It is commonly referred to as inventory or inventory, professionally referred to as a list of the company’s assets and liabilities. Most often it is a December nightmare for entrepreneurs. What should be done in order to avoid stress and carry out such an inventory in a proper way?
The end of the year is approaching the end of the year, and with it, additional work related to the inventory of assets is waiting for entrepreneurs. Every entrepreneur running a business is obliged to carry out a so-called inventory at the end of the tax year. Such a list includes specific elements of property, which should be valuated. The purpose of the inventory is to verify accounting entries, which in turn is to enable the necessary corrections to be made to ensure the reliability of the records and compliance with the actual state of affairs. In the light of the binding regulations, taxpayers who keep simplified accounting, make inventories in the form of a physical inventory of property components. A wider range of inventories applies to taxpayers who keep full books of accounts.
Very often entrepreneurs underestimate the value of a properly conducted inventory. And yet it is of great importance. Thanks to the correctness of the conducted register, it is possible to detect any discrepancies that distort the actual picture of the economic and financial situation of the company.
It is better to plan so as not to freak out
Of course, it is best to start earlier and not to leave the inventory at the last minute. First of all, it is necessary to appoint a person responsible for the whole census, as well as delegate the so-called census team and appoint someone to finally check everything. It is also worth to precisely specify the scope and individual activities that need to be carried out during the inventory.
First of all, the subject
The inventory should include such assets as: trade goods, basic and auxiliary materials (raw materials), finished products, work in progress, semi-finished products and shortages of own production and waste, as well as goods which are the property of the entrepreneur but which are not physically present in the plant at the date of the census and foreign goods which are present in the plant. After counting the above mentioned components, we must also assess them, no later than within 14 days from the date of completion of the census. Please note that foreign goods are not subject to valuation.
Then the valuation
Valuation is based on four basic values, i.e. purchase price, purchase price, market price and production cost, and individual assets are subject to different valuation values. The purchase price is e.g. the value the buyer pays for the purchased goods, less VAT. The purchase price is the sum of the amount due to the seller and the purchase costs resulting from the adaptation of the purchased item to a usable condition (e.g. the cost of transport, unloading, travel insurance). On the other hand, the cost of production is the equivalent of costs incurred to produce a given element. It is worth remembering that in the case of written off foreign goods, the valuation is not valid. It is enough only to include in the list information about their quantity and indicate the owner. We put the calculated and priced elements in the appropriate form, on which you have to sign, of course. The detailed form of the census is specified by the legislator in the Regulation of the Minister of Finance on keeping a tax book of income and expenses in § 28 item 2, including bookshops and antique shops, for currency exchange offices.
Finally, surpluses and shortages
But what if during the inventory it turns out that there are more assets than there should be? – In such a situation, the surplus should be shown as income from goods received free of charge, which will increase the amount of taxable income. It should also be borne in mind that the revenue will arise for the second time at the moment of selling this surplus item. If, on the other hand, the inventory also shows shortages, then a lot of caution should be exercised here. First of all, it is necessary to determine the reason for the shortage. If the shortage of stock is not at fault (e.g. due to loss, damage or theft despite due diligence), it can be deducted as a tax deductible expense. However, if they are culpable, expenses for the purchase of such goods will usually not be tax deductible in the taxpayer’s settlement.