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Re: Does Your Business Use Cash or Accrual Method Accounting?




Think about it from a sole proprietor viewpoint, if you have to claim an extra 10%, representing unpaid invoices, for example as taxable income it just cost you an additional 15.3% off the bat for self-employment tax as well as yoru margunal tax rate on this unrealized profit.

That 15.3% you quote is not really what you pay for SE tax, half of that is credited back on the 1040.  7.65% is a more realistic number.  And partners also are self employed and pay that tax too.


I have rentals, I guess I am lucky, I have only had two deadbeats over the years, and I convinced one to pay the overdue amount before he vacated.


I just don't see the issue of writing off an invoice to bad debt as being a major issue  at EOY - just me I guess.