Tag Info

Definitely go with cash-basis. Primary reason: You have to pay taxes with cash. If you use cash-basis accounting, taxes will be proportional to the amount of cash that you accumulate. Because you accumulated real cash, you can by definition afford the taxes. (Set aside ~30% for taxes every month.) Secondary reason: If you chose accrual and if you grow, ...

Yes, it is perfectly legal to do this. In fact many businesses, small and big, play these sorts of games to reduce their tax bills. A good accountant can help you with this. Something to keep in mind, however, is your accounting method. Are you using Cash or Accrual? The technique you describe mostly makes sense with cash accounting, not accrual. In cash ...

Welcome Steven. I'll try and give an answer here - but it's only an opinion: I would think it would be better to have a sit down with all relevant parties and hash out something that seems fair than accept an approach from someone out of the blue. That said, I'll assume that the 50/50 rule applies to internal and not external members. I would think it ...

If you maintain cash accounts in several currencies, you should maintain financial statements (P&L, BS, Cash flow statements, etc) in each currency. As and when you undertake an FX transaction to move cash from one currency to another, at that point you should update each set of accounts accordingly, applying the FX rate at the time the transaction was ...

Are you operating as an actual financial institution like PayPal or, say, Ally Bank? It sounds like you just want users to be able to add or withdraw credit to/from their account for purchases. NameCheap does something like this: you choose how much you want credited to your account, and it performs a checkout via Paypal, for example, for that amount. So ...

This has been an old question but my viewpoint quite differs from other answers, so I'm just sharing these thoughts... First of all, I'm highly surprised the IRS allows you to pick the accounting reporting method. To me, the IRS should be concerned with how much money companies are earning, not how much cash they have (they might tax assets, but this should ...

Definitely agree with Jason. You will have to switch eventually (I think when you reach $5M in revenue) but stay as cash basis as long as you can. Switching is not a big deal. There are significant benefits of cash basis in addition to what Jason indicated: At the end of the tax year, if you're making money you can ask customers to delay paying you to ...