Abdur Rahman ibn Yusuf Mangera – Simplified Zakat Guidance Business, Assets and Inventory

Bismillah R Rahman r Rahim, the point about zakat that I want to

cover now is the garden businesses. So I'm going to give

you an example of a small business and maybe a larger business. And

to understand so number one, in a business, or in assets in general,

everything that is considered to be wealth doesn't mean that it's

acceptable. So for example, if I've got a very expensive jacket,

somebody sent me a message the other day that they've got an

expensive watch is there as I got an expensive watch, anything that

you use for your personal needs, watch a car, and you have two

cars, and you basically need them for your personal needs, then

there is no skeleton that anything which is business oriented that

you purchase for business. Now in a business, you actually have two

types of aspects. Number one, let's just say you've got a larger

business. So you've got machinery, let's say you're baking cakes. So

you've got an oven, you've got to mixer.

You've got you've got maybe a scale, you've got spoons and

ladles and tins, and, and, and so on. And then you're gonna have

things like flour, you're gonna have sugar, you're gonna have

butter, you're gonna have the ingredients, the sultanas, the

raisins, chocolate, for brownies, or whatever else that you know,

people put in there, right? Or apple crumble, you're gonna have

apples, or whatever it is, right? Maybe, you know, getting a bit

tempted with this kind of stuff. So then you're gonna have maybe

cake cake boxes that you deliver the cakes in, maybe cake. Would

you cook cake cases in which you make your cupcakes and things like

that? Like, why do I know so much about cakes? Subhanallah just an

example. Right? So now, in the business, you only have to take a

value of the socketable assets for you to base a cat on the countable

assets of a business on let's start with nuns accountable.

First, the nones accountable assets in a business are anything

which is fixed, that doesn't need that will not go out to the

customer that you just use to manufacture or to do your business

with. So for example, your machines, you don't sell them,

they just use for your mixing, and so on your oven, your gloves, and

anything else that is use cases, you're going to give them to the

customer. So that will be marketable. So it's the countable

assets are those which eventually become final product. So your

sugar, right? Your butter, all the ingredients, your sprinkles,

right? And all of that kind of stuff with whatever is going to go

down, including cases, boxes, and so on. Will the car be will your

car that you do deliveries in? Will that be accountable? No. If

you've got a business car, it's not accountable, right? Or let's

just say you're doing a bigger business, whatever it is, somebody

sent me a question the other day about a a garment business, they

are the buyers and so on and he jobs. So again in there, you're

only going to pay not on the racks where you store your abayas,

right, but if you got plastic plastic coverings for the ABA that

you send out, for protection purposes to your customers that

will be accountable. So anything that eventually goes to the

customer that you sell, that will be part of your sale, all of that

is accountable, but your racks and rails and storage boxes, or

whatever that will not be because that is for your own storage, not

for sending to the customer. Aside from that, the other thing that

you need to also that is also as accountable as any money in the

business, any cash minus any debts. So if I am holding 5000

pounds in the bank, but I owe 3000, right to suppliers, and

that's all I have, then that means I only pay zakat on 2000. Because

the 5000 is not all mine 3000 have to go out. Likewise, if there's

money due, so I've got 5000 in the bank, but there's 2000 that is

owed to me by my customers that is also accountable minus any debts.

So if I've got 5000, I'm owed 2000. But I owe 3000 to my

suppliers, then that would be 7005 plus two, five in the bank to that

I'm going to receive is a business debt. So the very strong debts,

and that seven minus three that I owe, so that means I'm going to

pay zakat on 4000. Now, another complication comes is what about

stock that I've ordered? And it's been manufactured right now, I've

I've either paid for it, right? I mean, if I paid if I haven't paid

for it, then it's going to be money doing that you can just

probably ignore anyway. But if I've paid for advanced payment to

make a bias for me, advanced payments to make, maybe supply me

with 200 cakes, whatever, right? Or 200 books, I've maybe through

white for the press, we've already given the printer and order, right

that I want 2000 copies 3000 copies of the marriage book, I've

maybe even paid them. So if I paid them now, that means the books are

going to come that's business asset that is also going to be

accountable. Question is what price is that going to be

accountable at? So basically you can just take the cost price if

I've paid 3000 pounds, right or 5000 pounds, then that is going to

be the

marketable assets, because that's still my money, right? I'm going

to get the money back if they can't supply or I'm going to get

the books back, or I'm going to get books in return for it. Right?

So that's very strong. That's why you have to pay on any stock that

you've ordered, right? Which you've paid for, then you have to

pay for that. Now, if you've got inventory, right, like you're

selling, you're selling pens, for example, right? Are you selling

cakes? Or at what price? Do you what price do you give to your

cake casings, or your flour or whatever, obviously, whatever the

flour. Pricing is, that's what you give it. If it's finished

products, like books, let's just say I've got 300 books sitting,

which I haven't sold yet, I need to generally take the price, I

need to value that for socketable purposes, at the price that I

expect to sell them at. So if I'm going to sell them all in retail,

10 pound apiece, the marriage books, for example, 10 pound

apiece, then I need to value that that I'm going to receive 10

pounds each 200 bucks or 10 pounds is going to be what 2000 pounds.

So that's going to be my now if I think I'm not going to sell all of

them on retail, but I'm going to sell them on wholesale, then I

take the wholesale price and I pay zakat on that if I think that I'm

going to sell 50%, retail 50% wholesale, then I can do it

according to that. That's generally the idea that your

inventory should be priced at either its cost price, if it's not

a finished product, at what you can maybe even sell it at right

now. If it's finished products, then it's the retail price.

Because obviously if you're going to look at just the individual

prices, or the flour cost me this much the reasons cost me this much

the butter cost me this much, then that cupcake is going to cost you

20 Pence, right? Whereas you sell it for one pound 50. Right. And

you know, you're going to sell this tomorrow, right for one pound

50, right? $1.50, whatever. So that means you're, you don't pay

at the cost price, because you expect him to sell this at one and

a half. So that's the price you generally take. But if it's still

raw products, you can just take it at the price that you would sell

it then at raw products doesn't have that much value. So hopefully

that clarifies in terms of general business of course there's a lot

more complicated business scenarios, but this will do for

most businesses that people will be doing in sha Allah just like a

lot here.