At Kintsugi, we use the accrual accounting method for sales tax reporting. This is the standard way we do things, and it’s important to understand why.
What Is the Accrual Method?
Under the accrual method, sales tax is reported when a transaction occurs, not when payment is received.
Example: If you send an invoice today, the tax is recorded today—even if the customer doesn’t pay until next month.
This can result in a situation where your business owes sales tax before actually receiving payment.
Why Accrual?
Accepted by all states: Every U.S. state that collects sales tax accepts the accrual method.
Some states require it: A few states only accept accrual-based accounting.
Cash method is not universally accepted: Some states don’t accept cash basis.
Given this, accrual is the most compatible and reliable approach for multi-state compliance. Accrual accounting keeps us compliant with all states and simplifies filing.
Best Practice for Invoicing (Especially with QuickBooks)
To avoid prematurely reporting tax on unpaid invoices—especially when using integrations like QuickBooks—we recommend using Estimates instead of Invoices so that Kintsugi doesn’t include those unpaid invoices into filings until you actually get paid.
This way, our platform won’t count those records for tax filing before payment is received.
Can I Use the Cash Method Instead?
Not at this time. While we might add support for other methods in the future, there are no current plans to add this feature in the next few quarters.
Need help?
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