The Prophet ﷺ, as narrated by Samurah ibn Jundub, “used to command us to pay Sadaqah (Zakat) from what we had prepared for sale” (Abu Dawud). Trade goods have carried Zakat since the first generation — but many business owners either skip it entirely or overpay by including exempt assets. Here is the clean method.
The Formula
On your Zakat anniversary, take a snapshot:
- + Stock — all inventory prepared for sale, valued at today's selling price, not cost. Include slow movers at their realistic price.
- + Business cash — till, safe, business bank accounts, mobile wallets.
- + Receivables — customer credit and invoices you reasonably expect to collect.
- − Debts due — supplier invoices, wages payable, instalments currently due. Not the whole of long-term financing.
If the result is at or above Nisab, pay 2.5%. Add your personal wealth — savings, gold — in the same calculation or separately on the same date.
What Is Exempt
Everything the business uses rather than sells: shop premises, warehouse, machinery, ovens, sewing machines, delivery vehicles, computers, shelving. A tailor's sewing machine carries no Zakat; the suits made on it for sale do. (Property developers note: plots held as sales inventory are stock — see Zakat on property.)
Worked Example — Karachi Retailer
- Stock at selling price: PKR 2,400,000
- Till + business account: PKR 350,000
- Customer credit (recoverable): PKR 150,000
- Supplier invoices due: PKR 400,000
Zakatable base = 2,400,000 + 350,000 + 150,000 − 400,000 = PKR 2,500,000. Zakat = PKR 62,500.
Worked Example — UK Online Seller
- Inventory at selling price: £18,000 · Business account: £4,500 · Marketplace payout pending: £1,500 · VAT and supplier bills due: £3,000
Base = 18,000 + 4,500 + 1,500 − 3,000 = £21,000 → Zakat = £525.
Common Mistakes
- Valuing stock at cost — use selling price; the poor share in your margin.
- Including machinery or premises — exempt; you would overpay.
- Forgetting receivables — money owed to you is still your wealth.
- Deducting all long-term debt — only what is currently due.
- Skipping the year the business struggled — Zakat is on assets held, not profit made. A loss-making year with stock above Nisab still owes Zakat.
Business structures vary — this is general education, not a personal fatwa. For manufacturing WIP, shares, or complex holdings, consult a qualified scholar.