28. Accounting StandardBy Roger Bryan
First of all, the business plan should say who the accountant is. It must also say which programs and software of accounting you will be using in your business.
The method of accounting is one other thing that needs to be written down. There are two methods of accounting: accrual and cash-basis.
But which one is the best accounting method for your business? That depends on many factors. You should discuss it with your accountant.
Tax issues must be clarified also. Basically, it must be written that the accountant will take care of all tax issues and that you intend to always pay within the timeframe.
You will also have to say your federal employer number and your sate identification number. This will give extra credit to your company.
Accrual – In a very short way, we can say that when a company uses accrual accounting, they record the transactions and not the payments. For example, if you sold something, but you won’t be paid until next month, you still have to record it.
Cash-basis – Again, very synthesized, we can say that when a company uses cash-basis accounting, they record the payments. In the same example, the company would just record the transaction when they receive the payment.