Accounting for Stock in a Non-VAT Registered Ltd.

[REL]

Hi,

I'm an accounting dunce trying to get to grips with my accounts and wondered if any of you helpful folks could set a couple of things straight for me.

My non-VAT registered business buys stock from VAT registered suppliers who detail the VAT for the whole order in their invoice.

In my accounting software (Business Accountz), I add the cost of the goods, inclusive of VAT charged to stock.

On making a sale (of a widget, for example) I find the cost of the particular widget from the supplier's invoice and add VAT at the rate charged by the supplier at the time this particular good was supplied (thus finding the total cost to the business), and deduct this from the value of the stock I hold.

Am I right?

Also, when I buy services (such as postage from the Post Office) which I record as an expense, I take it I don't need VAT receipt as I'm not accounting for VAT, so any receipt stating the amount spent will be good enough for HMRC, inc. ones stating "this is not a VAT receipt"?

:|

 

[elaine@cheapaccounting]

Simplest thing for you to do - forget about the vat and just use the total that you have paid for an item in all cases.

Vat is totally irrelevant in non vat reg businesses.

You costs include vat - so you need to make sure that you can charge enough to cover that cost!

So on both cases the answer is yes to your questions.

 

[REL]

Thanks, that's excellent Elaine. Glad you've cleared that up, I'm going to get myself a book or two on business accounting which should improve my understanding.