Skip to main content
log into my account
contact us
site map
rss feedemail usour twitterour facebook page pintrest
Tuesday, August 01 2017


What are Deferred Revenues?

Deferred Revenues are funds collected for goods or services not yet delivered. 
Examples includes portion of annual memberships, premiums, or subscriptions that have been paid up front however, have not been used yet. 

What does this mean to your business? 

If you sell annual packages, subscriptions, or licences, your business can defer the portion of revenue which is unearned, which means you defer the tax otherwise payable on that income.  Let's go through an example.

For simplicity, assume you sold $1M of annual memberships in Jan and your year end is in June. $500K can be booked as deferred revenue. @ 12.6% small business tax rate, that's $63K  taxes deferred. 

3 Tips

1. Have a system to track your deferred revenues 

2. Make sure your accountant is booking this at year end 

3. Reinvest the deferred taxes, baring in mind that you will recognize the revenue next year







Posted by: Josephreen AT 09:00 am   |  Permalink   |  0 Comments  |  Email
rss feedemail usour twitterour facebook page pintrest
Bloom Accounting Services
New Westminster V3M5H5
Site Mailing List 
New Westminster Bookkeeping and Accounting Solutions