The accounting process for inventory in a rug store typically follows the following steps:

1. Initial Purchase: The rug store buys inventory from a supplier. The cost of this inventory is recorded as a debit to the inventory account, which is a current asset on the balance sheet.
2. Inventory on Hand: The rugs remain as inventory on the balance sheet until they are sold. They are valued at the cost price, which includes the purchase price as well as any additional costs needed to get the rugs ready for sale, like shipping or handling fees.
3. Sale of Rug: When a rug is sold, the value of the sold inventory is shifted from the inventory account to the cost of goods sold (COGS) account. This is a debit to the COGS and a credit to the inventory account.
4. Profit Calculation: Revenue from the rug sale is recorded in the sales revenue account. The difference between the sales revenue and COGS gives the gross profit made from the rug sale.

This process repeats for every rug purchase and sale transaction, helping the rug store keep track of its inventory levels, costs, and profits.

The best way to handle bookkeeping for rug imports and exports is by ensuring accurate record-keeping and understanding the specific industry regulations. It's crucial to track all costs related to purchasing, shipping, and customs fees. On top of these, you should also monitor your sales and returns meticulously. The exchange rates as at the transaction dates are other essential details to keep tabs on. Given the complexity of all these elements, it's highly recommended to use a cloud-based bookkeeping software or hire a professional bookkeeper experienced in import and export businesses. They can help you maintain precision, stay compliant, and minimize tax liabilities, allowing you to focus on your core business activities.

No, you generally cannot claim depreciation on luxury rugs held in stock for a long period. Depreciation applies to fixed assets like equipment, vehicles, and buildings that lose value over time due to wear and tear. Luxury rugs held in stock as inventory are not classified as fixed assets and thus cannot be depreciated. However, any fall in market value can be recognized in your yearly financial statements. Be sure to consult with your accountant or tax advisor for professional advice.

Nope! All bookkeeping is completed in-house.

Your bookkeeper will be your main point of contact, but at times you might hear from another member of your team. This is usually when your bookkeeper goes on vacation, is sick, or otherwise unavailable.

We handle the bookkeeping for you but sometimes we’ll need your input, especially at year-end. On average, expect to spend 15 minutes each month answering questions for your bookkeeper, or uploading supporting docs.