I have a small handmade business operating below the VAT thresholds.
I buy material then make items and sell them online.
The way I plan to account for this is to categorise materials as expenses COGS and at the end of year do a stock take and add the held materials to stock to reflect assets, then move back after the accounts are complete.
I understand that a larger business should probably use codes 1001,1002,1101 to move materials through the books but in my case this seems complex and I have no idea how to price goods as they move through production to finished goods.
Any advice on how to best do this would be greatly appreciated.
The support team are not registered accountants. For professional advice I would reccomend speaking to your accountant.
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I’d do what you’re planning to do.
Create an Auto-Reversing Journal for the Value of the Stock held.
(ie, Journal date 31/3/25 - Auto Reverse Date 01/04/25
Credit COGS
Debit Stock (1001)