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Inventory is an area where people cringe when I talked to them about it. It’s never a perfect process. Inventory is always flawed, so you’ll want to make sure that you have your procedures in place to keep the best track that you can at least on an annual basis. You’ll want to do a physical count of your inventory that involves checking out the cost of each piece of inventory that you have and coming up with a total value at your cost. The retail value does not matter. You’ll want to take the cost of the inventory, what you paid for it, and figure out how much in inventory you have total. Now, to make things a little bit easier, I actually recommend doing this more frequently than once a year. If you’ve got a good point of sale system, do categories or do shelving areas and do physical counts more often.
First you’ll get a better idea of where you are throughout the year for ordering replacement inventory and learning about what moves in your inventory. Secondly, you’ll be able to update these numbers more frequently than just once a year. You’ll also be able to spot any problems that you may have with theft, breakage, people ringing up the wrong piece in your point of sale system and not accurately having a good count on that info. So at your end, I’m always going to ask, Hey, what was the value of your inventory at 1231? So you’ll want to know how much did my inventory cost me? Also, keep an eye on this value. Keep in mind that you have some key performance indicators that will help guide you along the way to know how much inventory you should have. I hope this helps you and you have a great day. Thank you.
Donna Bordeaux, CPA with PYOPAccounting.com.
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna Bordeaux and PYOP Accounting.com. Donna and her husband, Chad, who is also a CPA, have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help PYOP studios earn 4 times more profit than the average PYOP and are passionate about helping industries that help families build great memories.