Entering Closing Stock and Inventory in Your Balance Sheet | TinyTax Support

Entering Closing Stock and Inventory in Your Balance Sheet

Stock (also called inventory or closing stock) and work in progress (WIP) are current assets and belong in the Current Assets field on your balance sheet. This guide explains how to enter them in TinyTax and how the balance sheet balances when you include these items.

Where to Enter Closing Stock in TinyTax

TinyTax uses a single Current Assets field that holds the total of all current assets — cash at bank, trade debtors, other debtors, stock, prepayments, and similar items. There is no separate stock field.

To include closing stock:

  1. Add up all your current assets: bank balances + debtors + closing stock + any other current assets
  2. Enter the combined total in the Current Assets field in the balance sheet section
ℹ Do not enter stock separately — combine it with your other current assets into a single figure.

How the Balance Sheet Balances

When you add closing stock to current assets, the balance sheet must still balance (assets = liabilities + equity). This happens automatically when your P&L correctly reflects the stock.

Why:

Closing stock reduces your cost of goods sold. For example, if you have purchases of £5,000 and closing stock of £1,010, your COGS is £3,990 — not £5,000. This increases profit by £1,010, which flows into retained earnings. The extra £1,010 in retained earnings offsets the extra £1,010 in current assets, and the balance sheet balances.

You do not need to adjust creditors or any other line to force the balance. If the balance sheet is not balancing after adding stock, the most likely cause is that the P&L has not yet been adjusted to reflect the closing stock.

Work in Progress (WIP)

Work in progress is treated in the same way as closing stock — it is a current asset and affects the cost of materials on the P&L.

On the balance sheet:

Include the closing WIP value in the Current Assets field, combined with your cash at bank, trade debtors, closing stock, and any other current assets.

On the P&L:

TinyTax's P&L does not have a separate "Changes in work in progress" or "WIP movement" line. Instead, enter your materials and direct costs net of the WIP movement in the Cost of raw materials and consumables field:

  • Increase in WIP (closing WIP > opening WIP): subtract the increase from your gross materials cost. For example — materials purchased £20,000, opening WIP £0, closing WIP £3,000 → enter £17,000 in Cost of raw materials.
  • Decrease in WIP (closing WIP < opening WIP): add the decrease to your gross materials cost. For example — materials purchased £20,000, opening WIP £4,000, closing WIP £1,000 → enter £23,000 in Cost of raw materials.
This gives exactly the same P&L result as showing gross materials cost with a separate WIP movement line, while fitting TinyTax's simplified FRS 105 format. The balance sheet balances automatically — the WIP as a current asset is offset by the corresponding change in profit flowing into retained earnings.

Prior Year Comparative Column

If your prior year accounts did not show any closing stock or WIP (for example, both were treated as expenses in prior years), the prior year Current Assets column should reflect what was actually filed — not the adjusted figure.

TinyTax automatically tries to fetch prior year balance sheet figures from Companies House, but the prior year column is fully editable. Enter the figure from your prior year filed accounts directly.

If this is the first year you are showing stock or WIP as assets:

  • Current year Current Assets: include the closing stock and/or closing WIP
  • Prior year Current Assets: use the figure from last year's filed accounts (usually without the stock/WIP)
This is normal and correct — there is no special prior year adjustment required in TinyTax for this situation under FRS 105.

Stock That Was Expensed in a Prior Year

It is common for first-time filers to discover that stock was treated as a purchase expense in a prior period and not shown as an asset. For the current year:

  1. Include the closing stock in Current Assets on the current year balance sheet
  2. Make sure the current year P&L correctly shows the closing stock as a deduction from purchases/COGS (so profit reflects the stock value)
  3. The prior year comparative column continues to show the prior year figures as filed
This approach is practical and consistent with FRS 105 for micro-entities. No retrospective restatement is required.

Common Questions

My balance sheet is not balancing after I added stock — what should I check?

Check whether your profit figure already includes the closing stock. Closing stock reduces cost of goods sold, which increases profit. If the P&L does not yet reflect the stock (for example, you entered all purchases as costs without deducting closing stock), the retained earnings will be too low and the balance sheet will not balance.

Do I need a separate note for closing stock or WIP?

Under FRS 105 (micro-entity accounts), the balance sheet uses a simplified format with a single Current Assets figure. No breakdown by asset type (debtors, cash, stock, WIP) is required.

What if the stock existed at the start of the year?

Opening stock is the prior period's closing stock. In the P&L, cost of goods sold = opening stock + purchases − closing stock. Enter your figures consistently and the balance sheet will balance.

Where do I enter an increase in work in progress on the P&L?

There is no separate WIP line. Enter the net cost of materials after adjusting for the WIP movement in Cost of raw materials and consumables — see the Work in Progress section above.

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