Deposits and tax year

elenapopaphoto

Hi,

Not sure if this has a direct implication on cutting tax, I have a feeling it might.

As a wedding photographer, I take non-refundable deposits from clients to reserve their date. The deposits are, more often than not, paid in the tax year ahead of the wedding day itself (which is when the balance is due and services are performed).

I do my accounts on a cash basis. Am I wrong in declaring deposits as money earned during the tax year during which they were actually paid? Or should I declare them in the tax year during which I perform the service?

Obviously if second option, then I'd be paying less tax this year...but I'd rather keep it simple and declare income as it comes in!

Any thoughts massively appreciated!

00ec25

cash basis means what it says, you are doing it correctly

elenapopaphoto

Thanks - that's what I thought, until someone's accountant told me you should be declaring deposits during the tax year the services were provided. Hence my confusion and panic mode!

Pennywise

elenapopaphoto wrote: »

Thanks - that's what I thought, until someone's accountant told me you should be declaring deposits during the tax year the services were provided. Hence my confusion and panic mode!

That would be right if you hadn't adopted the cash basis.

unholyangel

elenapopaphoto wrote: »

Thanks - that's what I thought, until someone's accountant told me you should be declaring deposits during the tax year the services were provided. Hence my confusion and panic mode!

Not all accountants were created equally