Hi.
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.
Hello @Karl_Jacobs
The support team are not registered accountants. For professional advice I would reccomend speaking to your accountant.
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I will leave this post open as there are some accountants on the forum who may wish to comment.
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)