VAT accounting methods

VAT accounting methods determine how businesses record and report the value-added tax they collect and pay. The two primary methods are the invoice method, where VAT is recorded when invoices are issued or received, and the cash (or payment) method, where VAT is recorded when payments are made or received. The invoice method provides a clear picture of owed VAT at any time, while the cash method can improve cash flow management, especially for small businesses. The choice depends on business size, cash flow, and accounting preferences, ensuring accurate VAT reporting to authorities.