Book Vs. Tax Accounting
When sole proprietors are asked to think about accounting, the first thing that comes to mind for many is taxes. However, did you know that in addition to tax basis accounting there is another set of accounting guidance that is widely used? The Generally Accepted Accounting Principles of the United States (GAAP or US GAAP) is a set of accounting rules designed to help business owners across all industries create accurate, reliable and comparable financial statements. As a business owner, it is important to understand the differences between GAAP and the Internal Revenue Code (IRC) and know when each method should be applied.