Kutchins, Robbins & Diamond LTD.

Certified Public Accountants


Election for Cash Basis Accounting – What is the Right Accounting Method for You?

The Tax Cuts and Jobs Act (TCJA) included simplifying the tax code and providing tax relief for small businesses.  Certainly these are provisions that added complexity and uncertainty. 


However, the expansion of cash basis tax reporting for businesses with average gross receipts under $25 million (prior three years) is a win for most businesses including C Corporations and businesses that maintain inventories.


Under the cash method of accounting, income is deferred until collected and the deduction for expense is deferred until paid.  If your business is like most and has more receivables than payables, the cash method will generally defer more income than the accrual method.  However, it is important to determine a strategy for future growth and income.


In order to change your accounting method you must file IRS Form 3115 which describes your former and new methods of accounting.


Our knowledgeable professional at KRD can help you analyze if this election will benefit you.  Contact us today to learn more. 

Back to Blog