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2018-06-05 21:36:25Small Business TaxEnglishIf your business buys or sells goods, you’ll most likely need to conduct a thorough stocktake at the end of each financial year. This...https://quickbooks.intuit.com/au/resources/au_qrc/uploads/2018/06/iStock-957669442.jpghttps://quickbooks.intuit.com/au/resources/small-business-tax/how-to-conduct-a-successful-stocktake/How To Conduct A Successful Stocktake | QuickBooks Australia

How to conduct a successful stocktake

3 min read

According to the ATO, businesses can claim a tax deduction on the majority of expenses incurred when buying, maintaining, repairing, and selling business assets or stock. To maximise your tax refund, it’s important to keep appropriate records. As part of this process, if your business buys or sells goods, you’ll most likely need to conduct a thorough stocktake at the end of each financial year. This involves counting each item of your trading stock and making a reasonable estimate of the items’ value.

The more stock you have, the more laborious a stocktake can be. If you haven’t already, it’s well worth investing in some stocktaking software. The following checklist will ensure your stocktake is completed as smoothly and accurately as possible.

1. Have the right tools at the ready

Before beginning your stocktake, make sure you have everything you need. You should already be keeping detailed records of your inventory along with descriptions of your items and their serial numbers, universal product codes (UPCs), and/or stock keeping units (SKUs) on what are known as stock sheets. Make sure you have your stock sheets on hand and/or your mobile device if you use cloud-based inventory management. You’ll also need tools such as calculators, pens, and clipboards. Scanners may also be necessary for barcoded items.

2. Set a date and prepare your stockroom

Conducting a stocktake consumes a large chunk of time (especially if you have a lot of stock), so ensure you choose at a time that won’t interrupt your business – during a slow sales period is ideal, or outside normal business hours. Having co-workers or friends assist during stocktake will greatly reduce the time it takes, and help minimise the likelihood of errors, or you may consider delegating the task if you have suitably qualified staff. Either way, ensure your stockroom is clean and organised, and your stock items are readily accessible.

Young couple going through a to-do list

3. Categorise your stock

Make sure you distinguish between your different inventory. Separate any items purchased by customers that may be still in your warehouse, and any items that are located elsewhere. Determine exactly what needs to be counted and what doesn’t.

4. Define your methods

Decide on the specifics of your stocktaking process (and make sure anyone assisting you is on the same page). Which category will you start with? Who will do the recording and who will do the counting? Will you begin at the top of the shelf and work downwards? Will you go from left to right? Figure out what will work best for you.

5. Count each inventory item

This is not the time for estimations and, to guarantee precision, you must count everything. It’s not safe to assume that current inventory data is correct. Be sure to check stockrooms and other storage areas, including the tops of shelves, underneath shelves, or anywhere else items may have been forgotten or misplaced. As well as ensuring you fulfil your tax-time obligations, an accurate stocktake will help to avoid over-stocking and identify damaged stock, alert you to theft, and allow you to make smart decisions regarding your ordering processes and warehouse procedures.

6. Validate your stock

Record your physical counts on your stock sheets or in your online system and check them against your current inventory records. Ensure all items are accounted for and make a note of any discrepancies. Point-of-sale software like Kounta can make this process easier day-to-day by automatically syncing your receipts and daily reconciliations to QuickBooks Online, so that you’ll always have a real-time view of your stock and your business performance.

7. Keep clear and accurate records

Once your stocktake has been completed, update your inventory records (within your accounting software) with the results. Congratulations – this year’s stocktake is done and dusted!

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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