Posted by Dennis Jao

Inventory Sourcing Tips for Small Business

Inventory Sourcing Tips for Small Business

To be successful in the inventory acquisition process, you will need to monitor your business's two main aspects: efficiency and profitability. It's important to keep a schedule, whether on paper, online, or at least in your head – of when you need more inventory for a given year, then back out the date to determine when to store that inventory so you can keep it or sell during your high season.


Because of the lower prices, wholesale products will likely be more attractive to you, although you should be prepared to buy items in bulk. An online search for wholesale distributors; for example, eBay and Amazon have a whole category dedicated to wholesale.

Depending on your needs, you can also search for inventory at trade shows to find hundreds of exhibitors selling the products you need. Trade shows can be useful as participating companies are from the same industry if you are looking for items in a specific vertical. Trade shows are also great networking opportunities.


You should also be aware of sales that take place in physical stores or online. You may find some great deals when retailers are looking to make room for next season's items and need to get rid of the products on their shelves and put them away as quickly as possible. Other inventory resources can be flea markets, property sales, and thrift stores.

When you think of inventory, you need to have an idea of your annual sales report. Also, you need to keep in mind that you don't need extra items in your warehouse. One of the secrets to Apple's great success, for example, is delivering and selling products in the same week; plan your logistics, so you don't end up with shelves and shelves full of cashless items, especially since you don't want to risk the value of stocks before they're sold. However, having a little safety stock is important to cover any short-term sales growth during the summer holidays.


USPS offers an online shipping service that you can use to print shipping labels and set pickup times. You can also schedule a delivery time for shipping via UPS and FedEx. It can be a cheap shipping solution and can save you a lot of time. If you could offer your customers an offer to deliver your package, they will be very satisfied with your service.

Each business has its origins differently: needs and conditions vary depending on the products bought and sold. Buy strategically, but when you buy, buy in bulk to keep costs down. Most importantly, understand your business's months and seasons to optimize your income better while remaining weak and aggressive.

 

Inventory Sourcing Rule

Income from the sale of inventory by a national company is usually obtained based on collateral transfer and the risk of property loss to the buyer. Therefore, when title passes outside the United States (for example, into a foreign port), the proceeds from inventory sale would generally be foreign source income. The source is important because, if the turnover is of foreign origin, the U.S. tax can generally be reduced by foreign tax credits that exceed other business income from the same basket of tax credits foreign.


If a domestic company produces stock in the United States and transfers the warranty and risk of loss outside the United States, the previous law provided that 50% of the income would come from the United States (depending on the place of production) and 50% foreign (based on the title's destination). The Tax Reform Act of 2017 amended this rule to provide 100% of the proceeds from the sale of real estate manufactured by the U.S company originating in the United States, regardless of the title's destination.


On the other hand, if the domestic company produces the inventory outside the United States, 100 percent of the sale proceeds would be of foreign origin, regardless of the inventory's destination and whether the products are sold in the United States or to foreign customers. If, on the other hand, the domestic company bought the inventory it was selling, the turnover would be based on where the collateral and risk of loss pass to the buyer.

Due to the relatively low corporate tax rate of 21% after the tax reform, external tax credit planning has gained importance. Therefore, an internal taxpayer should review their supply chain and consider options to increase income from foreign sources.


One Final Note

Income from the sale of inventory to foreign customers should generally benefit from the 13.125% rate applicable to foreign intangible income, whether the income is from a U.S. or foreign source. U.S. taxes can be reduced through foreign tax credits, provided the income is from a foreign source.


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