Cash vs Accrual Accounting

Cash basis records income when money hits your bank and expenses when they leave. Accrual records income when earned and expenses when incurred — regardless of when money moves.

When cash basis wins

Simple revenue (e-commerce, services paid on completion).
You want simplest possible bookkeeping.
You want to defer income for tax purposes.

When accrual basis wins

You bill on net-30/60/90 terms.
You're raising money or applying for a loan.
You carry inventory or work in progress.

The hybrid most growing businesses use

Keep books on accrual for monthly management reporting, then convert to cash at year-end for the tax return. Best of both worlds.