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Because we were already doing activities as a hobby before we turned them into a sole proprietor, we have gradually built up a substantial inventory from around 70 outfits (10 of which are quite valuable), around 30 wigs, around 50 pairs of shoes, around 10 headdresses/headpieces, two storage bins full of accessories, a storage bin full of jewellery, two of which are valuable, and a large sorting case on wheels with make-up materials, a mirror, make-up lighting, etc. Thousands of pounds have been invested yearly.I acknowledge that these purchases were made as a hobby and were not used in the context of a self-employed professional activity. But that is changing from now on, and this inventory still represents a considerable amount of (second-hand) equipment for which no purchase invoices can be provided.
Can we include this as start-up capital or start-up costs, and how do we do that? After all, if that inventory did not exist, we would have to quickly build up a stock of (partly) second-hand costumes. Can such inventory be recorded as an expense in one go, or will it be depreciated over several years? How is this processed in the accounts? And what if items from the inventory are resold second-hand?