Are unpaid invoices affecting your business’ financial health? Here’s a breakdown of 3 days to write off bad debt and how to claim tax benefits:
1. Direct Write-Off: Remove bad debt from your books by crediting accounts receivable and debiting bad debts expense.
2. Allowance Method: Predict bad debts in advance, improving accuracy. Debit bad debts expense and credit allowance for doubtful accounts.
3. Specific Charge-Off: Reduce tax liability for partly or completely worthless debts by following specific deadlines.
Utilize these methods to maintain financial accuracy and minimize the impact of bad debt on your business. Keep your finances in check!
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