This is an update of a popular blog post from 2009.

Forget New Year’s resolutions, the Rose Bowl, or black-eyed peas as New Year’s traditions.  In our shop, New Year’s Day used to mean one thing: inventory.  It’s an all-hand-on-deck event during which we physically count everything that is still around after the holidays.  To avoid a mutiny, we now do inventory on the Sunday after New Year’s Day, which is also a good day for us to be closed.  We adjust the inventory to account for the sales that took place during the few days since the first of the year.

Counting inventory is a necessary part of retail, even for those with a point-of-sale system that keeps track of merchandise automatically.  Unfortunately errors in data entry and shrinkage (employee theft, shoplifting and breakage) can reduce the amount of inventory that is supposed to be on the shelves, sometimes by a very significant amount. If you don’t tally your inventory at least once a year, you may not have an accurate picture of how your business is really doing, which could accidentally lead to tax fraud.  And you are much more vulnerable to employee theft if you do not appear to be keeping careful track of your goods.  

Your bookkeeper or accountant will want to compare your actual (“physical”) inventory figure with the starting and ending inventory figure on your books, and to make any adjustment necessary before filing your tax return. If you take inventory at retail, you will need to calculate the approximate wholesale value of the total.

Inventory can be rather grueling, especially since we take down most of the Christmas merchandise and replace it with new product as we go. But it’s a great way to start the year, with the shelves freshly dusted and a really clear idea of what we have on hand before we head off to the winter gift shows.  Once it’s completed, we can look ahead to the new year. I hope that it will be a good one for us all! 

Happy Retailing,

Carol “Orange” Schroeder