Accounting For Retail Business | Tips and Strategies
Successful retail business owners love to delegate accounting because of how stressful it can be. Accounting for retail business is demanding because of the meticulous attention needed when reviewing inventory and taxes.
Fortunately, at Numerico, we specialize in accounting strategies for small businesses. Here are our top tips that help retail companies keep their numbers accurate. Contact our team at (313) 278-8030 for more tips on retail business success.
3 Inventory Costing Methods | Which to Use?
The following methods can help you understand the amount of merchandise you have. They also indicate how much inventory is selling. These basic concepts will help keep your retail business organized and easier to manage during tax season.
FIFO (First In, First Out)
This method calculates inventory prices from the oldest available lot. This method works well when buying sets of inventory at different prices each time. If you price products based on your oldest stock, you’ll have a closer figure of the cost of goods sold.
LIFO (Last In, Last Out)
This method calculates inventory prices from the newest available lot. Accountants use LIFO less frequently than FIFO. Furthermore, it only applies when your business sells your most current stock first.
Moreover, this method benefits your tax liability since it produces a higher cost of goods sold.
If the stock price you buy doesn’t vary, use this method. All available units of stock are divided by the inventory costs. Therefore, this method is much easier for tracking your spending.
However, this formula doesn’t give accurate expenses if you buy the stock at variable prices.
Retail Accounting 101 | Keeping Accurate Records
Another crucial aspect of accounting for retail business owners is proper bookkeeping and keeping accurate financial records. Consistent and accurate bookkeeping is essential for excellent record-keeping. It also provides a solid backup if the IRS audits your business.
For the best picture of your business, use these three types of financial statements:
Income statements show the overall profitability of your business. They detail the revenue, expenses, and losses of your business over a period of time. Some accountants also call these “Profit & Loss” (or P&L) statements.
These statements measure a business’s finances at a specific moment. They itemize the assets, liabilities, and equity of a company. Businesses use this statement to examine how well they will meet their financial obligations over the next fiscal year.
Cash Flow Statements
These statements describe the money that enters and leaves a company. They reveal how well your business manages and generates cash, especially over time. As a result, cash flow statements supplement the financial information of balance sheets and income statements.
Automate Your Retail Accounting | Bookkeeping
Automated accounting removes many time-consuming tasks from your workday. Accountant automation programs track transactions and cash flow for you. Automated accounting promotes higher business productivity because it frees you to do more things in your day.
Account automation also boosts data accuracy. It removes many human elements and chances for error. Therefore, automating your books and having fewer errors significantly helps with small business tax planning.
Automated bookkeeping turns retrieving data into a quick search instead of hours of digging through the books. When finished, all files stay secure for any following investigations.
Benefits of Working with a Retail Accounting Expert
Retail accounting experts deliver many benefits to your business. We offer tax strategies for business owners to help find every tax deduction and credit while filing your taxes. Our expertise includes finding appropriate tax breaks and write-offs for your business.
At Numerico, we leverage our years of accounting services. Our experience enables us to handle any task you give us. We remove all the stress from accounting so you can focus on other business goals.
We learn and use the latest automation technology. Furthermore, our quick access to your records enables us to step in during an emergency.
Numerico, Your Accounting for Retail Business Experts | Livonia, MI
Accounting for retail business owners is simple if you plan accordingly. If not, your business may drown in unorganized tax burdens.
Instead of searching for a “business accountant near me” or navigating your accounts solo, contact Numerico. Call us at (313) 278-8030. Our team of experts will help your small business grow while freeing you to achieve other business needs and goals.