Date of this Version
Sand, S., Stockton, M. “Tax Accounting vs. Managerial Accounting: What Is the Difference and Why Does It Matter?” CAP Series 23-0901, Center for Agricultural Profitability, University of Nebraska-Lincoln, Sept. 15, 2023. DOI: 10.32873/unl.dc.cap013.
Understanding your farm's finances is critical to making sound decisions and positioning your operation for success. But the accounting methods used for tax purposes don't always provide the information needed to properly manage your business.
This article lays out how tax accounting focuses on external reporting and follows rules aimed at calculating taxable income. In contrast, managerial accounting looks inward, capturing the data needed to analyze production costs, cash flows, capital investments, and overall profitability.