Using products from your stock for yourself

[Divine Beauty Newcastle]

I spotted a thread similar to this a while back and after several days of searching I can't find it.

This is in regards to Eve Taylor products. I've taken a cleanser for myself to use, do I have to pay the full RRP that I charge customers for it? Or can I pay back the trade price my business originally payed?

I also (naughtily) took and used a couple of the peel off masques on myself. These are professional products and dont come with a RRP. What should I do about these? Pay back the trade price? If so, would I still mark these as a retail sales?

 

[TheBack&Beyond]

Hi - there's a term in the pub trade called "ullage". I think the same in the beauty industry would be called 'testers' or 'trial product'.

hth? Jason.

 

[persianista]

If the business and stock is yours, then there is no need to pay yourself for it.

If you are vat registered, you only declare items at the price sold.

 

[Divine Beauty Newcastle]

Well, I'm still confused about this.

The man running the second HMRC workshop I did said I definately did not need to pay myself the retail price for any items I take and use for myself, such as a nail polish, or face cleanser. Actually, he laughed and said it wouldn't make sense since I have already bought it with earnings from the business, then would be using my wages which comes from the business earnings to pay again. He said just to keep a record of how much I bought it for, and that price would be deducted from how much I had spent on stock... (or something like that lol)

Today at the self assessment online workshop the lady doing this one has told me thats wrong and I have to pay myself back the retail price that I would charge everyone else....

well which is it? What does everyone else do?

 

[SJK]

The first person was correct. You need to keep a note of what you take, at trade price, and then at the end of the year it would be classed as the "drawings" figure and be deducted from stock.

Beware - drawings reduces your profits, so don't go overboard.

 

[Divine Beauty Newcastle]

Thanks for that.

She also said that if I gave a treatment at a discounted price I still have to mark it down as the full cost. But then would that not mean I would end up having to make up for the missing money with my own?

 

[Lynne Baker]

I don't charge myself for stuff I use in my salon. How is anyone going to know that I didn't use that 2ml of acetone on a client?

 

[kimi1101]

well now we ALL know Lynne!!! Tut tut!! he he

 

[Divine Beauty Newcastle]

I'm not fussed about a small thing such giving myself one nail paint out of a bottle etc, as you said, who would know - more actually taking something for myself such as a retail product that would have to be accounted for.

 

[Lorrainelola]

I don't really understand this thread. I thought that if you owned the business, you own the stock. I do my own nails with the DD that i bought but I'm certainly not paying to do my own nails Or have i got completely the wrong end of the stick here

 

[Divine Beauty Newcastle]

Lol well that was my point, and its a bit annoying when HMRC are supposed to be educating you and give you conflicting answers.

 

[Lucy-Jayne]

Sometimes I wonder if HMRC know anything.

So what they're saying is that if you perhaps have a sale on of say 25% off treatments, you have to say you received the full 100%. Complete cr*p! How do they know how you price your treatments, or your stock for that matter. You don't have to charge RRP after all.

 

[Divine Beauty Newcastle]

Sometimes I wonder if HMRC know anything.

So what they're saying is that if you perhaps have a sale on of say 25% off treatments, you have to say you received the full 100%. Complete cr*p! How do they know how you price your treatments, or your stock for that matter. You don't have to charge RRP after all.

That was exactly what she was saying. I think I'm more confused than I was before, I've started to question the whole workshop now lol.

 

[Lynne Baker]

well now we ALL know Lynne!!! Tut tut!! he he

Well, I'm speaking hypothetically, of course

 

[kimi1101]

Well, I'm speaking hypothetically, of course

yeah yeah...we believe you....

 

[SJK]

Thanks for that.

She also said that if I gave a treatmeant at a discounted price I still have to mark it down as the full cost. But then would that not mean I would end up having to make up for the missing money with my own?

Absolute rubbish. You would mark it down as a sale for the price the client paid. Never heard so much tosh in my life, so might be best to ignore her.

It's important to distinguish between little bits here and there, and the larger stuff such as whole bottles of products that you take home.

Little bits here and there are taken into account when you do your costings and could easily be put down to evaporation or spillage etc. The larger bits need to be accounted for so that you keep the business figures correct, which is especially important when you are working out your profit margins.

 

[Lucy-Jayne]

That was exactly what she was saying. I think I'm more confused than I was before, I've started to question the whole workshop now lol.

It's basic accounting (I'm a part qualified accountant). You would be putting an entry for receiving the 100% say £20, but you only received 75% of it from the customer - £15. You're £5 short somewhere!!! Your accounts wouldn't balance and it's not for you to make up! What a numb nuts at HMRC!

 

[SJK]

For Lucy-Jayne:

She is completely confusing people. The only way I can work out what she was saying would be to (using your example):

Credit sales £20

Debit cash book £15
Debit discount allowed £5

The journal entry itself makes sense, but it is an incorrect use of the discount allowed factor, because the customer is paying in cash rather than on credit.

As you said, numb-nuts!

 

[Divine Beauty Newcastle]

Well thank you for putting my mind at rest. I got a bit flustered as I kept telling her that she was saying the opposite of her colleague, and nobody else in the class backed me up or questioned what she was saying.

I can see I'm still going to end up sitting on the phone to the advice team while I do my tax return haha.

 

[Lucy-Jayne]

For Lucy-Jayne:

She is completely confusing people. The only way I can work out what she was saying would be to (using your example):

Credit sales £20

Debit cash book £15
Debit discount allowed £5

The journal entry itself makes sense, but it is an incorrect use of the discount allowed factor, because the customer is paying in cash rather than on credit.

As you said, numb-nuts!

SJK, I'm not sure if you're making a dig at me to say I don't know what I'm talking about???

In these circumstances...... you are not selling anything at £20 which is my point. Your sales figure can be what you want it to be and any potential difference does not always need to be justified in a discount allowed account. It's for credit purposes only and say for example a discount for early payment. I'm trying to simplify it for our types of business.

As the owner of the business you can charge what you want, not even an auditor can really justify asking you to explain why. So if you don't need to justify it, there is no need to unneccesarily report it.