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Carry Loss Forward
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David Archer RJ: BallC CO: BallC Post Rating: 2 + / - Total Posts: 142 Karma: 135 Joined: Apr 11, 2012 |
Posted on Apr 17, 2013 The current taxation system requires you to keep your expenses and revenues fairly close in time due to the way revenue and expenses are tracked. If I bought a week's worth of product today, I'd write off the entire amount as a "B2B Purchase" on my revenue sheet, show a net loss operating profit, and would pay no taxes on any revenue I make today. However, as the loss doesn't carry forward, I don't have anything to offset the store revenues over the week from selling those products and will likely have to pay taxes on it.Suggestion: Create an "Loss Carryforward" account for every company. Anytime there is a net loss (expenses > revenue), add the amount of the loss to that account. On years where there is a profit, subtract from the "Loss Carryforward" account and add that amount as expenses for the current year. (ref: http://www.wisegeek.com/what-is-a-loss-carryforward.htm ) |
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Melinda Lastman RJ: 4egerd CO: Canadian Capital corp. Post Rating: 0 + / - Total Posts: 11 Karma: 11 Joined: Jul 6, 2013 |
Posted on Aug 1, 2013 In addition the accounting for Capex is way off the mark. We need an additional cash flow statement. Assets moving from class to class (cash to building) should not be marked against income and this is where deprecation and loss carry forward will work properly together. In addition loss carry forward should only last three years.
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