TAX PLANNING 2020
TIP #4 – OBSOLETE STOCK
We are into the first week of June, and have you reviewed your profit? Do you still have excess profit that’s going to present as a tax bill by 30 June?
What about stock. Does your business have a room, storage space or even factory full of old “stuff” that is obsolete, damaged, no longer of worth and sitting around costing you money?
Yet another TAX SAVING strategy is to WRITE OFF old and obsolete stock.
So where do you start!
🚩 Run your stocktake procedure – or stock count
🚩 Value your stock count at cost and compare to your inventory balance in Xero
🚩 From your stock count, identify obsolete stock that is no longer of value to your business
🚩 Process inventory adjustment journals in Xero to reflect retained value and write offs
What to be aware of when writing off obsolete stock
✅ Tax deduction by the business can only be made where the obsolete stock has been disposed of
✅ If your obsolete stock has been neglected and is substantial, the write off can present as a loss position for the business, so keep on top of your annual stocktake procedures
✅ Carrying too much stock drains cash flow and operations, be consistent with your inventory management
*** NOTE *** If you do not have a TAX PLAN 2020, the time to reach out for assistance is NOW!
If you have any questions at all regarding financial and business matters, please don’t hesitate to contact us.
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If you are a business owner and you would like to learn more about how you can produce an accurate and reliable set of financial records for your business for maximum value and minimum cost, please contact us to request a free consultation.