Dear Clients and Friends: Does it make sense to pay taxes on money you haven’t collected? Probably not! Under current tax laws businesses generally have two methods by which they must report income and expenses, cash and accrual. There are certain drawbacks to filing under the accrual method of accounting such as: You might find it is more difficult to manage the timing of taxable income and deductions. You must report income in the tax year your right to income has occurred and the amount can be determined. You must also report deductions when the liability and amount has been established. Example
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