Hi, I also make jewellery and stock take time is the only time I cringe! I went on an evening course many years ago for people planning on setting up their own business, the evening on tax was useful. I paid for an accountant for the first year I was in business - stock comes under an allowable business expense “cost of goods bought for resale or goods used” - this has always been my incentive for completing a stock take. There is a calculation you need to make that I picked up from the evening course.
I always work out cost of each bead and a cost per length of wire on receipt.
For stock taking I guesstimate numbers of beads and wire lengths; I weigh seed beads. After a couple of years of working out material costs of items made, I worked out what percentage of the finished cost was the cost of materials so now I total the selling price of items made and multiply by the percentage.
Hope this helps.
That is really helpful. Thank you so much. It has been a useful exercise seeing just how much I had accumulated in a Year!!! My husband set up an Excel spread which I have been using. I had already worked out the costings of most of the poplar beads I use but this will hopefully help me be more efficient in my future purchases.
You cannot really measure the length every roll of wire.I would do it by weight. for example, a full roll might be 30 g and after a few uses, you may have 24.3 g left. Also , for strands of beads, you will not be able to use all of them as a few might have deffects. What I do is if I have a 40 cm long strand of gems with 80 gems, I consider that a percentage will be unused and only count what is left. So if you start with 80 and that 10 of them have cracks or a hole too small …, I would only count 70. Does it help ?
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How you account kind of depends on what you want to achieve. I keep a record of costs of materials as I buy them, and calculate by weight or other sensible measurement into finished pieces, but don’t regard the materials as part of the business until the item sells, at which point I record the cost against the sale. That gives me the correct figures for the tax return, and works for me because not all of my beads and other materials end up in works I sell - the majority if I’m honest remain with me, and effectively I felt it would be simpler to transfer sold works at cost into the business, than constantly to have to transfer materials out of the business (particularly as so much work is experimental), and to have to constantly track or stocktake a massive stash (I did try tracking everything as I used it for a while but the time taken was ridiculous). For items only used in the business (packaging, business cards etc) I write those costs into the business as they are paid out though. However, the down side of the ‘transfer cost when sold’ option which I think many of us use is that I don’t get to reduce my tax bill if I buy more supplies and therefore increase my costs. At this point, I’m sitting on healthy stocks and don’t need to buy much so that works - I’m transferring costs which actually came out of my personal pocket several years ago, but to be fair in earlier years I could have reduced my tax bill (although it would be higher now as a consequence of me needing to buy less). There’s also a middle ground of transferring the cost in at the point a piece is completed (rather than waiting for it to sell), which is probably what I should be moving to really. I should add though that although I sought advice on this at the time it may not be correct any more!
And for beads I measure by weight - I mainly work with seed beads so I have an average cost I can apply if I can’t track back to individual colours, for thread I apply a rough cost to each piece as an approximate proportion of a roll (that takes experience). Because I sell tutorials & kits on the other side I’m used to needing to identify weights etc used as they need to be stated there, and my tiny ‘drug dealer’ scales are my best friend.
And however you decide to run your accounts, do remember to include the cost of any delivery charges and taxes in the cost of each component when you record it - it can really add up! Ask your lovely husband to do the maths (he’ll want to apply the additional costs proportionally by value across the whole order) - for some of the supplies I sell on the other side that doubles the cost so it’s really important!
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