You cannot just trust anyone to do your accounting Orlando. Tax calculation can be a complex process, as there are many ways to calculate taxes. Calculating your taxes through a chosen method can have considerable impact on your taxes and the impending tax burden. Two of the most common methods to calculate your revenue are the cash and accrual methods. While submitting your taxes with the Internal Revenue Services or IRS, you can use either of the two methods.
A company usually decides which method it is going to use to calculate taxes at the time of incorporation. There are several factors that come into play while making this decision. Some of these factors are: sales proceeds received, average sales volume, average level of inventory, operational expenses, production capabilities, commission on sales, receivables, duration of payables , structure of the organization, decision made by board members and so on.
Accrual Method of Accounting Orlando
In accrual method of Orlando accounting, transactions regarding sales and other purchases are recorded at the time of purchase and sale. Even though there is no actual transfer of cash, the transaction is treated as complete.
This method of accounting is founded to ensure that all the payments are made and the company does not have to bear the expenses of bad debts. A separate ledger is maintained by a book keeper that looks into following up with the payments and collections.
An accrual accounting system will help you monitor the progress of your organization. With an accrual method, you can accurately calculate your expenses and revenue. It also helps in projecting future revenues and expenses as you will be able to generate the reports and identify the trends related to sales and expenses. Accrual Accounting also generates reports such as Cash Flow, and Balance Sheet that are often used by financial analysts to determine the financial situation of the company. World Bank claims that the accrual method is known to keep company progressive as it promotes viability.
However, accrual method can be difficult to maintain for a small business as it requires dedicated manpower to collect the payments and the time to record all the transactions.
Orlando Cash Accounting
Cash Accounting is the recording of receivable and payable receipts on the day they are received and paid. Cash accounting is an ideal method of accounting for small businesses as it involves lesser use of manpower. It is ideal for those businesses that have a restrictive cash flow and can afford to maintain only basic booking keeping activities.
Once you have selected a method for tax preparation, it is usually not recommended to change it. However, under certain circumstances it is permissible to change the accounting Orlando method. To implement the change, you will require permission from the Secretary of the Treasury and an explanation for the change. Usually, last two consecutive years are required to use the changed method. In case you are thinking of changing the method, consult a Certified Public Accountant or a tax attorney to gain their insight into the transition process.
If you need more information about our, Orlando accounting and tax services, please contact us at 407-344-1012. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.