It is your responsibility as an employer is to collect, pay, and report payroll taxes as required by federal and state laws. If you are a corporate officer or other “responsible party,” you may be personally liable for payroll taxes not deposited or reported as required. Even if you use a payroll service or someone else to do your payroll work, including reports and deposits, this does not relieve you as an employer of the responsibility to pay all taxes correctly and file payroll tax return on a timely basis.

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The cash method of accounting is most commonly used by sole proprietorships and small businesses. In cash accounting, you usually recognize the income when it is received and the expense when the bill is paid out. However, there are some expenses that need to be treated differently.

1. Inventory

If an inventory is necessary to account for your income, you must generally use the cost of goods sold to calculate your purchase cost. 

 » Read more about: Accrual Accounting Methods for a Cash Basis Business  »