentioned here and it was super helpful! Uploaded my business formation documents and some receipts for my art supply business, and it confirmed I could deduct all my materials as business expenses regardless of how I initially classified the business. The coolest part was it organized all my expenses into the right Schedule C categories and explained why each one belonged there. Definitely cleared up my confusion about where to put things like my specialized printer paper - turns out it's best categorized as COGS in my situation since I'm directly converting it into products. Wish I'd found this earlier in the year!

8 For anyone struggling to get answers directly from the IRS on business classification questions - I highly recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to get through to someone at the IRS about a similar business classification issue for my laser engraving business. Used their service and got a callback from the IRS in about 15 minutes instead of waiting on hold for hours. The agent confirmed exactly what others have said here - the NAICS code (industry classification) on your EIN application doesn't restrict what you can deduct. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent actually spent time explaining how I should categorize various expenses for my specific business situation, which gave me a lot of peace of mind.

19 I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it since I had a question about business expenses for my woodworking side business. It actually worked exactly as described - I got a call back in about 25 minutes with an actual IRS agent on the line. The agent confirmed that my industry selection on my EIN application wasn't important for tax deduction purposes and walked me through exactly how to categorize my wood supplies and tools on Schedule C. I've literally spent HOURS on previous attempts to reach the IRS. This saved me an entire afternoon of frustration. Consider me converted from complete skeptic to satisfied user.

11 Just a tip from someone who's been running a small laser cutting business for a few years - regardless of industry classification, keep VERY detailed records of your materials like filament. I track: - Date purchased - Cost (including shipping) - Project/product it was used for - Estimated percentage used for each project This has saved me multiple times when calculating expenses and helps tremendously if you ever need to determine profitability of different product lines. Also take photos of your larger material purchases with receipts.

25 Has anyone tried just calling the industry code a "manufacturing and sales" combo? That's what I did for my pottery business. We both make and sell products, so it seemed logical to include both. The IRS agent I spoke with said many small businesses fall into multiple categories and it's not a big deal which primary code you choose as long as it reasonably represents your business activities.

This is such a common worry for new business owners! I went through the exact same confusion when I started my small embroidery business. The good news is that your industry classification on the EIN application really doesn't restrict your tax deductions at all. I initially classified myself as "retail sales" but later realized I could have gone with "manufacturing" since I'm creating custom products. When I called the IRS (using one of those callback services mentioned here actually), they confirmed that the NAICS code is mainly for government statistics and doesn't limit what you can deduct. Your 3D printing filament is absolutely deductible as a business expense regardless of how you classified the business initially. You can put it under Cost of Goods Sold on Schedule C since you're directly converting it into products for sale. Just keep those receipts organized! The most important thing is that you're running a legitimate business and the expenses are ordinary and necessary for that business - which yours clearly are.

This is really helpful information! I'm just starting my own small business (custom jewelry making) and was having similar worries about the industry classification. It's reassuring to know that the EIN classification doesn't limit what I can deduct. I've been buying silver wire, beads, and findings to create my pieces, and I was worried I might have classified wrong since I put "retail sales" instead of "manufacturing." Based on what everyone's saying here, it sounds like I can still deduct all my materials as business expenses on Schedule C regardless. Does anyone know if there are any other common mistakes new business owners make with their first tax filing? I want to make sure I'm not missing anything important since this will be my first year filing as a business owner.

This thread has been incredibly helpful! I'm in a similar boat with my small candle-making business. When I applied for my EIN last month, I was torn between selecting "manufacturing" since I'm creating the candles from scratch, or "retail" since I'm selling them at farmers markets and online. I ended up going with "retail sales" but have been second-guessing myself ever since. Reading through everyone's experiences here really puts my mind at ease that I can still deduct all my wax, wicks, fragrance oils, and containers as business expenses on Schedule C regardless of that initial classification. It's amazing how much confusion there is around this topic for new business owners! I spent way too much time worrying about whether I'd locked myself out of certain deductions. Now I can focus on actually growing the business instead of stressing about paperwork classifications that apparently don't matter as much as I thought they did. Thanks everyone for sharing your real-world experiences - this is exactly the kind of practical advice that's hard to find elsewhere!

I'm running into the exact same situation with my small laser engraving business! When I got my EIN a few months ago, I selected "custom manufacturing" but then started second-guessing myself when I realized most of my revenue comes from selling the finished products at local markets rather than doing custom work for clients. This whole thread has been such a huge relief - I was convinced I'd have to go through some complicated process to change my classification or that I'd be stuck with limited deduction options. It's so reassuring to hear from actual business owners who've been through this and confirmed that the industry code doesn't restrict what you can deduct. I've been meticulously tracking all my material costs (wood blanks, acrylic sheets, leather, etc.) but wasn't sure how to categorize them come tax time. Based on the advice here, it sounds like I can treat them as Cost of Goods Sold on Schedule C since I'm directly converting them into finished products for sale. Thanks everyone for sharing your real experiences - this kind of practical, first-hand knowledge is exactly what new business owners like us need to hear!

This is exactly the kind of question I had when I started my small woodworking business! I went back and forth between "manufacturing" and "retail" when applying for my EIN because I both create custom pieces and sell finished items at craft shows. After talking to a tax professional and going through my first year of filing, I can confirm what everyone else is saying - the industry classification really doesn't limit your deductions. I've been able to deduct all my lumber, hardware, finishes, and tools as business expenses regardless of how I initially classified the business. The most important thing is treating your business like a legitimate business and keeping detailed records. I track every material purchase, what project it went toward, and keep all receipts digitally backed up. When tax time comes, it's much more about whether the expense was ordinary and necessary for your business operations than what box you checked when getting your EIN. Your filament costs are absolutely deductible - you're directly converting raw materials into products for sale, which is textbook Cost of Goods Sold territory. Don't stress about the classification; focus on good record keeping and growing your 3D printing business!