Crowdfunding and its accounting and tax treatment

Crowdfunding, also known as participatory financing, is a new way of financing projects carried out by a company. For best accountancy training Best school of accountancy In Pakistan. But this new possibility of raising funds does not mean keeping an accounting and declaring its taxes .

Crowdfunding, a form of financing that is progressing

Because it is not always easy for a company to rely on the support of a bank to obtain the funds necessary for the conduct of certain projects, crowdfunding is becoming more and more extensive .

Participatory financing allows a company to raise funds through the financial support of a large number of people making a small investment. Obviously, this funding mode has been greatly facilitated by the emergence of social networks since they allow to make known a project to several million people in the world in a few clicks only.

No wonder then that the crowdfunding platforms putting savers and project bearers in contact grow like mushrooms. The most famous are Kickstarter , Ulule or Kiss Kiss Bank Bank .

Financial ratios relating to cash

Because cash is a key element of accounting , several ratios help to evaluate it:

The average settlement period calculated with the formula (Supplier Debts incl. VAT / Total purchases incl. VAT) * 360 . The longer this period, the greater the risk of encountering difficulties

The average customer settlement time calculated with the formula (Accounts receivable TTC / Total sales incl. VAT) * 360 . An extension of the deadline means the existence of disputes or a deterioration in customer solvency.