Accounting method
Cash or accrual: the basis your business files its tax return on. Set in the tax profile, separately from how reports open by default.
In Solo Superstars
Chosen in the tax profile. The tax filing pages and the year-end package use it.
It is not the same setting as the workspace’s default reporting view. Flipping a report between Cash and Accrual never changes your tax method, and changing your tax method does not change how reports open. If the two differ, that is allowed and often sensible.
Changing the method you file on with the IRS is a formal step, normally requiring Form 3115. Talk to your accountant before changing it here; the setting records your election, it does not make one.
For a cash-method business, the year-end package includes both book (accrual) income and cash-basis income, plus an explanation of the difference.
Example
Most sole proprietors pick cash; a business carrying inventory or large receivables often picks accrual.
Harbor Lane Coffee files on cash, so its tax profile says cash. Its accountant still reads the monthly Income statement on accrual to see whether wholesale orders are profitable in the month they are roasted. At year-end the package shows accrual income of $182,400, cash-basis income of $179,650, and the $2,750 difference, mostly December wholesale invoices paid in January.
Codes shown are the defaults a new workspace starts with. Yours may be renamed or renumbered — check Accounting › Chart of accounts. See the full default chart.
Also called
- tax method
- tax accounting method
- cash vs accrual
Related
- Cash basis — Counting revenue when money lands and expense when you actually pay. Simpler, and what most sole proprietors file on.
- Accrual basis — Counting revenue when you send the invoice and expense when you receive the bill, whether or not money has moved. The alternative is cash basis.
- Reporting view — Whether a profit-and-loss report counts revenue and expenses on cash or accrual timing. It changes how the report reads, never what the books contain.
- Book basis — How the books themselves are recorded. Solo Superstars keeps one double-entry ledger on accrual; cash reports are calculated from it rather than kept as a second set of books.
- Tax profile — Your entity type, accounting method, home state, fiscal year and nexus states. Most tax behavior in the app keys off it.
- Income statement — Revenue, costs and expenses over a period, ending in net income. The report that says whether you made money.