December Billing

Discussion in 'Business Operations' started by jrblawncare, Dec 30, 2001.

  1. jrblawncare

    jrblawncare LawnSite Senior Member
    Posts: 445

    For those of you that bill monthly........You are about to send out your bill for December,do you add this to you 2001 income or do you wait untill you receive payment and add it to 2002.THANKS
     
  2. bruces

    bruces LawnSite Senior Member
    Posts: 648

    For accounting purposes, if you are on accrual basis accounting, you will include it in 2001 income. You would also include any unpaid bills as of 12/31/01 in 2001 expenses.

    If you are on the cash basis, you will include the income when actually received and expenses when actually paid.

    For tax purposes, many businesses keep books on the accrual basis but pay tax on the cash basis. This is perfectly legal.

    Ask your tax preparer for advice. The accrual basis accounting provides the most accurate picture of your business operations.
     
  3. strickdad

    strickdad LawnSite Senior Member
    Posts: 544

    depends on when your "fiscal" year ends..
     
  4. KellyD

    KellyD LawnSite Member
    Posts: 8

    strickdad
    depends on when your "fiscal" year ends..

    Strickdad.....I'm new here, and this is my first post. You really confused me here..maybe I'm slow or something, so bear with me. We all pay our taxes to the US government...no difference due to state or location.

    What does your "fiscal year" have to do with taxes? Aren't all taxes bases on annual (Jan 1-Dec 31) income?

    KellyD
     
  5. LoneStarLawn

    LoneStarLawn LawnSite Bronze Member
    Posts: 1,415

    A "tax year" is an annual accounting period for keeping records and reporting income and expenses. The tax years you can use are:

    A calendar year.
    A fiscal year.

    A fiscal year is 12 consecutive months ending on the last day of any month except December. A 52-53 week tax year is a fiscal year that varies from 52 to 53 weeks but may not end on the last day of a month.

    If you adopt a fiscal year, you must maintain your books and records and report your income and expenses using the same tax year.

    You adopt a tax year when you file your first income tax return. You must adopt your first tax year by the due date (not including extensions) for filing a return for that year.

    The due date for individual and partnership returns is the 15th day of the 4th month after the end of the tax year. Individuals include sole proprietors, partners, and S corporation shareholders. The due date for filing returns for corporations and S corporations is the 15th day of the 3rd month after the end of the tax year.

    Not all taxes are based on a "calender year" and are not payed at the same time.
     
  6. Ric

    Ric LawnSite Fanatic
    Posts: 11,946

    Kelly

    Fisical year for most people is Jan 1 to Dec 31 however some of the gov. and corp. will run there books on a different time schelude Like June 1 to May 31. Therefore the name Fisical year instead of calendar year. Run yours on the Jan 1 to Dec 31 like most people do.

    Re Read Bruces post above and follow his advise when given in any post that Bruce makes on accounting. Bruce is not really a lawn guy he is an accountant. His Son is the lawn guy and we are luckie to have Bruce here. I Hope the attaboy makes Bruce feel good. He has given some good advise in the past.
     
  7. KellyD

    KellyD LawnSite Member
    Posts: 8

    Thanks for explaining it that way. I ASSUMED, (since I'm planning on starting as a solo) that it was done on an annual basis and completely forgot about fiscal year accounting as done by corporations. I have zero experience with that!

    Also, I wanna give you an "atta-boy"! While looking at your site, I found the page showing that lawn care services are taxable, according to Texas Law. As you know, most services in Texas are not taxable, and I assumed Lawn Care was the same. Maybe it's because their is no lawn care groups lining the pockets of politicians like some other industrys, and the State saw an easy way to increase revenues!

    Only been on this site for a week, but I've found a wealth of information! Thanks to all of you guys! (Ya'll if you're from Texas!)

    KellyD
     
  8. LoneStarLawn

    LoneStarLawn LawnSite Bronze Member
    Posts: 1,415

    Well Kelly I have actually been working on our new site and the FAQs page is the only thing I basically have left to do. I was thinking of removing that FAQ, but now I will reconsider.
     
  9. bruces

    bruces LawnSite Senior Member
    Posts: 648

    Ric,

    Thanks for the attaboy. Like you say, tax years are almost always the calendar year for individuals, partnerships, LLCs, and S Corporations. The IRS has made it very difficult to have other than a fiscal year for these types of entities.

    Most entities on a fiscal year other than a calendar year are C corporations that are taxpaying entities in their own right (and non profit or governmental entities).

    As for not being a lawn guy, after working with my son this summer and finding that I enjoy working outside more than I like pushing a pencil (actually pounding computer keys) I am going part time in the CPA firm after April and trying to build the lawn service into a real business with my son's help.

    The "attaboys" go out to all of the great people here who are willing to share their experience and knowledge with other members. I have spent countless hours here and am glad to return what little knowledge I have to others.
     
  10. LoneStarLawn

    LoneStarLawn LawnSite Bronze Member
    Posts: 1,415

    It is good to know that we do have some experts in other fields that can help us all out in this industry.
     

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