Accounts info

[Leew2143]

Hi all,

I have a few questions & hopefully get a few answers!!

I started a small tools sales business, had to upgrade the garage door to secure my stock better ( 4 point locking system)
How does it work for the books, as it not a repair? But upgrade. £900

Im trying to keep my profit low for the first year.

Also all money I make, I buy more stock with it, when it comes to work out the total amount I have spent.
Total spend against the total amount of income.
Or do I have to take the stock of that?

I also run my business from home & have not claimed anything for electric etc yet

would I just send a percent of the bill to my personal account,
where the bill currently come out of ?

hopfully my account will look at my books soon & let me know.

just like to get a heads up so I have an idea of what I’m taking about

thanks

 

[Leew2143]

Sorry I’m set up as a sole trader too

 

[Scalloway]

I started a small tools sales business, had to upgrade the garage door to secure my stock better ( 4 point locking system)
How does it work for the books, as it not a repair? But upgrade. £900

As it is your own garage rather than let to or owned by the business I would say you couldn't claim.

Also all money I make, I buy more stock with it, when it comes to work out the total amount I have spent.
Total spend against the total amount of income.
Or do I have to take the stock of that?

If your turnover is £150,000 or less a year as a sole trader you can use the cash basis and account for income and expenditure as it happens, rather than taking stock at the end of every year.

I also run my business from home & have not claimed anything for electric etc yet

would I just send a percent of the bill to my personal account,
where the bill currently come out of ?

You can just claim a fixed sum for the business's share of household costs, otherwise you need to work out what proportion of costs are chargeable.

https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

Do you have insurance covering the stock?

 

[Leew2143]

As it is your own garage rather than let to or owned by the business I would say you couldn't claim.



If your turnover is £150,000 or less a year as a sole trader you can use the cash basis and account for income and expenditure as it happens, rather than taking stock at the end of every year.



You can just claim a fixed sum for the business's share of household costs, otherwise you need to work out what

Do you have insurance covering the stock


Thanks for the reply,

no insurance on stock, small value items.

yes it’s my own garage.

yes turn over will be less than £50k.

so say I purchase 30k worth of stock & 10k running cost total spend 40k
Say my total turnover was 45k (sales) I would have made 5k.

but I have 3k worth of stock. Would my profit 8k for tax purposes??

Using cash based accounting

Sorry for all the questions, it’s all new to me

 

[Scalloway]

but I have 3k worth of stock. Would my profit 8k for tax purposes??

Using cash based accounting

If you were using conventional accounting it would be £8k. If you use cash based accounting it would be £5k as you would be accounting for the cost of the stock when you paid for it, rather than carrying it over to set against sales in the following year.

 

[Energise Accounting]

Using cash-based accounting in a sense is simpler although as your business grows and you may need to hold more stocks the profit differences can get quite a bit larger. Specially if you need to add in a few capital items in during the year.

This may or may not be a problem in the future. Although you may want to apply for a mortgage, loans etc it is something to think about.

 

[pentel]

Cash accounting is fine up until you reach the limit for doing this.

At that point it can be a bit of a nightmare to sort out and can result in a large tax bill.

 

[Leew2143]

Thanks for your reply’s, unfortunately due to health condition I’m unable to work much & currently clam esa. But am able to carry out permitted. Work upto £142 per week & under 16hours.
So being close to the limit, I really want to keep profits as low as possible

I only set this up to try & keep some mobility.

What happens about current stock not sold( value£500 is that classed as profit too.

 

[Scalloway]

The £500 of stock not sold should be deducted from the cost of goods sold.