A good question from the forum this week is about deducting supplies purchased as an individual as a business expense. While supplies you purchase for yourself to keep the finished product cannot be deducted, you can deduct supplies for products you resell. Remember, a good rule of thumb for sole-proprietorships is to always keep a second account for business transactions. Everything that you purchase for the business comes out of that account and everything you make goes into that account. A simple, yet effective profit and loss statement can be derived from using this system. It keeps things really simple for the KGB (I mean the IRS.).