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The cash method of accounting, which lets a business recognize sales when cash is received, is attractive to many small businesses due to its simplicity. For tax years beginning after 2017, the ability to use the cash method is greatly expanded. Any entity (other than a tax shelter) with three-year average annual gross receipts of $25 million or less can use the cash method regardless of whether the purchase, production, or sale of merchandise is an income-producing factor.

Thanks to this favorable rule, a business may be eligible to adopt cash method accounting. You will need to determine whether your clients’ average annual gross receipts are $25 million or less. If they are, and if a change would be beneficial, you can assist your clients in filing the appropriate paperwork with the IRS to change their accounting method.

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Published by IPS Accounting Services & Consulting

I was born in Cuba and came to the US at the age of nine during the 1980 Mariel Exodus. After twenty five years of a successful career in Managerial Accounting for private and corporate sectors. At the age of 45 and empty nester I felt my life needed a bigger purpose. Accounting has been my lifelong journey and I wanted the opportunity to help business reach their optimal growth. In addition to being a devoted mother and wife I’m very involved in my community and volunteer much of my time to advocating for righteous causes. I’m devoted to the women’s movement as well as keeping our Hispanic roots and culture alive.

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