Cash vs. Accrual Accounting: Which Method Is Right for Your Business?

Written By Adam Ramroop

When it comes to bookkeeping, one of the first decisions you’ll make is whether to use cash or accrual accounting. Both methods are legal and accepted, but which one fits your business best?

Cash Accounting

  • Records income when money is received and expenses when paid.

  • Simple and easy to track.

  • Best for very small businesses or solopreneurs.

Accrual Accounting

  • Records income when earned and expenses when incurred (regardless of payment).

  • Provides a more accurate picture of financial health.

  • Required by the IRS for businesses with over $25 million in revenue.

Which should you choose?
If you’re running a small, cash-based business (like a freelancer or a local service), cash may be easiest. But if you’re growing, managing inventory, or seeking outside funding, accrual gives a clearer picture of profitability.

Tip: Many small businesses start with cash and switch to accrual as they grow.

✅ Not sure which method is right for you? I’ll walk you through your options and help set up your books the right way. Schedule a free consultation

Adam Ramroop
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