Accounting

Accounting is a tool for making management decisions.

Quote: IRS Rge. 1.446-1(a)(4): Each taxpayer is required to make a return of his taxable income for each taxable year and must maintain such accounting records as will enable him to file a correct return. Accounting records include the taxpayer’s books of account and such other records and data as may be necessary to support the entities on this books of account and on his return, as for example, a reconciliation of any differences between such books and his return.

There is no IRS approval requried to adopt a method of accounting for the first time it is used. If you later want to change accounting methods, you must get IRS approval. File form 3115

You can compute taxable income under any of the following methods:

  1. Cash – include all items of income you actually or constructively receive during the tax year
  2. Accrual – report income in year earned, deduct expenses in year incurred
  3. Special Methods – for certain items of income and expenses
  4. Combination – of any of the above

Business Blog – Resources on accounting, Payments, Payroll and More

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