One records when money moves. The other records when work is done. Here's how to choose.
Records income when cash is received and expenses when cash is paid. Simple and intuitive. Most small service businesses default to this.
Records income when it's earned (even before payment) and expenses when they're incurred (even before payment). Better for businesses with inventory, long sales cycles, or extended payment terms.
That's a CPA conversation - there can be tax and reporting implications either way. We can keep books on either basis; your CPA will recommend which to use.
If anything in this article hit close to home, schedule a free 30-minute consultation. We'll talk through your situation and the right path forward.