Cash Basis Accounting
Cash basis accounting is an easy way to record business transactionsCash basis accounting is an accounting process in which you record all transactions when you receive a cash payment from customers or pay out cash to vendors for products or services. You can’t use cash basis accounting if you sell products or services on store credit or if you bill customers for services after the service has been rendered.
In addition to cash basis accounting, you can also record transactions using a method called accrual accounting. WWith accrual accounting, you record transactions in the books as soon as they occur--even if no cash is exchanged. Take the following steps to determine if cash basis accounting is right for your business:
1. Evaluate the benefits of cash basis accounting for your business transactions.
2. Rely on advice from a cash basis accounting expert.
3. Automate your cash basis accounting processes.
Get cash basis accounting advice
Talk to a consultant for cash basis accountingCash basis accounting usually isn't an acceptable accounting method for public companies. Be sure that you consult with an expert to fully understand all governmental reporting requirements with which you must comply.
Purchase cash basis accounting softwareCash basis accounting is generally the preferred form of accounting for small business owners, because it's the simplest method to track business transactions. You can purchase software to help you automate your accounting processes.
- Consider how cash basis accounting will impact your tax filings. Choosing the cash basis accounting method could greatly affect your taxes, because you can only deduct the actual cost of the purchases made in a specific tax year with this method.
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