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Accrual method: how to properly report small business expenses
For me is not clear how to properly report business expenses in some situations using accrual method of accounting. I will use 5 domain names as an example.
Every year I pay for domain names renewal. Payment date is June 01. Domains valid for 1 year. If I paid on June 01, 2014 $100 for domain renewal and it covers period from 06/01/2014 until 05/31/2015 then how should I report expenses?
a) all 100$ s/b reported as 2014 expenses? Because it's paid in full in 2014?
b) only portion of year 2014 from amount paid can be reported as expenses (7 month == around $58) and the rest should be reported as 2015 tax year income? (100-58=$42 go to 2015?). Because part of domain effective during 2014 year and part of effective period in 2015 year?
Thank you!
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Self-employed
To properly claim this expense when using the accrual method, use option B. For more info on prepaid expenses please see http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/bsnssxpnss/prpd-eng.html
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Self-employed
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Self-employed
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Self-employed
Only the expenses that relate to the calendar year for proprietors need be reported. You will end up with a full year of expenses any way as the first year has June to December and the second year has January to June and June to December.
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Self-employed
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Self-employed
As for this particular question - I appreciate your effort to answer. Unfortunately, this answer is not complete and quite general. That is why I asked questions with examples and did not mix all subjects. I understand that _eventually_ all expenses for domain names will be applied. The question was should I apply whole amount in 2014 or I must calculate only portion of amount based on how many days domain names active in 2014 and apply that portion to 2014 tax year expenses; then the portion of domain expenses for domains being active in 2015 apply in 2015.
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