What is “accounting period” and “basis period” and what’s the difference between them?

Question

What is “accounting period” and “basis period” and what’s the difference between them?

In: 0

Answer 1

An accounting period is a period of time that covers certain accounting functions, which can be either a calendar or fiscal year, but also a week, month, or quarter, etc.

A basis period is the time period for which a sole trader or partnership pays tax each year. Usually your business’s basis period will be the same as its accounting year.