accounts/wastage
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accounts/wastage
Hi all,
Im looking for a little help/information (if any of you are willing to disclose)
I have just had my tax bill through (OUCH) and although I have been in business for over 6 years I have never put 'wastage' through the books. Yes, silly I know but to be honest, I didnt even think about it.
I was just wondering roughly what value you guys put through the books as wastage?
I could refuse to pay the tax bill now while I re analise my stock etc and pay £100 fine but I think im just going to pay the full amount due and then hopefully my accountant will do his job and reduce my tax bill considerably for next year
Look forward to hearing your comments.
Thanks,
Ian
Im looking for a little help/information (if any of you are willing to disclose)
I have just had my tax bill through (OUCH) and although I have been in business for over 6 years I have never put 'wastage' through the books. Yes, silly I know but to be honest, I didnt even think about it.
I was just wondering roughly what value you guys put through the books as wastage?
I could refuse to pay the tax bill now while I re analise my stock etc and pay £100 fine but I think im just going to pay the full amount due and then hopefully my accountant will do his job and reduce my tax bill considerably for next year
Look forward to hearing your comments.
Thanks,
Ian
- Jonny2morsos
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Re: accounts/wastage
I was told you could not claim for it.
Re: accounts/wastage
Depends what you mean by wastage. The stock you hold counts as assets and valued at cost. But a 10ft stick with 6" chopped off is an offcut in my book and should be valued as such. Anything with a bit chopped off is essentially worth nothing, although I do allow an arbitrary figure to cover all offcuts. This is the same every year, so it really doesn't effect your tax. Also, old stock can be written down in value. Or written off completely at your discretion. And yes, I have had that from the horse mouth.
That reminds me...... must do my return. 11 and a half hours left.
That reminds me...... must do my return. 11 and a half hours left.
Watch Out. There's A Humphrey About
- Jonny2morsos
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Re: accounts/wastage
Spent all morning trying to make an online payment. Just got through at 1pm.
Re: accounts/wastage
Usually they get so many peeps trying to submit returns at the last knockings that it clogs the works up.
Watch Out. There's A Humphrey About
- Ricky
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Re: accounts/wastage
Got mine in early for a change, 9.30 this morning
- Steve N
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Re: accounts/wastage
Paid my accountant to do mine
Steve CEO GCF (020)
Believed in Time Travel since 2035
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Believed in Time Travel since 2035
Proud to sell Ready Made Frames
http://www.frontierpictureframes.com
http://www.designerpicturemounts.com/
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Re: accounts/wastage
It all depends on how your accountant recorded your expenses for your moulding inventory.
Waste (scrap, shorts, miss-cuts) traditionally are not an inventory item on the assets of a company. They are simple charged off as a expense at the time of making a frame. If you just happen to make a product from this left-over, that sale has a 100% profit margin.
This is definitely a question for your tax preparer to handle.
Scrap has more uses than just making a frame.
Replacing an OOPPPPPS rail
R & D - testing a concept - testing finishes - samples etc.
gifts to a school art department
firewood
garden stakes
etc
Waste (scrap, shorts, miss-cuts) traditionally are not an inventory item on the assets of a company. They are simple charged off as a expense at the time of making a frame. If you just happen to make a product from this left-over, that sale has a 100% profit margin.
This is definitely a question for your tax preparer to handle.
Scrap has more uses than just making a frame.
Replacing an OOPPPPPS rail
R & D - testing a concept - testing finishes - samples etc.
gifts to a school art department
firewood
garden stakes
etc
Jerome Feig CPF®
http://www.minoxy.com
http://www.minoxy.com
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Re: accounts/wastage
This all seems overly complicated to me. As Prospero says, any cut off a moulding is an off-cut and therefore not recorded as stock. Any mountboard which has a cut is treated the same. All offcuts that make up new frames are 100% profit and affect your GP accordingly.
So if you have a stock level of say £5000 and nominally £500 of offcuts, then leaving loads of offcuts depresses your GP and will have the Accountant asking questions. If you use 50% of your offcuts then you buy 50% less stock and your GP goes back up.
So wastage does not actually come into the equation - its just less GP. My GP went down 2 years ago because there were loads of offcuts which have been used last year and pushed my GP higher. If GP keeps rising taxman is happy(er)
So if you have a stock level of say £5000 and nominally £500 of offcuts, then leaving loads of offcuts depresses your GP and will have the Accountant asking questions. If you use 50% of your offcuts then you buy 50% less stock and your GP goes back up.
So wastage does not actually come into the equation - its just less GP. My GP went down 2 years ago because there were loads of offcuts which have been used last year and pushed my GP higher. If GP keeps rising taxman is happy(er)
Re: accounts/wastage
It all comes out in the wash. Say if you had £20,000 in stock at the end of your accounting year. You could write off the whole lot and then gain and extra £20K on your tax liabilty. Fairly extreme example, but bear with me...... The next year you don't buy any stock because you have plenty. But this means no purchases to deduct. It's all profit! You can't write your stock off again 'cos on paper it's worth nowt. So Mr.Taxman claws it all back.
I would add that you would probably be on the carpet if you actually did this. Play fair and they will do the same. Take the wotsit and they will jump on you from a great height.
I had a run-in soon after I moved shops. I sold off a lot of excess stock partly to raise a bit of cash to finance the move and partly it was a chance for a good clear out. So the stock level dropped maybe £5K. On paper, that years accounts looked as though I had spent more than I earned. Perfectly kosher though. Just that I had less stock. Anything atypical in your figures tends to throw up red flags.
I would add that you would probably be on the carpet if you actually did this. Play fair and they will do the same. Take the wotsit and they will jump on you from a great height.
I had a run-in soon after I moved shops. I sold off a lot of excess stock partly to raise a bit of cash to finance the move and partly it was a chance for a good clear out. So the stock level dropped maybe £5K. On paper, that years accounts looked as though I had spent more than I earned. Perfectly kosher though. Just that I had less stock. Anything atypical in your figures tends to throw up red flags.
Watch Out. There's A Humphrey About