Prepare for stocktake

All businesses must account for the value of their trading stock at the end of each income year (closing stock) and at the start of the next income year (opening stock). Trading stock is anything your business acquires, produces or manufactures, for the purposes of manufacturing, selling or exchanging.

Don’t forget to account for any trading stock you use for private purposes. If you take an item of your business's trading stock for your private use, you need to:

• account for it as if you had sold it
• include the value of the item in your business's assessable income

You’re required to do a stocktake as close as possible to the end of each income year.

A stocktake involves counting and checking all products, goods or inventory in your business to make sure your records are accurate and correct. A stocktake lets you work out the value of your trading stock at the end of financial year for business or tax purposes.

If you're a small business with an aggregated turnover of less than $10 million a year, and you estimate that the value of your trading stock changed by no more than $5,000 in the year, you don't have to:

• conduct a formal stocktake
• account for the changes in your trading stock’s value

As well as meeting your tax obligations, benefits of doing a stocktake can include:

• gaining a better understanding of your stock levels
• making sure you don’t have too much or too little inventory on hand
• identifying what inventory you need to buy
• improving your cash flow by identifying and reducing slow moving stock
• detecting theft and gaps in your stock levels
• reviewing your pricing strategy

As well as the benefits, doing a stocktake can come with costs. These costs can include:

• accidental damage since people are physically handling your stock
• extra employees costs that you hire to help with the stocktake
• possible lost income due to taking time to check inventory rather than selling goods and services

It can be hard to keep track of your inventory when doing a stocktake. It’s a good idea to plan a stocktake before you start this task. For example, make sure you have stocktake sheets ready to fill in and ensure your employees know what stock to count.

Sometimes, doing a stocktake during business hours can interfere with your day-to-day business running and annoy your customers. Depending on your customers, it can be useful to do a stocktake outside business hours.

Doing a stocktake can be complicated. Having a dedicated supervisor at each stocktake location can help your employees complete this task successfully.

A stocktake can be costly, so it’s a good idea to only do it if it is helpful, like detecting theft or identifying what stock you need to order or retire.

Make sure your employees know what to do and give them what they need to complete the stocktake. Provide them with the essential tools to be able to complete the stock take successfully.

Consider giving casual employees extra hours to do the stocktake. This can let your other employees serve customers so that your business doesn’t miss opportunities to sell its goods and services.

A stocktake sale is a marketing technique to lower your stock levels, particularly at the end of the financial year, as stock often needs to be counted and valued.

The costs of doing a stocktake are higher when your business has a lot of stock. So it’s a good idea to consider running a stocktake sale before doing a stocktake.

The benefits of doing a stocktake sale can include:

• higher sales
• improved customer satisfaction
• selling inventory before it goes out of season or out of date