Accounting is accounting, right? Not when it comes to business. There are two main methods for small business accounting: cash basis and accrual basis. There are advantages and disadvantages to each, and it is best to speak with an accounting professional before making a decision about which method to use.

A CPA in Tampa from Reliance Consulting, LLC, can help you determine which is the better accounting method for your company, cash or accrual. The basic rule of thumb is that companies with sales of less than $5 million are free to choose either method. For the most part, those that earn more than $5 million in sales must use the accrual method. Here are the basic definitions of the two:

• Cash basis accounting – This is more common for small businesses. Under this method, income and expenses are not counted until the money actually changes hands.
• Accrual basis accounting – A transaction is considered to be recordable when an order is made, delivery has been taken, or services have been rendered. The transaction date, or the date of job completion, is the key metric in this method.

Regardless of which method proves right for you, the place to go for professional, detail-oriented accounting and tax planning is Reliance Consulting. We have helped thousands of individuals and businesses reach prosperity since we opened our doors in 1984. Contact us today to let us get you started with a free financial health checkup.