Updated May 2026 · Florida Plan Finder · Licensed Florida Health Insurance Producer

Inventory and Material Deductions for Interior Design Firms in Hollywood, FL

Interior design firms in Hollywood handle a tax pattern unique to their industry: ordering goods on the firm's account that are ultimately for the client, holding samples for portfolio use, and managing the tax handling of items between purchase and installation. Get the inventory rules and Florida sales tax rules right, and the firm operates cleanly. Get them wrong, and the firm faces both income tax and sales tax issues. This page covers both.

The Three Patterns of Goods Movement

1. Pure pass-through: Designer orders furniture; goods ship directly to client; designer never takes possession; designer invoices client for goods + design fee. Goods are not the designer's inventory.
2. Designer-purchased for client: Designer pays for goods, takes delivery at the firm, then delivers/installs at client site. Goods are temporarily in the firm's inventory but not held for resale in the inventory tax sense.
3. Showroom or sample inventory: Designer holds samples, fabric swatches, prototype pieces. Inventory may be deductible as marketing/sample expense rather than COGS.

Inventory Tax Treatment

Under IRC § 471 and Section 263A (UNICAP rules), if the firm "holds inventory for sale," it must use accrual accounting and capitalize certain costs. However:

• Small business exception: firms with average annual gross receipts under ~$30M (2024 threshold) can use cash accounting and avoid UNICAP
• Pure design service revenue is not subject to inventory rules
• Goods sold incidental to design services may be treated under the "reseller" simplified UNICAP rules or excluded for small firms

For most Hollywood interior design firms (well under $30M revenue), cash accounting is permitted. Goods are deducted when paid for; revenue is recognized when invoices are paid.

Florida Sales Tax — The Big Issue

Florida sales tax (6% state + Broward County 1% = 7%) applies to tangible personal property sold to consumers. For interior design:

• Pure design services (no goods): Not subject to sales tax
• Goods sold to clients: Subject to sales tax (designer collects from client)
• Goods purchased by designer for resale to client: Designer can use a Florida resale certificate to purchase from vendors tax-free, then collect sales tax from the client on resale

The resale certificate is the most-overlooked tax saver in interior design. Without it, the designer pays 7% sales tax on goods, then often charges the client a marked-up price plus another 7% on the marked-up amount — double-taxation.

The Resale Certificate Workflow

1. Register with the Florida Department of Revenue for a sales tax permit
2. Obtain the resale certificate (Form DR-13)
3. Provide the certificate to vendors when ordering goods for resale to clients
4. Vendors do not charge Florida sales tax on certificate-supported orders
5. Designer charges client the appropriate sales tax on resale
6. Designer remits collected sales tax to Florida DOR monthly or quarterly

Sample and Portfolio Inventory

Designers maintain showroom samples, fabric books, and demonstration pieces. These are not held for resale — they're marketing/portfolio investments. Treatment:

• Initial purchase: deductible as marketing expense or, for high-value items, capitalized and depreciated
• Retired samples: written off when removed from active use
• Items eventually sold (e.g., end-of-line samples sold to clients): recognized as income when sold

Markup and Trade Discount Deductibility

Designers receive trade discounts from manufacturers and showrooms. The discount reduces the designer's cost; markup applied to the client is the designer's revenue. Both flow through the books cleanly:

• Designer pays $1,000 for a sofa (vendor invoice net of trade discount)
• Designer charges client $1,500 + 7% sales tax
• Designer's income from goods: $500 (markup); $0 (sales tax pass-through to FL DOR)
• Designer's COGS: $1,000

Common Mistakes

• Not obtaining the Florida resale certificate — paying double sales tax on goods
• Failing to remit collected sales tax monthly/quarterly to FL DOR
• Treating sample and showroom inventory as COGS when it's actually marketing
• Confusing pass-through purchases with held inventory
• Forgetting that pure design services are not subject to Florida sales tax — should be invoiced separately from goods