Corporate election

2. Corporate election of accounting method (continues...)

As previously stated, a C corporation can choose among three different accounting methods, Cash accounting method, accrual accounting method, and a hybrid accounting method. Some business C corporations can choose freely among the three, others may be restricted to particular accounting method.

Low income C corporations

If your C corporation has average annual sales of less than $5 million, the C corporation is free to choose which accounting method to adopt as long as the C corporation does not have inventory.

Higher income C corporations or C corporations with inventory / stock

If your C corporation has inventory or have sales over $5 million, your C corporation is required to use specific form of accounting.

Most small business C corporations choose cash accounting method. The cash accounting method counts revenue when you receive the cash and expenses when you pay them. Cash accounting method is probably the most common and simple accounting method for corporate election.

3. Corporate election to amortize start up business expenses and organizational business expenses

The corporate election to amortize start up business expenses and organizational business expenses can only be made on the initial corporate tax return.

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