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Accrual date

The accrual date is a very important accounting principle that you should know if you have a company. For this, we created a complete guide with its definition, types, differences with the payment date and more.

Content

  • What is the accrual date?
  • The accrual date in accounting and taxation
  • Types of accrual dates
  • Practical examples of the accrual date
  • Differences between accrual date, issue date and payment date
  • Common challenges in determining the accrual date
  • Conclusion
  • Sources

What is the accrual date?

According to the  General Accounting Plan , the accrual date is an accounting principle that indicates the day on which a right to payment or an obligation arises for self-employed workers and companies.

For practical purposes, it does not matter whether the money is received or the debt is paid on that day, since the date is only relevant for accounting records and for calculating corporate tax, personal income tax, VAT, etc.

The accrual date in accounting and taxation

You already know what the accrual date is, but what is its relevance in accounting? This date determines the moment in which income and expenses are recognized, so it has a direct impact on the preparation of financial statements and accounting books.

On the other hand, in tax matters, the laws in Spain establish that the obligation to pay a tax arises at the time the economic transaction is carried out, that is, as indicated by the accrual date.

So, depending on the date indicated, taxes are calculated taking into  switzerland email list consideration the tax period to which they correspond. It also influences the right to apply certain tax deductions and credits depending on your economic activity.

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Types of accrual dates

Let’s now look at the different types of accrual dates.

Accrual date on an invoice

Every  invoice must include an 8 game-changing canva features for marketers  issue date and an accrual date (which in some cases may be the same). The latter indicates the moment in which a customer’s obligation to pay for the purchase of a sms to data  product or service arises.

Accrual date according to taxes

Depending on the type of tax you have to pay, the accrual date changes:

  • Income tax accrual date :  Personal Income Tax (IRPF) covers all tax-relevant events that occur throughout the calendar year. The accrual date is December 31 in Spain.
  • VAT accrual date : This tax is different, since  Article 75 of the VAT Law indicates that the accrual date is the moment in which the economic transaction involving the payment of VAT is carried out.
  • Corporate Tax accrual date : this case is similar to that of Personal Income Tax. Commercial companies with an obligation to pay this tax have an accrual date of December 31 according to the  Corporate Tax Law .

Practical examples of the accrual date

The best way to understand this concept is through some examples.

Case 1: Billing for services

Imagine that you hire a company to perform maintenance on various machines for a month. The company generates an invoice for its service on September 1, but its accrual date will be at the end of the month, that is, September 30.

Why does this happen? Since the maintenance service is continuous, the provision of the service is considered to end at the end of the month and that is when the obligation to pay arises.

Case 2: Purchase and sale of goods

Let’s suppose the sale of a car takes place on October 15, but the invoice is issued several days later, on October 20. In this case, although the document was issued after the transaction, the accrual date will be October 15.

This is because it was on that day that the goods were delivered to the buyer. The accrual of the goods is considered to begin from the moment in which the seller transfers the right to the product.

Case 3: Lease contracts

This is a special case. Imagine that you have to pay rent for a premises on the first day of every month and the landlord generates the invoice on the fifth day of the month without fail.

The tax accrual date will not be when the payment is made, but rather it is considered to occur as the month progresses.

The right to use the premises is acquired over time and, for that reason, rental income is considered to be accrued over the course of each month.

Differences between accrual date, issue date and payment date

As we mentioned, all invoices must include an issue date, that is, the date on which the document is created. However, this does not necessarily match the accrual date or even the payment date.

The accrual date shows the day on which the obligation to pay is generated, which will depend on the type of economic activity or the agreement reached between the parties involved.

The payment date is the day on which the transaction is made and the money is received. As long as no clause of the contract or agreement is breached, this date may be different from the previous two. Correct identification and management of these dates is essential for the financial and accounting management of a company.

Common challenges in determining the accrual date

If you are unfamiliar with the subject, it is possible to make some mistakes when determining the accrual date of a transaction. Some of the most common ones are:

  • Confusing the date of issue of an invoice with the accrual date.
  • Not considering the nature of the economic activity (buying, selling, renting, etc.).
  • Not knowing the accounting rules and taxes that apply to each transaction.
  • Failure to record transactions in the accounting books on time.

All of this can lead to problems such as errors in financial statements and subsequent errors with self-employed and business taxes. If these are not corrected and incorrect tax returns are submitted, you can receive fines or penalties from the Treasury.

Conclusion

If you want to avoid problems with your accounting records or tax obligations, it is best to make sure you are familiar with tax regulations and train your staff to correctly determine the accrual date corresponding to your economic activities.

It is very useful to create a concise procedures manual for each type of operation you perform. This, combined with a periodic review of your records, will help you reduce and detect errors in less time.

Finally, make sure you have an accounting system that allows you to automate the process of recording transactions and quarterly tax filing.

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