Hi…I started as a sole trader this year. I am an Artist, selling paintings and teaching.
I’m entering my purchases at the moment, paper, paint, brushes etc.
Firstly, can I enter goods that I bought previous to the date I registered, and if so:
How far back, as I have a lot of expensive equipment and goods from being an amateur.
Also, do these all go down as general purchases? Does any go down as stock?. I don’t sell the goods I buy, as is, just the end product or to use when teaching… Hope that makes sense, sorry, I’m a complete novice with this…
Many thanks for any help
Purchases are for reselling items, any thing else can fall under consumables
You can introduce items into business you had before start of business, date it beginning of business , e.g any assets will go under relevant assets category and credit side can sit under capital introduced
Thank you so much for your reply.
So even though say, some paper and paint becomes part of the end product (paintings that I sell) , it would still go down as consumable and not general purchase? Would that also apply to frames etc?
Sorry for more questions, just trying to understand…appreciate your help.
Frames can be purchases as it is part of final product being sold, you will have to take stock take at end of financial year for frames to value closing stock
Remember that you can also use the custom codes if the standard ones do not give sufficient clarity for your specific business.
I use them to separate wholesale and retail sales and to show what I am spending on printing the magazine as a separate line in my profit and loss.
Thank you for all your help and sorry if I’m sounding a bit stupid in understanding all this. It’s just that when I read the initial help guides it said :
“The category “General Purchases” can cover any item you buy in your business that is either resold or rearranged to form part of your product or service.” Would I not be rearranging it? I understand how brushes etc would be equipment, but the paint and paper are in the product I’m selling.
Or doesn’t it really matter as it all becomes expenses?
Thank you …I’m really new to this and appreciate any help.
I generally think of it as “general purchases” is anything you buy that can be directly linked to a specific thing you sell (e.g. the paint, canvas and frame that went into a specific painting), other expenses codes are consumables that aren’t directly attributable to a particular sale but are just a general cost of doing business, and assets are equipment you buy and use in your business over a period of years.
Thank you Ian, this would be my way of thinking as well.