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| Topic: |
Business
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| Number of pages / Number of words: |
4 / 1060 |
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Thompson, principal at Premier Tax & Accounting LLC. in Alexandria, and Donna LeValley, a tax attorney and J.K. Lasser spokeswoman:
Using the wrong accounting method. Most small businesses use the cash method, said Thompson. They report income when it is collected and deduct expenses when they pay them...
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But, if you're a small business that has inventory, you should be using the hybrid accounting method, he said.
Using the hybrid method, inventory is deducted in the year that it is sold, not when it is purchased. "If I bought $5,000 of inventory on Dec. 28 and didn't sell it until in the next year, I can't deduct it in the current year because I haven't sold it yet," he said...
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