What method should you use to manage your business’ books…?

Cash accounting

Any cost, sale or transaction is only recorded in your books once the payment had been made.

This is a simpler method for accounting, and suits smaller businesses, especially those that mainly have cash transactions.

However, it doesn’t show any money you owe others, or vice versa.

Accrual accounting

Expenses and sales are recorded when they take place, not when the payment is made.

This allows you to keep track of how much you owe others, and how much others owe you. This suits business that don’t get paid immediately, and that deal with contracts or large sums of money.

However, accrual accounting is more complicated and requires a deep understanding.

 

If you aren’t sure which one suits you best, get in touch with us today!

 

All information sourced from business.gov.au