Details

  • Industry: Technology
  • Type: White paper
  • Date: 12/20/2012

Building a Successful Cloud Provider Service: Accounting and Tax Considerations 

Cloud has become one of the biggest revenue growth drivers for technology companies.


As cloud continues to enable new business models and incremental disruptions in enterprise and consumer markets, cloud service providers need to consider a variety of business, financial reporting and tax implications to enhance the efficiency and value of their cloud offerings. This publication is focused on the key accounting and tax issues facing these technology companies.

Building a Successful Cloud Provider Service: Accounting and Tax Considerations examines the wide-ranging financial reporting and tax implications Cloud Service Providers (CSPs) need to consider to succeed in today’s rapidly evolving cloud marketplace.


Since our first cloud report on these topics in 2009, growing cloud adoption has heightened the importance for CSPs to proactively manage and plan for the accounting and tax issues associated with operating in the cloud.


This publication is focused on the following areas:


Accounting implications

  • Revenue recognition
  • Are cloud arrangements subject to software guidance?
  • Separation criteria
  • Allocating revenue to separate units of accounting
  • Limitations on allocating the consideration
  • Timing of revenue recognition
  • Accounting for costs incurred to develop, maintain, and deliver cloud services
  • Costs to develop internal-use software and website development

Tax considerations

  • General considerations
  • U.S. Federal tax considerations
  • Classifying cloud computing transactions
  • Sourcing income from cloud computing transactions
  • Outbound and inbound tax considerations
  • State and local tax considerations

Evolving cloud business models are constantly creating new opportunities and risks. CSPs that proactively manage and plan for the accounting and tax issues associated with operating in the cloud may unlock incremental value for their business models.

 

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