Posted by BossLadyMD on 10/4/11 11:49am
Msg #399589
Business Losses/Unpaid Invoices....
I dont have any unpaid invoices (knocking on wood) but inquiring minds want to know - if you have the misfortune of not being paid for a signing, do you write it off as a 'business loss' on your taxes? Thanks.
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Reply by Linda_H/FL on 10/4/11 11:59am
Msg #399590
Depends on your bookkeeping method...
do you use cash or accrual method? If cash method, you account for fees when they're paid, as opposed to accrual, where you account for it at the time of "sale" (services rendered)...
You can only write off an unpaid invoice as a loss if you use the accrual method.
http://www.inc.com/articles/2000/04/19194.html
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Reply by JENNY/TX on 10/4/11 12:01pm
Msg #399591
If your business is on a cash basis (income) you cannot write off an invoice as a loss. If you use the accrual method you can write the invoice off as a loss. So you need to know which method you are using for income.
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Reply by JENNY/TX on 10/4/11 12:02pm
Msg #399592
Sorry, Linda and I must have been writing at the same time. LOL
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Reply by CopperheadVA on 10/4/11 12:28pm
Msg #399596
It's important to keep in mind that although the accrual method allows you to write it off, it's essentially getting you back to zero. My understanding is that with accrual method, you claim the income when it's earned, even though payment has not yet been received. If payment is never received, you can write it off as a loss, but all that does is put you back to square one.
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Reply by BossLadyMD on 10/4/11 12:30pm
Msg #399597
Thanks for the info. I personally use the cash method. I have a few that paid 50-60 days out but luckily they all came in.
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Reply by Art_MD on 10/4/11 12:35pm
Msg #399599
Re: but expenses are actual
If you get stiffed on a closing, you still can take mileage, tolls, printing etc. as an expense.
Art
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Reply by BossLadyMD on 10/4/11 3:34pm
Msg #399625
Re: yes, expenses definitely are n/m
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Reply by mwm143 on 10/5/11 4:47pm
Msg #399709
Of course it's never happened to you. 
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