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> 3) You have to pay tax based on the amount of money you've invoiced for, not the amount you received to date, so you can easily get a tax bill for which you w
by ci5er 10y ago
> 3) You have to pay tax based on the amount of money you've invoiced for, not the amount you received to date, so you can easily get a tax bill for which you won't have the money for until your customer pays you. But the taxman won't generally be willing to wait so you have to finance it somehow.
I was just re-reading this, and this doesn't sound quite right. Is this a cash-basis accounting vs. an accrual accounting thing?
- ig1 10y agoIt'll vary by country but in the UK sales tax (VAT) is generally paid based on the invoice date: https://www.gov.uk/vat-record-keeping/time-of-supply-or-tax-point https://www.gov.uk/vat-record-keeping/time-of-supply-or-tax-... You can do cash-based accounting and pay only when you receive the payment but this is only available to small companies (<1.35m revenue) and with some other restrictions: https://www.gov.uk/vat-cash-accounting-scheme/eligibility https://www.gov.uk/vat-cash-accounting-scheme/eligibility