buy and selling stock

[goodgrief]

This might be a simple answer.

Say you start a small business with £1000 of stock and then sell your stock for £1500 eventually making a profit of £500. What happens if you keep buying and selling so you then have £10000 of stock but no reserve in your account.

What I mean is.....is it possible to not pay for tax if it's just stock you have accumulated from your profits = your purchases are equal to sales in figures but you just have more stock than a few months ago.

Obviously if you stop buying stock but sales are still ongoing then the £10000 will become taxable.

Replies are much appreciated.

Thanks

[Ian J]

You are mixing up profits & losses with assets & liabilities. Your profits are calculated on the difference between buying and selling (to put it simply) but no account is taken of unsold stock as no profits have realised yet.

[dadesign]

Isn't the stock market down...
Why should you advice people to spend every penny they have.
Its not wise to do so...

The UK economy is not doing so good. The service industry is slow.
I would suggest that people be prudent and spend the money wisely.

Small biz that makes some cash flow will do good.
Not getting our butts burn in the stock market...

Cheers.

[figurewizard]

On the figures you have quoted you would be better off putting your £1,000 investment into a building society long term bond. The bank interest incurred on the £10,000 of stock would wipe out your profit and then some.

[profitxchange]

good grief if that is your level of understanding of business accounting you are doomed to failure. business is all about wealth creation so you need to understand business numbers. get a couple of introductory books from the library. its not difficult once you get your head round the principles.