How to conduct an inventory? Inventory step by step
- Knowledge base
Many entrepreneurs associate inventory with some kind of tedious and labor-intensive activity, where the slightest mistake can result in serious criminal and fiscal consequences. Accuracy comes at a price in this case, but other fears need not come true at all! In this guide we will suggest how to carry out the inventory step by step. It is enough to apply a few basic recommendations, so that the final report will be detailed and accurately represent the company's assets. And that is, after all, why an inventory is carried out. We already know what an inventory is, now it's time for the next question. How to conduct an inventory!
Stages of the inventory
A physical inventory results in a final report, which is a document certifying the company's property and financial condition. According to the Accounting Act, it is submitted no later than the date of the end of the fiscal year. How to take inventory in a store? If we strictly adhere to the plan, we will avoid pitfalls, and the final report will help optimize in addition to meeting statutory deadlines, it will also be a "road map" for the process of optimizing the company. The rules for taking inventory were not set out to make our lives more difficult, but just to make the whole process more efficient!
- Preparation
A very important stage of the inventory is the preparatory stage. This is a complex part, which consists of a number of formal and organizational activities. According to all formulas, we should start with the appointment of an inventory committee with a chairman who will be directly responsible for clearing the inventory. At this stage, we also prepare the entire schedule of activities, documentation and also organize the marking of the various product groups. The idea is to facilitate and systematize the counting process itself. Depending on the chosen ways of carrying out the inventory, we also prepare accounting forms, which later form part of the entire final protocol.
- Taking inventory
After preparing the documentation and the team, we move on to the inventory activity itself. It involves the reliable recording of each asset in stock in a warehouse or store. Due to the nature of the business and its scope, the method of carrying out the inventory should be chosen accordingly. Until recently, many entrepreneurs practiced manual operations with appropriate sheets and a pen. Nowadays, appropriate computer programs and barcode readers are used. This makes it possible to instantly transfer data into the protocol.
- Comparison of state values with accounting records
At this stage, the inventory committee is tasked with analyzing the reports in depth and comparing them with the state of the accounting records. In addition, the reasons for any differences are also determined. These can be due to many things, such as wear and tear, exceeding the expiration date, but also fraud or theft.
- Update documents
After conducting a physical inventory, and comparing the results with the accounting records, the current changes in the accounting records should be recorded. The day of the inventory is the day when the facts must be brought into full conformity with the documents. This is what updating the documents is all about.
- Completion of the process
This is the final stage that crowns the inventory activities. At this stage we organize the documents, draw up a final protocol and archive the prepared documents. The whole constitutes the documentation that we must later present to the tax authorities.
How long can an inventory take?
How long does an inventory take? This, of course, depends on the chosen method and scope of activities. Currently, it is assumed that the average time to carry out an inventory in a large store is a few or several hours of intensive work by the entire team. For a smaller one it will be correspondingly shorter. Of course inventory procedures are more efficiently carried out when the team has the necessary experience. All the more reason to use companies that provide inventory services. They guarantee that the entire process will be carried out quickly and professionally, and will result in a reliable final report.
What if the inventory doesn't agree?
If irregularities are detected at an early stage, before the inventory is completed and the final report is prepared, it is a good idea to start the count from a point on which you are certain. Regardless of the diligence in conducting a physical inventory, it may turn out that a comparison of the facts with the information in the accounting records will show differences. Depending on whether there are surpluses or shortages, appropriate solutions are used, and this is unlikely to be affected by ways of conducting the inventory. The report includes appropriate sections on shortages and surpluses. They, too, are subject to accounting. If the differences arise from natural or fortuitous causes for the most part, they can be booked as expenses. If, on the other hand, the tax authority proves that the shortage was the entrepreneur's fault, then the entrepreneur will not be able to enter it as a business expense.
How to complete the inventory?
Completion of the inventory procedure consists in preparing a final report and entering the updated data in the accounting ledger. Companies accounting on the basis of the income and expense ledger complete the process in this way. Depending on the type of inventory, statutory deadlines must of course be met! Exceeding them can result in severe financial liability.