Your financial year ends on 31 December and your accountant is asking for your “stock statement”? This is not just another formality: the value of closing stock feeds directly into the calculation of profit, and therefore of tax. Overvalued stock inflates profit, while forgotten stock reduces it. Here is who must carry out the stock count, when, and how to do it without mistakes.
Who is required to carry out a stock count?
The obligation comes from Article L123-12 of the French Commercial Code: every trader, whether operating as a sole trader or through a company, must check by means of an inventory, at least once every twelve months, that the assets and liabilities of the business actually exist and what they are worth. The same article requires annual accounts (balance sheet, income statement and notes) to be drawn up at the year-end close.
According to Le Coin des Entrepreneurs, the annual physical stock count is therefore mandatory for any person, natural or legal, who has trader status; it covers in particular goods for resale, raw materials, finished products and work in progress.
The case of micro-entrepreneurs is different. Bpifrance Création points out that they “do not have to keep full accounts (general ledger, balance sheet, accounting balance sheet, etc.)”. They must, however, keep a sales ledger and, if they sell goods, supplies or foodstuffs, or provide accommodation, a purchases register. If you are unsure about your situation, ask your business tax office or an accountant.
When should the stock count be carried out?
Without reliable ongoing stock tracking, the physical count takes place on the closing date of the financial year. This is known as a periodic inventory.
Businesses that keep a reliable perpetual inventory, i.e. real-time tracking of every incoming and outgoing item, often with management software, can count on a date other than the closing date, Le Coin des Entrepreneurs explains. Cycle counts, spread over the year by area or product family, are also accepted, provided that every item is counted at least once during the financial year.
The steps of a year-end stock count
- Set the date and give notice: choose a day when you are closed or a slot after closing time, and inform suppliers and customers that deliveries and shipments will be suspended during the count.
- Prepare the materials: use pre-numbered count sheets, signed by a manager, or an export from your software. Divide the premises into zones, storerooms included.
- Organise the teams: arrange for supervision by a manager, preferably from another site, to limit the risk of fraud, Le Coin des Entrepreneurs recommends.
- Freeze movements: note the number of the last delivery note received and the last invoice issued before the count, so that each item is allocated to the right financial year.
- Count what belongs to the business: only units that are physically present and that you own are included in stock. Set aside goods held on your premises on consignment that belong to a third party.
- Isolate damaged or obsolete items: count them, but identify them separately, as their value may need to be reduced.
- Value the stock: multiply each quantity by its cost, using the chosen method (see below).
- Compare and send: reconcile the counted stock with the theoretical stock, look for the cause of any significant discrepancies, then send the signed statement to your accountant for the stock movement entry.
How to value stock
Article L123-18 of the French Commercial Code sets out the basic rules. Purchased goods are recorded at their acquisition cost, and goods produced by the business at their production cost. For interchangeable goods, known as fungible goods, the law allows two methods:
- Weighted average cost (CUMP in French): an average unit cost is calculated from the opening stock and the year’s purchases.
- First in, first out (FIFO, PEPS in French): the units sold are deemed to be the oldest, with the remaining stock valued at the most recent purchase costs. Le Coin des Entrepreneurs describes it as the most widely used method in small businesses because of its simplicity.
Two prudence rules complete this calculation. If the value of an asset falls below its net book value, the inventory value is used on the closing date, whether the impairment is permanent or not. Conversely, a gain between inventory value and entry value is not recognised: stock that has increased in value stays at its purchase cost.
Keeping stock count documents
Under Article L123-22 of the French Commercial Code, accounting documents and supporting documents must be kept for ten years. Inventory documents must be kept without blanks or alterations. So keep the signed count sheets, the valued statement and the justification for any write-downs.
Frequently asked questions
Does the stock count have to be done on 31 December?
It is carried out on the closing date of your financial year, which is not always 31 December. A business with a reliable perpetual inventory can count on another date or through cycle counts, with each item counted at least once during the financial year.
Does a micro-entrepreneur have to count their stock?
They do not draw up a balance sheet and do not have to keep full accounts. They must, however, keep their sales ledger and, depending on their activity, a purchases register. Tracking stock is still useful for managing the business.
Which method should I choose between weighted average cost and FIFO?
Both are permitted by the French Commercial Code for fungible goods. FIFO is simple to apply; weighted average cost spreads purchase price variations over the whole stock. Decide with your accountant.
What should I do with unsaleable stock?
Count it, identify it separately and flag it to your accountant: if its current value is lower than its cost, the inventory value must be used at the year-end close.
How long should count sheets be kept?
Ten years, like other accounting and supporting documents, under Article L123-22 of the French Commercial Code.
Sources
- Code de commerce, article L123-12 — Légifrance, 2000-09-21
- Code de commerce, article L123-18 — Légifrance, 2000-09-21
- Code de commerce, article L123-22 — Légifrance, 2003-01-04
- L'inventaire des stocks : obligations et réalisation — Le Coin des Entrepreneurs, 2024-10-15
- La comptabilité du micro-entrepreneur (auto-entrepreneur) — Bpifrance Création, 2026-02-01