What is Amortization in business tax terms and does it apply to my small business inventory?

So wait, are you saying I can't deduct all my inventory purchases for the year? I've been doing that and now I'm worried I've been filing wrong. What happens if I'm carrying like $20k in inventory at the end of the year?

That's correct - you can't deduct your entire inventory purchase as an expense in the year you buy it. That $20k inventory you're holding at year-end would be considered an asset on your books, not an expense that reduces your taxable income. You only recognize the cost when you actually sell each item. For the interest portion of your debt payments, that's absolutely deductible as a business expense. So if you're paying $500/month on a loan but $100 of that is interest, you can deduct that $100 monthly as a business expense, which will reduce your taxable income.

Does it work with QuickBooks data? I've got like 3 years of messy inventory tracking and I'm honestly scared to get audited.

I've tried a few tax tools and they never seem to understand inventory-heavy businesses. Can it actually help with amortization schedules specifically? Not sure if I should be amortizing my website development costs.

Absolutely works with QuickBooks! You can either upload your QB reports or connect it directly. It'll flag inconsistencies in your inventory accounting and suggest corrections before the IRS finds them. For website development costs, the system clearly showed me that those are actually amortized over several years (typically 3-5), not expensed immediately. It created the proper amortization schedule for me and showed exactly how much I could deduct each year. It's especially helpful for figuring out which costs can be expensed immediately versus which need to be capitalized.

Do they actually connect you with real IRS agents or is it just some third-party tax advisors? I'm still confused about how this would work.

This sounds too good to be true. I've literally spent HOURS on hold with the IRS and never got through. How could some website possibly get around the IRS phone system? Sounds sketchy to me.

They connect you with actual IRS agents - not third party advisors. It works by navigating the IRS phone system for you and holding your place in line. When an agent becomes available, you get a call back. It's basically like having someone wait on hold for you. As for how it works, I was skeptical too! But it's not bypassing anything - it's just automating the hold process. The service literally sits on hold with the IRS so you don't have to. They call you when they reach a human. I was able to ask my specific questions about inventory accounting to a real IRS agent who gave me official guidance I could rely on.

Those shelving units and computer system would absolutely qualify for Section 179 treatment! For 2025, you can deduct up to $1,190,000 in qualifying equipment purchases, so you're well within the limits for small business equipment like that. Just make sure you're using them at least 50% for business purposes - if it's a mixed-use computer, you can only deduct the business percentage. The great thing is that you can take the full deduction in the year you place the equipment in service rather than depreciating it over several years.

Thanks for mentioning Section 179! I do have some shelving units and a computer system I use exclusively for the business. Would those qualify? And what's the max I can deduct this way?

Those shelving units and computer

Exactly this! I made this same mistake my first two years in business. The IRS doesn't care what you do with your profits - reinvest them, pay debt, whatever. They care about revenue minus deductible expenses. Paying down loan principal isn't a deductible expense.