Inventory management for sole proprietors — main requirements, liability and tips for 2025

Maintaining inventory records for individual entrepreneurs (FOPs) has become one of the key issues of tax control in 2025, with the tax authority regularly reminding about the main rules and sanctions for non-compliance.

Who is required to keep inventory records
Inventory accounting is a requirement for FOPs who conduct cash or non-cash transactions when selling goods in the areas of trade, public catering, and service provision.

The mandatory category includes:

• FOPs on the general tax regime;
• FOPs on the single tax (group 3) who are also VAT payers;
• FOPs selling technically complex household goods, medicines, medical devices, jewelry and household products made of precious metals and stones, regardless of the taxation regime.

Legislative framework and main acts
The regulation of inventory accounting is based on Law No. 265/95-VR and Ministry of Finance Order No. 496 dated 03.09.2021, which sets forth the procedure for FOP accounting. This requirement applies to those who carry out settlements using cash registers (RRO, PRRO).

What is included in inventory
Inventory refers to the totality of goods that FOPs sell or use for the provision of services. Goods not intended for sale are excluded from accounting: raw materials, production materials, products for own use, and so on.

How to keep inventory records
Inventory is kept in a special Inventory Form, which can be maintained either on paper or electronically. The Form must reflect all transactions relating to the receipt and withdrawal of goods, transfers between warehouses or retail outlets, as well as write-offs and returns.

Documents confirming accounting:

• invoices for receipt of goods;
• write-off acts;
• receipts, payment documents, invoices;
• documents for internal transfers.

Key details in Inventory Forms
The Form must indicate:

• entry sequence number;
• date of information entry;
• primary document details;
• total value of goods upon receipt and withdrawal;
• notes on transfers, write-offs, returns, etc.

Accounting at several retail locations
If the FOP operates in several points of sale, inventory records must be kept separately for each location, clearly indicating the movement of goods between warehouses, sites, etc.

Responsibility and sanctions
Absence of records, improper completion, or neglect of the requirements of Order No. 496 entails fines under the Tax Code of Ukraine. During a tax audit, the FOP is obliged to provide the inventory form and all supporting documents—their absence is considered a breach of business conduct and may result in financial sanctions, orders for correction, blocking registration of RRO/PRRO or suspension of activity.

Practical tips and action algorithm

1. Assess whether you are required to keep records—depending on the tax regime, goods category, and transaction method.
2. Choose a form of record-keeping—paper or electronic—but comply with approved requirements as to form details and record structure.
3. Store all primary documents for each operation.
4. Document the movement of goods between points of sale and warehouses with mandatory documentary support.
5. During inspections—provide a complete set of documents upon request of the tax authority.

Conclusions and risks
Maintaining inventory records is not just a bureaucratic requirement but a tool to protect business against the risks of tax disputes, fines, and financial losses. Systematic work with documentation helps to prevent conflicts with regulatory authorities, optimize inventory management, and reduce costs. Particular attention should be paid to updating form details, clarifying instructions to employees, automating processes, and careful document storage at the place of sale.

Yulia Popadyn – tax and customs law attorney at the Law Firm “WINNER”.
If you have any questions or issues related to accounting, taxation, settlements with suppliers, or compliance with new FOP inventory legislation requirements, contact the tax lawyer of the Legal Company “WINNER” for professional advice.