Backdating your past data in Craftybase
Learn how to enter your historical data into Craftybase
It depends on how you have been previously tracking your material usage as to what options you have for entering in past data into Craftybase. It's important to note that we strongly advise starting on a recent date in most cases as this will speed up your initial setup process, allowing you to work forward with Craftybase faster.
To learn more about our backdating options, choose from the following scenarios that best matches your business situation:
If you started your business sometime after 1 Jan of this year, then this will most likely be your first tax return and you will not need to change your inventory valuation method.
Your strategy however will depend on how long it has been since your business began and your ability to reconstruct your stock changes from this date to the current date.
I can reconstruct my stock history back to the beginning of my business.
If you have kept good records of your manufacturing and purchase activity (i.e. when you made products and what materials you used) then you can consider backdating to the start of your business.
This method involves reconstructing all stock changes right back to the date you began your business, then finally reconciling your Craftybase stock levels with what is currently physically on hand.
I cannot reconstruct my stock history back to the beginning of my business.
If you don’t feel you can construct your complete manufacture and purchase records, then it may be better to consider indirectly expensing for your materials up to the date you began with Craftybase and then switch to COGS at this point.
This method involves starting to track your inventory using COGS from today forward, with all previous material expenditures claimed as indirect expenses.
If you have been previously claiming your material usage via indirect expenditure (i.e. claiming material purchases in the year that they were made) then you’ll need to at some point switch your inventory valuation method to COGS (Cost of Goods Sold) to use Craftybase.
There are a couple of different options for this situation. To determine your best way forward, you’ll want to consider:
a) how far along in the current year it is and
b) how accurately you can reconstruct your past inventory changes.
Option 1: Begin on current date
If it is later in the year and you find you cannot reconstruct your past inventory changes, this is the option we generally recommend in most cases. This option allows you to work forward with Craftybase from today's date using COGS. All material purchases you have made before this time will be claimed as indirect expenses on your next tax return.
Option 2: Backdate to 1 Jan of this year
If it is early in the year and you feel you can reconstruct your manufacturing and purchase history back to the 1 Jan, then you can consider this option. This involves switching your inventory valuation method to COGS on 1st January and backdating to this date.
Option 3: Begin Craftybase on 1 Jan next year
If it is very late in the year and you do not want to use Option 1, another option is to begin tracking with Craftybase as of 1 Jan next year and use your current indirect expenses method until the end of the year.
If you have any questions about your backdating strategy please feel free to get in touch and we'll be happy to help.
In general, we recommend using the current date as your Inventory Start Date as you can use your tallies from both systems for your next tax return. This strategy will reduce your backdating data entry time significantly.
This essentially involves doing a full stocktake on your Inventory Start Date in Craftybase and entering all materials and products with their current stock levels and calculated unit costs as per your old system.
At tax time for Schedule C, you'll be using your old system to generate your Beginning of Year Inventory Total and Craftybase to generate your End of Year Inventory Total. Your total purchases and personal use deductions will then need to be calculated from your total expenses across both systems.
Note: If it is still very early in the year, you might like to consider also transferring your inventory history into Craftybase back to Jan 1 so that you can generate both your beginning and end-of-year inventory valuations in the one system.
Hope this helps! If you have any questions about your backdating strategy please feel free to hit 'reply' and we'll get back to you as soon as we can.