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- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
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Accounting Methods
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Hybrid Method
The hybrid method is a combination of the cash and accrual methods.
If inventory is an income-producing factor, the accrual method is used to account for inventory and the cash method is used to account for all other expenses.
The hybrid method could prove cumbersome since you are using two different accounting methods in the same set of books.
Generally, most small businesses use the cash method. The main reason is its simplicity and the fact that you don't have to report income unless it is actually received. This means, you don't end up paying income taxes on income you didn't receive.
Under the accrual method you report income when it is earned regardless of when it is received.
Consequently, you would be obligated to pay income taxes on income earned as of year-end even though payment on such income is not received until the following tax year.
Related Links
- Bounced Checks Under the Cash Method
- Receiving Advance Payments Under the Cash Method
- Guaranty or Warranty Contracts Under the Cash Method.
- The General Rule When Prepaying Expenses Under the Cash Method
- The 12-Month Rule When Prepaying Expenses Under the Cash Method
- The Accrual Method Exception Under Revenue Procedure 2002-28
- Businesses That Could Benefit From Revenue Procedure 2002-28
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