Stock records and tax reporting: how they connect

Many entrepreneurs see tax reporting as a separate, nerve-racking job at month end: a pile of papers goes to the accountant while the figures are put together approximately. In fact the key figures for a report, namely sales, purchases and stock balances, appear by themselves in your stock records every day. If the records are in order, filing a report means copying ready figures rather than assembling them from scratch. The rules depend on the tax regime you have chosen, so only the general logic is given here; for specific questions consult your accountant or tax adviser.

Four figures for reporting

In any shop that trades in goods, four figures underlie everything:

• the value of stock at the start of the period;
• goods received during the period (purchases);
• sales during the period (takings);
• the value of stock at the end of the period.

From them you find the cost of goods sold: cost of goods sold = opening stock + purchases − closing stock. For example, opening stock is 48,000,000 so'm, purchases during the month are 31,500,000 and closing stock is 52,200,000. The cost of goods sold is 48,000,000 + 31,500,000 − 52,200,000 = 27,300,000 so'm. With takings of 38,600,000, gross profit is 11,300,000 so'm. Gross profit is not the same as the tax base: depending on the regime, tax is charged on turnover, on profit or on another base. Everything still starts with these four figures.

Documents and records must match

Documents confirm the figures in a report, so every entry should have a document behind it:

• Purchases: a delivery note or invoice matches each receipt entry. Goods without documents are risky because their origin is hard to prove.
• Sales: till receipts, terminal, Click or Payme receipts and bank transfers should add up to your sales table. If your till data is transmitted to an official system, it matters all the more that your table agrees with it.
• Payments: the sum paid to each supplier is backed by a document.

If you sell online (marketplace, Telegram shop), their reports should enter the table too: sales amount, commission and returned goods. Otherwise the gap between takings and sales cannot be explained. Record the purchase price as shown on the invoice and set transport and delivery costs on a separate line.

Make it a habit at day's end to add up till, terminal and electronic payments and compare them with the sales table. A small gap is easy to find on the same day and almost impossible at month end.

Write-offs need documents too

Expired, damaged or missing goods are written off, but this must not happen silently. Draw up a report: date, item, quantity, reason and the signatures of the responsible people. An undocumented loss remains just "missing goods" and, depending on the regime, may not be accepted as an expense. Goods the owner takes for personal use should also be entered as a separate outflow. Ask your accountant how both cases are treated for tax.

Closing stock should come from a count

Stock at the end of the period should enter the report not as an estimate but according to the counted quantity. Run a full stock count at year end and keep the report. Small monthly checks prevent an unexpected difference at year end. The count result becomes the documentary basis of your balance, so the annual report also turns out reliable.

A month-end "reporting pack"

At the end of each month fill in this list:

1. Takings by payment type (cash, card, transfer), adding up to the sales table.
2. Purchases by supplier, with document numbers.
3. Stock: opening + purchases − cost of goods sold − write-offs = closing, compared with the counted quantity.
4. A list of debtors (credit sales) and debts to suppliers.
5. Write-off reports.

Conclusion

Stock records are the backbone of tax reporting: when the figures for sales, purchases and balances are ready, a report is prepared faster, more accurately and with less stress. If your records have become tangled, the AniqHisob team can run a stock count, confirm your balances and help put your stock records in order.