There are two main accounting methods: cash basis and accrual basis. Each method is defined by how your business tracks income (or receipts) and expenses, as briefly described below:
- Cash Basis – You report income/receipts and expenses based on when you receive or make payments.
- Accrual Basis – You report report income/receipts and expenses based on when you earn or incur them.
Note: If you are unsure which method your business uses, you may want to consult a tax or legal professional.
Editing your Accounting Method
If you need to add an accounting method or change your accouting method:
Access your Sales & Use Tax account.
Select the Account Information tab.
Click the Edit link for Accounting Method.
Select your accounting method and complete the remaining steps as directed.