Adding total weight of inventory and sales please

budgetkids

I just got home from my finance class and learned some things about inventory.
As a business we have to track our inventory. The easiest way to do this would be to do it by ounces (or grams).

Fictitious example:
I buy 50pound lot for $50. This means I paid $1 per pound (or 0.0625 per ounce)
I sell 3pounds worth of inventory for for the month of January for a total of $300.
This means my new current total inventory would now be 47pounds worth $47.

With this information I can calculate my "cost of merchandise" and current inventory on hand cost. This information is used internally and for tax purposes.

@Admin could you please (with sugar on top!) let stores have the capabilities to view the current total weight in our inventory. Also the total weight of our sales by month.

For a best case scenario, but not a necessity (maybe put on your list), let us view the information by our own custom date range.

DagsBricks

How is this beneficial over the cash accounting method? I know that prices of inventory can fluctuate given many factors but I only count expenses and income, not current inventory.

budgetkids

This is to track cost of inventory, your expenses, in turn your net income and gross profit.

This information is needed for the income statement.

As for calculating inventory. There are 4 methods approved to calculate inventory in the USA (only 3 in other countries.)

The best method is the "average" method for my store since I purchase the majority of my inventory as bulk lots.

If I purchase 5pounds at $10, then a lot of 5 pounds for $15, the average cost of my inventory is $12.50 per pound.

DagsBricks

Isn't my net income based on sales minus expenses? I still don't understand how my current inventory has anything to do with it. If I spend $1000 in a year on inventory, take in $2500 by selling some of it, and spend $500 for materials and postage, my net income looks like $1000. I then have a carryover of inventory into the next year, is this where inventory tracking comes in handy?

Usually I just let this ride and use cash accounting.

budgetkids

inventory, supplies on hand, office supplies on hand, etc are all assets. (sorry, they do not effect net income. I only have a "B" so give me some leeway :P )

Here is an excerpt I found from a problem:
"The more inventory she has on hand, the smaller the amount she can write off for direct operating expenses."

EDIT: So the more assets you have on hand the less you can write off. (I would like to add that I import my information from QuickBooks to my tax documents. So exactly what it effects on taxes, I do not know, I just know it does)

Lawrence

I think you should be able to get by for now with the order and inventory download csv files. With them in excel, you can add up weights and do it for specific date ranges etc. when we make some fancy reporting stuff it will simplify that,

bluedragon

Could this be done using the number of parts instead of weight? That is what I do. I know the average cost of each part and it is easy enough to know how many parts are listed for sale on your store. I guess you are talking about inventory not listed for sale?

pumbaugh

I would consult a tax professional Brian. As it is explained to me, a growth in inventory is essentially taxable. My end of year inventory greatly affects my tax liability. Increase in cost of inventory on hand seems almost like income. I am no tax specialist, can only go by what my accountant says and how I have seen those numbers specifically change my tax returns.

budgetkids

@admin I did not realize weights were in the downloads, thank you.

@bluedragon yes it could be done by number of parts. Like you said though I have a lot uninventoried (500K parts estimated) and I am not going to sit and count them. This is why I choose the weight option.

@pumbaugh I am in a finance class, not a tax class. I just know I need to know cost of inventory and that it does affect taxes, I just don't know exactly how.

budgetkids

Sorry for double post.

@admin the weights are not in the CSV file for inventory download, only order download. Is it possible to add it?

alltrightbricks

Isn't my net income based on sales minus expenses? I still don't understand how my current inventory has anything to do with it. If I spend $1000 in a year on inventory, take in $2500 by selling some of it, and spend $500 for materials and postage, my net income looks like $1000. I then have a carryover of inventory into the next year, is this where inventory tracking comes in handy?

Usually I just let this ride and use cash accounting.

My tax lady told me the same. I need to have a starting cost and ending cost of inventory for the year.
I allocate my cost to each item parted out based on what I paid for the set, and what that part sells for on average. I can then price the item wherever I want, but the cost of the item has some standard. Bricklink allows me to see what my total cost is for my inventory, and this is what I use for tax purposes.
Katie

PS--I HATE doing paperwork and taxes!!!

minithingsforlife

In Britain we have the same rules. An adjustment to inventory that is not the result of a sale or purchase, i.e. you have just found some Lego that you have had for years in the attic since you were a child and now decide to sell it, is considered profit. This happened to us and had to be dealt with by our accountant to avoid us paying huge taxes. Although when we were just a "sole trader", the term in the UK for a business that is not incorporated, the tax office did not require this information, when we became incorporated, we had to start keeping track. The weight option is the only sensible way of doing things in a fast moving store.

Lawrence

@budgetkids done

DagsBricks

I just realized that the tax issue is completely different depending on whether you are running your parts store as an Inc/LLC/Ltd/Corp than if you are a DBA/ABN. As the former, you have a separate legal entity to deal with. As the latter (as I am at the moment) I have more freedom to be looser as long as I keep good financial records. I think...

Graham

Taxation is theft and therefore a crime
OR
slavery for the same % of time spent for the % tax taken

I hate taxes - it was only 100 years ago that they were introduced "for the war effort" (WW1)
… and to think the War of Independence was ….

grrrrrr

@DagsBricks your name (Mr. _______) is also a legal entity (corporation) - that's what registration of Birth is for, and that's how they get ya - by you agreeing that you, the natural born being, IS a piece of paper whereas you are legally an authorized representative, acting on behalf of the Legal Fiction (Your name as MR _ ___)

For more search "Mary Croft" she is brilliant

Graham

Hoddie

Income Tax has been around in one form or another for almost 1,000 years in England, but the current system can be traced back to the end of the 18th century when it was introduced to help fund the Napoleonic Wars. Purchase Tax, the pre-cursor to VAT in the UK, was introduced in 1940 during WWII to reduce the demand for luxury goods, perhaps that's what you were thinking of?

Little known fact, New Year's Day used to be celebrated on 25th March in England, and so the tax year also began on that date. In 1752 the UK switched from the Julian calendar to the Gregorian calendar, and 11 days were 'lost' - people went to bed on 4th September and woke up on 15th September. People were appalled that they'd have to pay a full year's taxes despite the year being 11 days shorter, so the start of the tax year was pushed forward to 5th April, and - following the skipped leap year in 1800 - to 6th April.

You're right with the Legal Fiction paragraph. This is becoming more widely used by people trying to avoid re-paying their debts in the UK. Most debt recovery companies will cease trying to chase up debts where someone starts writing to them as an authorised representative of themselves. Crazy. Something else that's becoming more widely used by people is the common law method of claiming damages from someone for a grievance, without referencing any Act of Parliament. The internet is allowing people to re-claim the rights that common law has historically allowed them.

Hoddie

Wow that was a bit boring wasn't it. Sorry lol but thing like this interest me.

Lawrence

Not boring, quite interesting.

DagsBricks

@DagsBricks your name (Mr. _______) is also a legal entity (corporation) - that's what registration of Birth is for, and that's how they get ya - by you agreeing that you, the natural born being, IS a piece of paper whereas you are legally an authorized representative, acting on behalf of the Legal Fiction (Your name as MR _ ___)

For more search "Mary Croft" she is brilliant

Graham

Stuart Hill also comes to mind, challenging the presence of the UK in the Shetland Islands.

I have never incorporated myself, this much I know. If I were a corporation by law, then I should be able to unincorporate myself. I've yet to find paperwork to this effect.

Being self-employed, I can have several cash streams and let them all resolve each other on the tax forms. Were I to incorporate one, the game would change quite a bit. There'd be dual taxation, once for the money made by Dag's Bricks Inc. and another when Dag's Bricks Inc. paid myself. Or maybe they would pay my legal fiction...

Hmm... what if Dag's Bricks incorporated and included myself as an asset instead of an employee?

/ramble