Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Small Businesses May Benefit From Revenue Procedure 2002-28
Since 2002, Revenue Procedure 2002-28 expanded the number of businesses permitted to use the cash method of accounting rather than being required to use the accrual method.
The accrual method requires income to be reported in the year it is earned without regard to when payment is received. Consequently, taxes could be owed on income for which no payment has actually been received.
For example, under the accrual method, income earned in December 2018 (assuming a calendar year) would be included in 2018 gross income and subject to taxes for that year even if payment was not received until 2019.
On the other hand, under the cash method, income is only reported in the year it is actually (or constructively) received regardless of when it was earned.
Therefore, under the cash method, income earned in December 2020 but not actually received until 2021, would be included in 2021 income and not 2020.
Depending on the amount of taxes deferred, the extra cash in your bank account could be used to reduce debt, purchase inventory, replace equipment or increase your cash reserve in case of an emergency.
Businesses that stand to benefit from the accrual method exception under Revenue Procedure 2002-28 include:
- Service businesses.
- Service businesses, where the service is the principal activity and merchandise related to the service may be sold.
- For example, a pool service that also sells pool supplies out of a retail store
- Service businesses that must use materials and supplies in the performance of the service.
- For example, a medical service provider that provides drugs to treat illnesses, a roofing contractor that uses materials and supplies to install roofing.
- Custom manufacturing (other than mass production manufacturing).