Struggling to put together your annual stocktake?
Several clients are still struggling to put together the results of their annual stocktake and of course, given the time and effort involved, it’s not the most popular job in the business world, as my lovely younger daughter Ellie found out a few weeks ago in her Saturday supermarket job when it was all hands on deck until late at night!
Some clients short of time ask whether it’s really necessary to carry out an annual stocktake. Well the answer (unless you have very little stock the levels of which don’t vary very much) is a resounding yes. Even ignoring the law pertaining to companies, it’s absolutely essential to know the quantities and cost of the stock you hold at your year end because otherwise, you cannot work out your annual profit. If you can’t work out your annual profit you won’t know how much money you’re making which means:
- Your profit is the most important measure of your success or otherwise in business. The profit you make enables you to pay all your bills, take drawings from your business, fund your own business (as opposed to say your bank) and potentially sell your business in the fullness of time for a tidy sum. For some, knowing their profit should be trigger to improve or even pack up and get a job.
- You won’t be able to work out how much Income Tax you owe to the IRD. Now whilst at first sight this might seem attractive (maybe some naively think that this means you don’t have to pay any tax?) the IRD won’t take that lying down and will punish you severely to make sure you don’t do that again and as an example to others.
- Try getting a mortgage or borrowing money from a bank if you can’t tell them your profit, they won’t be impressed!
So yes, the annual stocktake, whilst a chore, is still very much necessary!
If you need help with your business, contact Nick on 0800 ASK NICK or via email firstname.lastname@example.org.