008. Should You Use the Cash or Accrual Method of Accounting

Small Business Accounting Made Easy with Catherine Fairweather

English - January 23, 2020 05:00 - 11 minutes - 8.15 MB
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Previous Episode: 007. Are Your Independent Contractors Really Employees? Why the Difference Matters.

Next Episode: 009. The 3 Reasons Why You Need to Track Inventory

When you complete a business tax return, you’ll see a question about your accounting method. You have to check either cash or accrual.

Have you ever wondered what the difference is and which method is right for your business? And what is an accounting method anyway?

An accounting method defines the way a company records its revenue and its expenses.

You can choose to either record revenue and expense when cash changes hands. This is known as the cash method of accounting.

Or, you can choose to record revenue and expense when revenue is earned and expense is incurred. This is known as the accrual method of accounting.

Learn more about the difference between these two accounting methods and how to choose one for your business in this week's episode.

For resources mentioned in this episode, be sure to check out the show notes at: www.catherinefairweather.com/008.