Cash vs. Accrual Accounting

What’s the difference? And which is right for your business?

Cash-Basis Accounting

• You record income when the money arrives and expenses when you pay.

• Simple, straightforward, great for side hustlers or small businesses just getting started.

Accrual-Basis Accounting

• You record income when you invoice, and expenses when you incur them — regardless of when the money actually moves.

• Perfect for businesses that want to understand their profitability beyond their bank balance.

So which should you use?

• If you’re looking to just make a little money on the side from your 9-5 in a service based field, cash-basis accounting is the right choice.

• If you want a more accurate picture of how your business is truly performing and have plans to grow the business significantly, accrual is the way to go.

Whatever method you choose, the key is being consistent!