Background: One of those shops selling all manner of individual fashionable knick knacks like small table, jewellry, bath soap tablets etc etc. Items costs would range from many at next to nothing up to say £100/£200. There may be hundreds of ever changing items as well.
Question: is there a need to keep individual stock records (number, cost, sale price) of every item coming in and out? And what accounting detail should be recorded when any item is sold? Bear in mind
Why I ask this: Because if a good stock system is not in place, surely the owners (and shoplifters!) could just remove items to their hearts content, and surely they need to know their stock value at any given time, not just at the year end.
Please please can someone just give me general guidance on how best to advise the best way to run their accounts. They are VAT registered.
If there is hundreds of unique items and is a small business then it probably isnt worth having an up to date stock system in place. As the time to enter purchases and bar code them etc would probably outweight the benefit.
All that needs to be done is keep a track of the purchases. Keep a track of sales (probably via till register) then at the year end do a stock count to get a value for stock and the cost of sales will be whatever stock was at the start plus the purchase less the stock at the year end. Compare this will the sales in the year and this will give the gross profit.
Has the shop got an "open all hours" style till or modern Point of Sale?
Many items already come with a barcode label. All you need to do with modern POS is assign price with barcode and process volume of stock coming in. everytime barcode reader picks up a transaction, the stock quantity goes down.
when you do physical stock count, write off the difference bettween quantity of stock in till and actual volume of stock.
security - I can imagine being a nightmare unless the owner has security tags.
thank you very kindly for your advice. I am just worried that unless you have a good individual item stock record system it will invite HMRC to say how do you know that goods are not being taken for personal use. They aren't but how can you prove it!!!! Yes I also appreciate "missing stock" can also be due to wastage and shoplifting as well!!
Thank you so much, but yes if you bar code everything a) it will be so costly b) you need expensive software and readers etc c) how do you barcode small trinkets and postcards etc etc.
Oh the list goes on. I want to prove that the owners are honest and accurate in their accounting records but how do you draw up a happy medium!!
You are a hero sir. I agree with your approach you advise 100%, and think it takes the right balance; or else most smallish shops in the whole country must be taking the wrong approach and risking potential HMRC problems perhaps . Only HMRC knows where their own balance is.
