eKTP 59

Why Stock Take under Income Tax and GST?
Part 2 of 2 

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Conduct stock take for Tax Saving and meetregulation requirements.

 

HOW TO DO STOCKTAKING?
 

Plan Ahead

It is important that you have a full understanding of the resources and time required, so as to reduce the level of interruption to business operation. Most Company will be conducting stocktakes outside of business hours. As part of your planning procedures you should also ensure that the materials such as stock sheets, pen and calculators are ready for your staff members.

 

Organise Staff

Involve internal staff in stocktaking procedures as it will help them to gain understanding of the importance of stock management. When allocating teams for the stocktake management may appoint a supervisor to each section and ensure all staff fully understands how the stock is to be counted. For example, it may be advisable to count from top to bottom and from left to right of the stock room, to avoid count duplications. It is also good practice to clearly mark items that have been counted in count tags, so as to avoid duplication and to identify items which may have been missed in error.

 

Know what needs to be counted

Firstly, the management should identify all stock owned by your business and stock held. Stock held could invoiced to customers, but not yet dispatched and stock received but not yet recorded in your system should be isolated and excluded from the stock count. The location should be easily accessible and arranged in proper categories.

Staff should be aware of the requirement to identify slow moving, damaged or obsolete stock. It is important that these items are separately identified so they can be either valued at a discounted price or removed from the stock count completely.

 

Get value for your stocktake

It is important to review price lists to ensure you have the most up to date prices for the stocktake and that all recent price changes have been taken into account.  Another aspect to be considered when valuing stock is to identify the lower of the cost of the item or the actual selling price of the item, as stock should be valued at the lower of both. 

By stock has counted and price correctly valued, the management to review the results of the stocktake to identify where improvements in stock management can be made.  By understanding your stock levels and stock requirements you can easily identify and monitor slow moving stock, profitable stock and possible theft which may be occurring within your business. Regular stocktakes will also assist you in streamlining your warehouse procedures and allow you to deal with stock issues in a more efficient and effective manner. Furthermore, if you conduct regular stocktakes throughout your financial year your staff will become more familiar with the procedures and stocktakes will be conducted in a more efficient manner.