The method you choose changes your taxes, your loans, and how clearly you see your business. A plain-English breakdown.
Cash and accrual are two ways of recording your money. The difference sounds technical, but it changes your taxes and how clearly you see your business.
Cash basis
You record income when money lands in your account and expenses when you pay them. It is simple and it mirrors your bank balance, which is why most small businesses start here.
Accrual basis
You record income when you earn it and expenses when you incur them, even if the cash moves later. It gives a truer picture of profit and is often required as you grow or seek financing.
The right answer depends on your size, your industry, and your goals. We help clients pick the method that saves tax and tells the truth about the business.