Why?

:(>>>

Met w/ my accountant for a couple of hrs. yesterday. Switched from cash to accrual a while back. At my level...... not much has changed. As it pertains to year end>>>

Ah heck. I'm going to have to come back. Too much meat-and-potatoes for me to ignore.:)>>>

Not sure if it will surprise anyone or not but I couldn't agree with you more on that, especially considering what happens to it. Time was when I was young and utterly idealistic and thought if the country only owes (I forget what it was then) this much>>>

Friggin site busted me again on a long post. Walked away for a bit and when I posted it nailed me.

I see the points. I see advantages both ways. With accrual you may get to bank expenses early, but you have to bank income too, sometimes long before yo>>>

That makes sense. So the point of impact is the instant the progress is 'logged.' Therefore if your fiscal year ends on November the 14th and you have a major project ripe and ready for a phase to be logged, but your controller is overwhelmed with an>>>

With the example of ording trucks of material.... you don't have to take inventory? I know inventory is a number I can play with, but eventually I'll pay taxes on it, so playing with the numbers in a big way is sort of non-sensical. At least with acc>>>

Got it. I'm no professional accountant either, but I get the gist, usually. So do you. The downside, if you want to call it that, of 'cash-basis' is there is no such thing as writing off a bad debt. You either collect or you don't. You can't inf>>>

Egg,

I really can't profess any expertise is cash basis accounting. It was purely reasonable deduction on my end. With accrual, at least the way we do it, billing doesn't affect anything. If we over bill or under bill, the taxes are actually figured>>>

Good ones guys. I just keep believing have a big CPA attached to my returns pronounces me as legit, and if there is really a problem she will handle it.

Altho I take her advice, she does not manage my business, and I don't pretend to know all of the i>>>

rotfl! Of course you are right on the face of it, but my point stands. The manipulation possible in the cash basis is of limited scope and duration and using it as an accounting method has its own downside too. Besides, with accrual, when you get to th>>>

Egg,

I think the morons were dreaming, quite correctly in this case, that with cash-basis accounting it is easier to manipulate profits from an exceptional year where a higher tax bracket may be achieved, into a more average year, thereby actually enabli>>>

That makes sense to me, HOP. While we're on the subject, you mentioned paying taxes as you go, not "not paying them." The IRS folks got it in their heads a few years ago that cash-basis accounting construction companies were unfairly adjusting their>>>

Our Volume is down but we had several really large projects. Gross is probably around normal but profits are much higher than usual. Only problem is we just ran into a wall due to several accounts pulling back from commitments as a result of corps tight>>>

I like that kind of strategy myself. Only thing I would be leery of is deviating so substantially from year over year numbers that I brought on an audit. Don't want that hassle. In my most paranoid frame of mind I imagine them sitting around in a staf>>>

House Of Pain wrote: [quote]It's all an illusion. We use the cash accounting method and I've agreed to hold paper on several large projects. Additionally, I increased my salary to eliminate the profit. In these tough economic times, I wouldn'>>>