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Do I need to report receivables in a business I am reporting on my personal tax return?

Do I need to report receivables in a business I am reporting on my personal tax return?
 
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Category : > Business Tax
Posted On : Thu Nov 25th,2010

 
Do I need to report receivables in a business I am reporting on my personal tax return?
 

Do I need to report receivables in a business I am reporting on my personal tax return?

Answer: Business income can be reported using the cash method, accrual method or a combination of the two. When using the cash method receivables need not be reported. When using the accrual method receivables need to be reported.

Example: A taxpayer starts a business where he has to wait up to six months for payment on completion of a job. The taxpayer chooses to use the cash method of reporting income on his tax return. By using this method the taxpayer does not have to pay taxes on receivables before he receives payment.

  


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