Do you guys typically look at your P&L on a cash basis or accrual basis? Also, do you pay sales tax on a cash basis or accrual basis? Thanks!
Solved
Cash or Accrual?
Best answer by KerryS
Hi
We typically review P&Ls on an accrual basis, as it offers a clearer and more accurate picture of a business’s financial health by recognizing revenue and expenses when they occur, rather than when cash changes hands. Just to clarify as well, the IRS allows businesses to choose between cash basis and accrual basis for tax reporting, depending on the size and structure of the business. While cash basis is common for smaller businesses, it’s not the only method used. That said, cash basis is the most common.
As for sales tax I agree, we handle it on a cash basis, meaning we only pay sales tax when the payment for a sale is received. However, even if sales tax isn’t being collected from customers, there may still be requirements for reporting or remitting sales tax to the Franchise Tax Board, depending on local regulations and your business structure.
+5Hi John. Typically you will do cash basis. This is the only way that IRS calculates taxes.
This would be the same for Sales tax however, I don’t charge it and that way I don’t have to keep track of it nor pay it to the franchise tax board.
+3Hi
We typically review P&Ls on an accrual basis, as it offers a clearer and more accurate picture of a business’s financial health by recognizing revenue and expenses when they occur, rather than when cash changes hands. Just to clarify as well, the IRS allows businesses to choose between cash basis and accrual basis for tax reporting, depending on the size and structure of the business. While cash basis is common for smaller businesses, it’s not the only method used. That said, cash basis is the most common.
As for sales tax I agree, we handle it on a cash basis, meaning we only pay sales tax when the payment for a sale is received. However, even if sales tax isn’t being collected from customers, there may still be requirements for reporting or remitting sales tax to the Franchise Tax Board, depending on local regulations and your business structure.
Your Go-To Pool Company CPA & CFO: Empowering Business Owners for Growth and Profitability.
1 person likes this
+3Hi AJ,
Great question! If you’re trying to do accrual-based reporting where revenue is recognized when the service is performed rather than when it's paid — you’ll need to supplement QBO with some additional data from Skimmer.
It really depends on what your accountant is looking to build out, but in general, they can use reports from Skimmer (like the Invoice Detail report or invoice reports) to manually create adjusting journal entries in QBO. This helps properly reflect accounts receivable and revenue in the period the work was actually done.
Your Go-To Pool Company CPA & CFO: Empowering Business Owners for Growth and Profitability.
1 person likes this
Reply
Join The Pool Deck Community
Already a member? Login
If you're a Skimmer customer wanting to unlock full access, please create an account with the same work email address associated with your Skimmer account. If you don’t use Skimmer, you can still create an account but will be granted general access. Please email community@getskimmer.com if you have any questions.
Visit The Pool Deck Community
Not a member yet? Create account
Enter your email address. We'll send you an email with instructions to reset your password.