Every self-employed person faces this at some point: you\u2019ve bought goods, but suddenly you can\u2019t sell them. They gather dust in your warehouse, whilst your money disappears. How do you deal with this, both practically and in your accounts?<\/p>\n\n\n\n
Put simply, trade goods are products you buy to sell later. Yet things don\u2019t always go to plan. Perhaps the government has introduced a specific ban on certain goods, perhaps the products are damaged, or perhaps the hype has already died down.<\/p>\n\n\n\n
There are various reasons:<\/p>\n\n\n\n
Everyone involved in inventory management knows this is part and parcel of the job.<\/p>\n\n\n\n
Fortunately, there\u2019s no need to panic; it\u2019s usually simpler than you think.<\/p>\n\n\n\n
When you make purchases of goods, you record them as an expense. At the end of the year, you tally up your inventory. Goods you can no longer sell are simply removed from the closing inventory.<\/p>\n\n\n\n
Suppose you purchased \u20ac5,000.00 worth of trade goods for resale in 2024. By December, you discover that \u20ac1,500.00 of this is unsaleable.<\/p>\n\n\n\n
Initial inventory: \u20ac5,000.00<\/p>\n\n\n\n
Closing inventory: \u20ac3,500.00<\/p>\n\n\n\n
Difference: \u20ac1,500.00<\/p>\n\n\n\n
That loss is automatically recorded as an expense. Your profit therefore decreases by \u20ac1,500.00 without you having to do a separate booking. Fortunately, Dexxter ensures this happens automatically.<\/p>\n\n\n