When tax-time rolls around each year small business owners everywhere get a bit panicky. This is because taking the time to report lost inventory, expenses and profits is a tedious task even with accounting software.
Savvy business managers can make this process much less stressful with the application of cutting edge inventory management software. Automated inventory management software tracks the products as they enter stock supply or leave on the way to customers. This makes tracking your profits and stock levels a lot easier.
A management system that coordinates the accounting process with the inventory control system is the ideal setup to have in place when tax season comes around again. Following are a couple more ways that a proper inventory management system can greatly facilitate your next tax season.
Multi-Channel and Multi-Location Business
Tracking inventory, sales and stock across a number of different locations can be especially grueling. The process is complicated if these locations exist across different state boundaries. If this is the case, it is quite likely each location will have to report their income tax according to local law.
This type of accounting is greatly facilitated with sales and inventory management systems. Reports for individual locations and channels can be produced in a matter of minutes. All the information is presented in one convenient location saving you from the cost of error and time consumed in this task.
The amount a business will typically pay on taxes for inventory is greatly affected by the way the business values their products. The two most common ways of doing this are referred to as LIFO (Last in first out) and FIFO (First in first out). As their names suggest, the two management systems refer to how stock is expected to enter and leave inventory.
The best interests of the company and business owner may require that the system is adjusted periodically. Unless the inventory records have been kept immaculately, this can be an especially difficult process. Meticulous records, like those kept by an inventory management system, are flexible enough to be adapted on the dime. If the business owner and accountant see fit, this task could be completed by tax-time.
Having all the details records and statistics ready for tax-time will make things a lot easier. Inventory management systems today are quite sophisticated and can be updated and accessed in real-time. This significantly reduces the risk of error and the time spent in completing this important yearly duty.