I provide full-cycle accounting services for wholesale companies, with particular attention to the turnover of goods and documents, inventory control, settlements with business partners, and VAT accounting.
To ensure accounting, I periodically (usually once a month or more frequently if necessary) receive information and documents about the transactions carried out:
I check the received documents and information and, based on them:
According to part 6 of Article 30 of the Law On Taxes and Duties, "wholesale trade is the sale of goods in one's own name to a person conducting economic activity (JSC, LLC, individual merchant, as well as a natural person who has registered with the SRS) for further resale, production or ensuring of their own activity".
The buyer of the goods may use the goods to:Typically, the parties enter into an agreement that specifies the goods to be sold, quality requirements, sales volume, price of the goods, delivery terms, etc.
In the same premises it is permitted to sell goods both in wholesale and in retail trade.
A company may also engage in mediation in wholesale trade. For example:
Thus it is possible to reduce costs (warehouse, storage of goods, employees' salaries). However, there is a greater likelihood of various unexpected situations arising. For example, the manufacturer does not produce the required volume, or does not produce within the specified time limit, the carrier does not deliver the goods within the specified time limit, the buyer refuses the purchase.
Possible turnover of goods and documents between the seller and the buyer:
In both cases the seller and the buyer are obliged to register the sales invoice in the relevant document register. The seller registers the invoices on the day the invoice is issued (on the day of transfer/dispatch of the goods). All invoices must be registered in chronological order (by dates). Such a register of invoices must be located at each place of issue of goods.
There may be a situation when after a sale, the buyer and the seller agree to reduce the price of goods, as well as a situation when the buyer returns the goods (or part of the goods) to the seller.
If the seller reduces the price of the sold goods (the goods are not received back), the seller issues a credit note to the buyer. The credit note indicates for which goods and by how much the price is reduced. There must also be a document that can justify the price reduction (the State Revenue Service (SRS) may request it during an inspection).
If the buyer returns the goods to the seller, the buyer issues the corresponding invoice (tax invoice). The buyer delivers or sends the goods back to the seller. The seller receives the goods and the parties sign the corresponding invoice. The seller registers the corresponding invoice in the register of invoices.
There may be a situation where the company has several warehouses (wholesale locations – structural units) and goods need to be moved from one warehouse to another. In such a case an internal invoice (transport document) is issued. On the basis of this document the warehouse employees account for (register) the goods and the accountant makes the accounting entries.
It must be taken into account that invoices and sales documents must meet certain requirements (for example, the Latvian language must be used, they must contain details, document numbering requirements).
Warehouse bookkeeping must be carried out in such a way that the movement of each unit of goods can be traced. It should be ensured that:
It must be taken into account that in the event of an SRS inspection the following requests may be made and the company must be able to show and prove the movement of the goods.
It should also be possible to prove with documents who transported the goods (the buyer itself or another company). Documents could be, for example, an invoice from the carrier, a document about the transfer of cargo to the carrier, CMR, etc.
Proper accounting of goods would also be useful for the company itself. Because:
When accounting for goods, codes may be assigned to the goods (groups, types of goods) and in warehouse accounting the goods may be tracked not by names but by codes. Because it may happen that the purchase invoice has one name (for example, in English, Chinese etc.), but the sales invoice has a different name. It may also happen that from several purchased goods another product is assembled for sale and the names are completely different.
At least once a year a inventory of goods must be carried out. The procedure for conducting the inventory is laid down in the Accounting Organisation Rules.
Basically the following should be located in the warehouse:
They should be accounted for at purchase (cost) prices. The cost of the goods should include:
Usually sales amounts are divided according to the applicable VAT rates. For example, in separate accounting accounts the following are recorded:
Usually the buyer of the goods pays by transfer (transfer from the account of a credit institution or a payment service provider). The buyer may also arrive at the seller and pay using a payment card.
In principle, cash payments are not permitted. Exception if the seller of the goods has previously notified the SRS about settlements in cash and maintains a register of buyers of goods.
The requirements regarding restrictions on the use of cash, as well as the requirements related to electronic cash registers, must be taken into account. However, it is advisable to avoid cash payments.
It must be taken into account that a licence is required for the trade in certain goods.
For example, for the trade in certain chemical substances (products).
Additional requirements may also apply to trade in food products. For example, for trade in quick-frozen food products. The requirements of the Law On the Supervision of the Handling of Food and of Cabinet of Ministers regulations (for example, requirements regarding premises, vehicles, hygiene requirements) must also be taken into account.