Financial Expert, Ellory Shaw-Fallas: What is the best accounting basis for my business, cash or accrual?

What is the best accounting basis for my business, cash or accrual?

This depends on the way you want your financial reports to read. Accrual basis will account for Customer Invoices that have not been paid yet. Cash basis will account for what you have in your bank account. For example, if you invoice your customer today for $150 on the accrual basis- that $150 will show up as income on your Profit and Loss Report immediately even though it has not been paid yet. However, on a cash basis, you invoice your customer today for $150 but it will not show up as income on your Profit and Loss Report until the Invoice has been paid.