Tracking inventory factors heavily into determining your taxable income – costs of goods sold (COGS) can reduce or increase your gross income. If you lose inventory to theft, you may be eligible for a tax deduction. Having unbalanced inventory management can result in ending up with too much inventory at the year end and having to pay more taxes. Long story short, inventory levels figure into tax calculations – you need to be able to account for your beginning and end of the year inventory amounts, as well as existing inventory.
Doing manual inventory counts, tracking items as they enter and exit on paper or in spreadsheets and then entering this financial data into your accounting system, given there is one, normally just adds to the stress and agony of tax filing. Meanwhile, inventory software seamlessly integrated with your accounting software can significantly reduce the stress by automating the tracking and management of your stock, giving you a much better insight into your business and its taxable profit.
Some of HandiFox users turn to tax accountants for help and guidance, while others deal with taxes on their own and that is when there comes a moment of realization that they made the right choice by investing into inventory management automation because they can:
1. Set up taxable/non-taxable items and tax rates in your QB. After syncing, you will have the same settings in your app on the mobile device
2. Track, transfer, count and manage inventory at multiple warehouses, eliminating a need to physically travel between sites to aggregate inventory data for taxes
3. Easily perform inventory counts on a regular basis taking advantage of the speed of barcodes – there is no need to dread physical inventory anymore.
4. Identify inventory shrinkage. It is critical that you are able to account for it in the tax statement
5. Value inventory based on QuickBooks inventory reports that are, in turn, generated based on inventory records data from the app.
To ease the pain of tax time and turn tax filing to your advantage, you need to track your inventory and have well-kept year-long records. No more semi-guessed figures. Start thinking ahead and consider introducing inventory control software to make tax season a stress-free time next year.