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Cash Or Accruel Accounting?

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SJA

Freshman Member
Joined
Jul 15, 2017
Professional Status
Appraiser Trainee
State
Canada
Any knowledgeable bookkeepers out there?

I am a fee appraiser and have registered my sole proprietorship. For my accounting, apparently I have to choose between the cash or accrued method. What is the best method for the fee appraiser/contractor doing mostly lender work.?
 

glenn walker

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Oct 11, 2006
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Certified Residential Appraiser
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California
OK you are in Canada ? but in the USA you would be on the cash method not accrual.
 

BRCJR

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Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
OK you are in Canada ? but in the USA you would be on the cash method not accrual.
Why do you say that? It can be done either way, from what I understand.
 

glenn walker

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Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
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California
Go ahead and use the accrual method * Read the instructions below two or three times and the light may turn on :

The most commonly used accounting methods are the cash method and the accrual method. ... Under the accrual method, you generally report income in the tax year you earn it, regardless of when payment is received. You deduct expenses in the tax year you incur them,**** Regardless of when payment is made ?



 

BRCJR

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Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
Go ahead and use the accrual method * Read the instructions below two or three times and the light may turn on :

The most commonly used accounting methods are the cash method and the accrual method. ... Under the accrual method, you generally report income in the tax year you earn it, regardless of when payment is received. You deduct expenses in the tax year you incur them,**** Regardless of when payment is made ?



I get it and did before I read your post. It is a business decision. You implied in the USA you "would' be on the cash method.
It lead me to believe you did not understand the difference. I will agree it is more common in the appraisal profession to be on the cash method but, it is not mandatory.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
IMO, the accrual format doesn't work that well at all for what we do (I've run businesses using both systems); much more work to keep straight than just doing it on a cash basis.

Accrual might make sense for a smaller business who deals with a lot of inventory and purchase orders. But for a professional services business, I see no benefit.
 

bnmappraisal

Elite Member
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Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
Per my CPA's advice, I am on the CASH basis. Has worked well for my company (I'm incorporated; 1 man shop)
 

Noreen

Senior Member
Joined
Feb 5, 2011
Professional Status
Certified Residential Appraiser
State
New Hampshire
Why do you say that? It can be done either way, from what I understand.

Not according to the Portsmouth, NH office of the IRS. They consider Real estate appraisers as a cash business.
 
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