If you own or have considered opening a retail business, there’s a wide variety of tax, financial, bookkeeping, and accounting issues that you need to be aware of. A few examples are below.
Inventory and its management. The lifeblood of a retail business is its inventory, and as a result it needs to be tracked and accounted for carefully. On each year’s tax return, you’ll need to report the cost of the inventory the business purchased, the cost of the inventory it sold, and the cost of the inventory it had on hand at the end of the year. Institution of a formal point-of-sale system (POS system) can often greatly decrease the cost and burden of tracking inventory, but a physical, in-person inventory count should still be performed at least annually.
Sales taxes. Virtually all retail businesses are subject to sales taxes in at least one state and county, and many of them are subject to sales taxes more broadly than that. As a result, it’s critical for a retail business to stay up to date on the sales tax rates and sales tax filing requirements in each of the locations where it does business. An accountant’s advice and expertise can be very helpful to the retail business in these aspects. In the city of Atlanta, GA you're typically looking at an 8% combined sales tax rate.
Payroll management. Most retail businesses have employees – someone has to man the store. These employees need to be paid in a timely fashion and their pay needs to be reported properly to federal and state tax authorities. In order to keep up with the various payroll reporting requirements, it’s almost necessary that a retail business employ a bookkeeper or a payroll service.
Cash receipts and deposits. Retail businesses receive large amounts of cash. As a result, it’s critical that they institute the proper controls to reduce the possibility for theft or misuse of that cash. Bank deposits should be made daily if possible, and those deposits should be carefully compared to the business’s records of cash received and cash spent for the day. An accountant or bookkeeper can be very helpful to the retail business in this process.
Leasehold improvements. Most retail businesses rent their locations, and many of them find that they need to change the layout, furniture, and equipment of their stores to suit the business’s needs. These changes are known as leasehold improvements, and it’s important for the retail business to track them properly, as these improvements must be reported in a specific way for tax purposes. A retail business should strongly consider working with an accountant and bookkeeper closely in order to ensure that everything will be reportable properly in a smooth, efficient manner.
These are only a few examples of the accounting and bookkeeping issues that a retail business needs to consider. If you have questions about your specific situation, you should contact an Atlanta accountant.
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