More Firms Qualify for Cash Accounting in 2002
Titan CEO Appointed To State Chamber Board
SMALL BUSINESS
by Lee Zion
Staff Writer
Good news for small businesses for 2002: The number of businesses allowed to use the cash accounting method has been expanded.
The IRS released a document Dec. 10 known as Notice 2001-76, which states that qualifying businesses can use cash accounting for tax purposes starting with their 2001 returns.
To qualify, a business must have less than $10 million in annual revenues. The rule change will benefit more than 500,000 small businesses by reducing administrative costs, allowing deduction of supplies when purchased and eliminating taxes on income never received.
Dan Blankenburg, a spokesman for the Washington, D.C.-based business advocacy group National Federation of Independent Business, hailed the change.
“NFIB has been lobbying both the executive and legislative branches of government for expanded cash accounting for many years,” he said. “The rule change is an important step in NFIB’s ongoing efforts to achieve tax simplification and fairness for small business.”
Blankenburg cited a typical example of how this works. If a contractor buys lumber and installs a deck for a customer who refuses to pay up, the cash accounting method allows the contractor to deduct the cost of supplies, without ever reporting the income. The previous method, known as the accrual method, requires the contractor to report the income, even though it was never received.
The accrual method requires small business owners to pay taxes on services and merchandise, even if they didn’t receive payment for them, while the cash method of accounting more accurately reflects the actual business income, he said.
Some businesses are still not allowed to use the cash method under the new IRS rule, even if they have less than $10 million in annual revenues. These include retail and wholesale trade, manufacturing, mining, and newspaper and magazine publishing, Blankenburg said.
Business owners are advised to consult with tax professionals to see whether the new rule will assist. Tax filers must fill out an IRS form to change accounting methods, he said.
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Gene Ray Joins State Board: The California Chamber of Commerce welcomed a San Diego man to its board for 2002.
Gene Ray, the chairman, president and chief executive officer of San Diego-based Titan Corp., is one of 10 new members appointed to the board for 2002.
Ray holds B.S. degrees in mathematics, physics and chemistry from Murray State University, an M.S. in physics, and a Ph.D. in theoretical physics from the University of Tennessee.
A founder of Titan, Ray has served as president, chief executive officer and a director since the company’s inception in 1981 and was elected chairman of the board in 1999.
He previously held executive positions at Science Applications International Corporation, Inc., where he specialized in nuclear survivability, and in the U.S. Air Force.
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Online Helps Bottom Line: A seminar for small business owners can reveal how to increase profits and visibility in the new year.
“The ABCs of Internet for Small Businesses,” a seminar sponsored by Cox Business Services, a division of Cox Communications, will show small business owners how to enhance their bottom line by going online.
Business owners will learn how to create a successful Web site and e-commerce plan, and how to do online marketing and research. The event will be held at 8 a.m. Jan. 17 at the Natural History Museum in Balboa Park.
The seminar will also include topics such as e-marketing, customer service, building a Web site, and how government agencies are helping small businesses.
The cost is $15 in advance, or $20 at the door. For information, call (619) 266-5382.
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The Doctor Is In: Dent Doctor, Inc., has added a franchise in North County.
The new Escondido location claims its new process takes care of hail damage and minor dents without paint, body putty or filler. The process takes a fraction of the time of conventional bodywork, said James Froud, owner of the new franchise.
The Little Rock, Ark.-based company was named as one of the top 500 franchises in the country in the January 2001 issue of Entrepreneur magazine, he said.
Submit small business and retail-related items to Zion at (858) 277-6359, Ext. 112, or at
lzion@sdbj.com.
The deadline for the Jan. 28 issue is Jan. 18.
