Cash Basis is a type of accounting that focuses on when you actually receive the money rather than when the transaction occurred.
Cash Basis is an accounting method that only records transactions when cash changes hands. It is commonly used by small businesses, Self-employed individuals or Sole Traders. It differs from the Accural accounting method, which records transactions when they occur.
It is a simple and straightforward method of accounting that stops people from paying tax on money they have not received yet.
Cash Basis accounting is not normally used at larger and more complex organisations. It also can be a negative for companies who need to report to shareholders or lenders, as it can distort your business figures.
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