Change in Accounting Method

Hamacher

Senior Member

Join Date: Jun 2006

Posts: 180
#1

Change in Accounting Method

01-06-2009, 02:58 PM

I have a client that started his business in 2006. He filed a schedule C and elected cash basis. After a full year of business, we have decided that it would be more appropriate to file on the accrual method as he frequently receives large amounts of money in advance of the services being provided. For example he received a check in December for $150,000 and will not be completing the project until 2009. The anticipated income is only around $25,000.

What is involved with changing his accounting method to accrual? Hes not in construction he is a programer... could he simply be cash basis using the completed contract method?

Thanks in advance for you help!
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geekgirldany

Senior Member

Join Date: Jul 2005

Posts: 2359
#2

01-06-2009, 08:41 PM

Here is a book I found on google that talks about accounting for software programmers:

Software Industry Accounting

http://tinyurl.com/7k8h2q

The software industry is being inundated with important accounting and valuation questions. The rules and regulations governing accounting of the software industry are very different from other industries. The software industry has unique accounting concerns, such as capitalization of development costs and software revenue recognition. This book emphasizes accounting and financial reporting, and discusses taxation, law, and general industry subjects.

There are several requirements on the completed contract method.
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