I didn't realize how hard it is to run a business!!! :-)

Kayalana99

Laurajo wrote: »

Noooo....if you have no sales you wouldn't have any profit, so no tax!

Look at it this way - by adjusting for closing stock you are matching the 'income' for the sales to the cost of that 'stock'.

At the year end, you take your total purchases, then deduct the cost of any stock you have left. The balance is the amount you will deduct from the sales.

Your closing stock will be next years opening stock, so next year your total 'expense' will be the opening stock, stock purchased in the year, less any stock held at year end, and so on.

Sorry, I'm probably not explaining this very well!

No that makes perfect sense thank you, only problem is I dont no how much stock I have exactly!! I don't understand why they would make it so complicated. No idea how big businesses manage to keep track....

The other thing that bothers me, is if you have to count your stock you'd have to do it all on the day before the books are complete surely? As the day after your selling things and its to late...

You could keep a record as you go I guess ... *pulls hair out*

Kayalana99

I suppose I could always stock up on postage stamps and buy my new machine that I need next come March but if theirs no money left I won't be able to pay the tax bill of the stock! ugh

Edit again - I dont have to pay tax man straight away anyway do I so its not that big a deal...sorry youve all paniced me lol

Annisele

Kayalana99 wrote: »

Only problem is I dont no how much stock I have exactly!!

Do you mean "I'm not sure whether I have 4036 widgets or 4037 widgets", or do you mean more "I have no idea how much stock I have"?

You'll probably have to do a stock take every so often, and if you're a little bit out it won't matter. (Depending on what the stock is, you might expect some of it to break / go off - but you'll want to account for those losses in your books).

If you're massively out - or if you don't actually know how much stock you've got - then you won't know whether you're making a profit or not. If that's the case, you'll need to start looking a bit more at your stock control.

Kayalana99

Hmm its more along the lines without counting I could be around 250 out of my smaller items I guess, I suppose I'll just have to make an educated guess.

Profit I've just been doing on a month to month basis, but I do know that I am making profit as I know how much I get off each item but I've already exceeded sales to expenses even with the stock levels I have not included.

Savvy_Sue

Kayalana99 wrote: »

How to big companys manage to work out how much stock then have left? I dont understand it. I sell things in singles / packs so its going to b xtremly hard to work out how many ive sold and counting them is going to be a nightmare...put it this way a 2 thousand of them fit in a shoe box!

They probably know how many they start with, and keep track of how many they sell. Surely you know how many you started with, and you know how many you've sold?

Annisele wrote: »

Do you mean "I'm not sure whether I have 4036 widgets or 4037 widgets", or do you mean more "I have no idea how much stock I have"?

You'll probably have to do a stock take every so often, and if you're a little bit out it won't matter. (Depending on what the stock is, you might expect some of it to break / go off - but you'll want to account for those losses in your books).

If you're massively out - or if you don't actually know how much stock you've got - then you won't know whether you're making a profit or not. If that's the case, you'll need to start looking a bit more at your stock control.

This.

Kayalana99 wrote: »

Hmm its more along the lines without counting I could be around 250 out of my smaller items I guess, I suppose I'll just have to make an educated guess.

Profit I've just been doing on a month to month basis, but I do know that I am making profit as I know how much I get off each item but I've already exceeded sales to expenses even with the stock levels I have not included.

Rather than count, can you weigh 10, 20, or some number like that? In grams, but on a normal kitchen scale, something with a digital display though.

Then weigh the rest, possibly in batches.

It may not be 100% accurate, but it will give you a rough idea. (It's the way I count the small change in petty cash ...)

sequence

Get a scale with a piece counter function. Can be had on ebay for < £10. Then all you have to do create a spreadsheet showing your stock levels. Deduct for sales and add to it for purchases.

Laurajo_2

Kayalana99 wrote: »

Hmm its more along the lines without counting I could be around 250 out of my smaller items I guess, I suppose I'll just have to make an educated guess.

Profit I've just been doing on a month to month basis, but I do know that I am making profit as I know how much I get off each item but I've already exceeded sales to expenses even with the stock levels I have not included.

Just having a think...


You can elect to use the simplified cash accounting which has come in from April 2013.

This way, you can treat stock as an expense, assuming turnover is below the vat threshold. It does restrict some of the other expenses you can claim, and realistically, you could end up paying more tax than necessary.

If your business is likely to make a loss, you also lose the ability to offset the loss against other income (although it can be carried forward against future profits).

It may cause problems using this method if you are looking to use it for proof of income - most banks have said they won't accept accounts prepared on this basis.

http://www.accountingweb.co.uk/article/cash-based-tax-accounts-kick-2013/535010

Here's an article which may be of interest.