The Ministry of Finance, by Order No. 496 of September 03, 2021, approved the Procedure for Keeping Inventory Records for Individual Entrepreneurs, including single taxpayers.
Order No. 496 is published in the Official Gazette No. 87 dated November 16, 2021, effective from November 26, 2021.
The inventory accounting form is approved in Appendix 1 to Order No. 496.
The Procedure defines the rules for keeping inventory records and applies to individual entrepreneurs, including single taxpayers, who, according to the Law, are required to keep inventory records and sell only those goods that are reflected in such accounting, and persons who actually sell goods (provide services) and/or settlement transactions at the place of sale (economic object) of such an individual entrepreneur.
Peculiarities of maintaining the Form
The individual entrepreneur must enter information in the Accounting Form in the following order:
- column 1 indicates the serial number of the line in which the corresponding entry was made;
- column 2 shows the date when the entry was made;
- columns 3-6 contain details of the primary document (type of primary document, date of its compilation, number of the primary document (if any), name of the business entity – supplier or recipient, his/her registration number of the taxpayer record card or code according to the USREOU/ID card number for individuals who, due to their religious beliefs, refused to accept the registration number of the taxpayer record card and officially notified the relevant regulatory authority and have the appropriate mark in their passport);
- column 7 contains the total cost of the goods according to the primary document on receipt of the goods;
- column 8 shows the total cost of the goods according to the primary document on the disposal of goods (except for data on sales through the registrar of settlement transactions/software registrar of settlement transactions). Disposal of goods for the purposes of this Procedure is considered as follows: sale of goods with payment in non-cash form, which is carried out in cases established by law without the settlement transaction registrars/software settlement transaction registrars; internal movement of goods between places of sale (economic objects) belonging to one individual entrepreneur and/or storage places; destruction or loss of goods; return of goods to the supplier; use of goods for their own needs;
- column 9 indicates the notes provided for in this Procedure.
Records in the Accounting Form are kept in chronological order of receipt or disposal of goods. For individual entrepreneurs who have an obligation to keep inventory records, the first entry made by the individual entrepreneur in the Accounting Form must reflect information about the balances of goods available to such individual entrepreneurs as of the date of acquisition of the obligation to keep inventory records.
The obligation to maintain inventory records is not an innovation this year, because from August 1, 2020, it must be maintained by individual entrepreneurs who perform settlement transactions and belong to one of the following categories: (clause 12 of Article 3 of the Law on STRs):
- Individual entrepreneurs under the general tax system;
- Individual entrepreneurs paying a single tax – VAT payers;
- Individual entrepreneurs paying a single tax that carry out activities related to the sale of technically complex household goods subject to warranty repairs;
- Individual entrepreneurs paying a single tax that carry out activities related to the sale of medicinal products and medical devices;
- Individual entrepreneurs paying a single tax, engaged in the sale of jewellery and household products made of precious metals, precious stones, organogenetic precious stones and semiprecious stones.
According to Order No. 496, filling out the Form requires making balances. To make this first entry in the Form, the entrepreneur must also draw up a corresponding document, since all entries must be documented.
To do this, you should independently create a primary document called “Description of the balance of goods at the beginning of accounting”. You can create it in any form, as long as it contains the following information:
- name of available products;
- quantity of such products (including the unit of measurement);
- their cost.
If the individual entrepreneur does not have any balances at the time of starting accounting, such an inventory is not compiled, and accounting will begin with a record of the receipt of goods.
The individual entrepreneur must also register his/her reserves based on the primary documents. In the absence of documentary confirmation of the purchase made, the tax authorities will consider such goods received free of charge and demand that the entrepreneur pay tax as from the gift received.
Therefore, when indicating the receipt of goods, the individual entrepreneur must indicate the date of entry, the type and details of the supporting document, the counterparty’s identification data, and the total cost of the goods in the appropriate columns of the Form.
There is no clear indication in Order No. 496, such as making a “day-to-day” entry in the Form. However, records of the receipt of goods must be made before recording their disposal.
A special feature of accounting for inventory disposal when maintaining the Form is that it must not indicate the cost of goods sold through the STR (subclause 5, clause 3, Section II of Order No. 496).
Therefore, the Form must only record the disposal of goods in such cases:
- sale of goods with payment in non-cash form, which is carried out in cases established by law without the use of STR/SSTR;
- internal movement of goods between points of sale (economic objects) and/or storage points belonging to the same individual entrepreneur;
- destruction or loss of goods;
- return of the goods to the supplier;
- use of goods for own needs.
To make corrections to the Accounting Form, use the “Notes” column.
In particular, if the individual entrepreneur made an entry by mistake, and you just need to delete this line, mark “cancelled” in the “Notes” column of such an erroneous line. If the entered line is not completely erroneous, but simply needs to be corrected, then a note “cancelled-corrected” must be marked in this line,
and the line number that will contain the correct data. In turn, in such a “correct” line, put the note “corrected” and the line number.
Also, at the end of the month, the individual entrepreneur must group his/her primary documents in chronological order and put them in an inaccessible cabinet to avoid misunderstandings with the inspectors.
Documentation of the individual entrepreneur’s operations
The individual entrepreneur can keep records in both paper and electronic form. The main thing is that the individual entrepreneur can provide this information and supporting documents during the audit. In general, we consider it appropriate to recall that the obligation of proper documentation does not depend on the obligation to maintain inventory records.
Any entrepreneur must have documents, regardless of the chosen tax system or the type of activity carried out. This is a direct prescription in clause 44.1 of the TCU.
These documents must be kept for 3 years from the date of submission of reports based on them (clause 44.3 of the TCU). For example, if the individual entrepreneur reflects expenses on any invoice in the financial statements for November (Q4) 2021, the date of submission of which falls on January-February 2022, this invoice must be kept at least until spring 2025.
At the same time, it must be remembered that if in the future the individual entrepreneur submits updated reports for November 2021, three years for storage must be counted from the date of submission of such an update. Taking into account the quarantine suspension of all terms, for primary care, the countdown of years will begin after the quarantine is finished.
Which of the individual entrepreneurs paying a single tax must keep inventory records?
According to clause 12 of Article 3 of the Law on STRs, business entities that carry out settlement transactions for the sale of goods (services) in the field of trade, public catering and services, as well as transactions for accepting cash for its subsequent transfer, shall be required to keep inventory records according to the procedure established by law, sell only those goods (services) that are reflected in such accounting.
At the same time, the business entity shall be obliged to provide the regulatory authorities with documents (in paper or electronic form) confirming the accounting and origin of goods located at the point of sale (economic object) at the time of verification.
Such requirements shall not apply to individual entrepreneurs who are single taxpayers and are not registered as VAT payers (except for those who carry out activities for the sale of technically complex household goods subject to warranty repair, as well as medicinal products and medical devices, jewellery and household products made of precious metals, precious stones, organogenetic precious stones and semiprecious stones)