Bookkeeping large quantity of pre business stock

[Beth]

Hi, hoping someone can help.

I am working towards starting a new partnership business. We have a lot of stock which we have amassed over the last 4yrs, how should we account for this pre business stock in the books? We have paperwork for them. Mainly auction purchases, mixed lots.

Any help gratefully received.

 

[Lewis-H]

Both are numbers-related, but bookkeeping and accounting are not quite the same things. Bookkeeping is the process of tracking all financial records—mainly income and expenses. The term dates back to the olden days when business owners tracked finances in paper books.

Accounting is the process of interpreting your financial records for everything from making sure you pay the right amount in taxes, to make strategic business decisions based on your business’s numbers.

Both bookkeeping and accounting are vital to every business’s success, but as a startup, you may have an additional need to keep good records. If you have investors, they’ll require that you provide financial reports. And if you are trying to get a business loan, you’ll need clear and easy-to-read financials so that potential investors can make an informed decision about investing in your vision.
Currently, I am using Quickbooks enterprise hosting solutions for my business and it has been working great for me.

 

[Beth]

Thank you, Lewis-H, that has given me a lot to think about. I will be doing the books manually at first, but may move online later. Luckily I have no investors to worry about. Thud is very helpful.

 

[Szymon]

Hi.

In terms of how to account for the pre-trading stock, it would depend on who purchased it (as in who is currently the legal owner of the stock and who actually paid for the stock). If you bought the stock personally then the accounting treatment would depend on the partnership structure (Ltd, LLP or just partnership?). Generally, if the stock was bought within 7 years of trading start date then it can be treated as if it was bought on the first day of trade. Let em know if you have any questions.

 

[Beth]

Hi Szyome, thank you for your reply. That is helpful.

 

[Arael]

Hey there. I hope your business went well and nothing was left out. I was wondering how did you manage to get through these hard year since I noticed you open your business in the middle of the pandemic. I'm trying to open mine as well soon but I'm not sure how well the vaccine program will roll out around the world. My uncertainty is one of the reasons that I decided to look for a financial advisor like suggested here yourmoneygeek.com. It's always better to get a second opinion on what to do other people who know the correct ways of dealing with money and investments.

 

[Business Upside]

There are some accounting mistakes that one need to remember in their business. Read this: https://businessupside.com/2021/01/25/6-accounting-mistakes-that-new-small-business-owners-make/

 

[felicebehaviour]

Why don't you talk to a professional financial expert about this?