I run a relatively small eBay based ordinary partnership (not LLP) business using cash basis accounting. The tax return under this system very easy, cash in minus cash out = reported profit. This year our turnover will exceed £150k, which I understand to mean that we will not qualify for cash-basis accounting next year.
I know that the main difference between cash-basis and traditional accounting is when revenue is reported, i.e. the date of invoice rather than when revenue is actually received or paid out. Since we always pay up front for all purchases, receive payment with order and dispatch goods on receipt of payment, this probably makes no difference to our accounts.
My questions are:
what is the minimum additional record keeping and reporting is required for traditional accounting?
do we have to count stock annually?
I am quite concerned about doing a stock take because we are a 2 person business selling small craft pompoms. We buy them in the tens or hundred of thousands in many colours and sizes, also we sell them in many small denominations and combinations of sizes/colours etc, so it would be impossible to make an accurate count. Most items come to us in bags of 1000, the best we could do is to count how many full bags of 1000 we have at the start and end of the accounting period but this would not include some large quantities which are in bins of mixed colours and sizes and are realistically uncountable.
Thanks in advance for all comments!