Cost Accounting vs. Tax Accounting

PRICE IT PERFECT

COST ACCOUNTING vs TAX ACCOUNTING

Biggest difference is direction.
Tax accounting reports history, events of the past. It does not provide decision making information. Tax accounting is just that. Accounting to determine the amount of Tax you owe the government.

Cost accounting is a financial tool that tells you where you are today, what to charge for your product and how much you have to sell at that price. Cost accounting also allows you to perform future projections based on today’s data.

No where on your tax statement do you see an accurate Gross Margin. For instance the Government has set guidelines for depreciating long term assets. They do not consider that a car that may last 10 years may need replaced in 6 months, or a year, or two years, depending on use. This depreciation (tax accounting) amount is used in determining your Gross Margin for tax purposes. You need to recover the cost of that car in 6 months, not ten years. Cost accounting allows you to specify the useful life of any item, or the number of months/years you need to recover the cost of such an investment.

Common Small Business Comparison

COST ACCOUNTING TAX ACCOUNTING
Price per item sold X
Capacity of your business X
Market variables X
Completed Sales X X
Cost of Sales X X (historical)
Total Expenses X X (historical)
Depreciation X
Recovery of Investment X
Net profit of Business X X
Net profit by product X
Establish prices X
Establish sales & production targets X
What if projections X
Shows impact on pricing based on
daily changes X
Minute Costs X
Hourly costs X
Daily Costs X
Weekly Costs X
Monthly Costs X X
Yearly Costs X X
You are or have been keeping all the information necessary to do Cost Accounting and until now have only benefitted from tax accounting report. Tax accounting only reports. Cost accounting allows you to analyze your company.

Big Business does detailed cost accounting with expensive departments and software.

Price it Perfect makes cost accounting available to small businesses at a price they can afford..
Don’t wait to be in charge of your business.
Get the facts TODAY
Know what it costs today to run your business
and win profitable bids.


For further information and a
no cost demonstration
call S. I Business Associates
412-828-2550
and ask for JoAnn R. Forrester
for your no-cost demonstration