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Setup for SME who manufactures and retails Items

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Rolly
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Setup for SME who manufactures and retails Items

Hi.

 

My wife has a small jewellery business where she manufactures jewellery from raw materials and also retails the jewellery herself. She operates under the SME Cash Accounting rules with ATO. Currently we inventory all the individual items that go into the jewellery and then build items for sale that are inventoried.

 

There is little value that we gain from this process as inventory tracking is not required as we are operating on a cash basis (not accrual) and is used a little for determining the cost of items made but not fully as we don't add overheads to the inventoried items held for sale. 

 

I was wondering if there was a simpler way that I could implement where purchases of supplies go to COGS and items for sale are entered as inventory (but without using the build function that requires the raw materials to be inventoried as well).

 

Or indeed, can we just record the purchases of supplies and the sale of jewellery without any inventory system. We also use Square which allows us to keep track of items in stock.

 

Thanks

 

Rolly

 

 

2 REPLIES 2
The_Doc
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Re: Setup for SME who manufactures and retails Items

Hi @ Rolly There is often a tendency for SME to complicate their book-keeping - and MYOB AccountRight enables you to do this. I have been using MYOB since 1994 and setting a lot of Small to large business - that started small - and the inventory part is littered with this good intention. I have done it to myself - and others - setup build - created big inventory lists - and a few years later - had to roll back to simplicity - which actually was better. The advise then is to start simple - keep MYOB simple - else you will end up spending more time making MYOB work vs making and selling jewellery. You mentioned Square - I am not familiar with this but suggests it is some sort of stock control management package. Depending on how many jewellery items you are selling (and you certainly could use MYOB as a point of sale) but again if your turnover is small the effort to set this up and run this will be proportionately higher than the effort to make and sell the items. Keep it simple Suppliers - purchase to 2 or 3 COGs GL accounts - claim your GST back on these. Sales - net sales per week to a few sales accounts in MYOB - GST paid on sales - simple. If you must add a bit of complexity create some basic stock items - core components for a base level - that you buy in via purchases. Then do an adjustment for inventory and stock control sake and your financials at the EOY - but just keep it simple. As you grow this simple setup can be expanded to enable more granularity - however, add the granularity now and it will just be too complex and will need trimming later on. The Doc
Rolly
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Australia
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Re: Setup for SME who manufactures and retails Items

Hi @The Doc,

 

Thanks for your sage advice. I also ran it by my tax accountant (because I stupidly didn't to start with) and she agrees 100%. KISS - the simpler the better to save many, many hours of work.

 

Greatly appreciate you taking the time to respond. BTW The Square started out as a simple POS device for accepting credit and debit cards where you buy a card reader for less than $50 from any office supplier and use it with your smartphone. Transaction fees are similar or less than a bank for SMEs and there is no monthly account keeping fees or monthly rental fees for the EFTPOS machine (which for us was $65 a month!). Square has expanded and now has a full POS solution that can be as simple or fully blown as you need.

 

Thanks

 

Rolly

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