If your business in involved in the development of crude oil and natural gas as sources of energy, or in the exploration and acquisition of such resources right here in the heartland of Texas, then you have to know that being in business in the gas and oil industry means choosing between two separate oil and gas accounting approaches for a proper way to handle your books:
• The Full Cost Method
• The Successful Efforts method
As per Investigator, these methods primarily differ in the way they treat operating costs in-the-books, in relation to natural gas reserve and new oil exploration and discovery.
The accounting method you choose determines how your net income and cash flow is structured and reported for taxation. This makes it a big deal. The FC, or full cost method, allows all of your operating costs in any exploration venture to be capitalized, regardless of the outcome of said exploration.
Successful efforts, on the other hand, means your company only capitalizes on the expenses associated with actual success in locating new oil and gas sources.Whatever you end up choosing for the purposes of maintaining the highest quality and accuracy in Oil and Gas Taxation, be sure to try and bundle your taxation and accountancy needs with your small business payroll services to ensure that you save as much as possible by spending on a single provider rather than spreading your business needs out over several different companies and service providers.