5 Reasons to Automate Your Accounting Processes in 2025

Whether you're launching a startup or running a small business, one of the first financial decisions you need to make is choosing the right accounting method. Cash vs accrual accounting isn’t just a matter of preference it impacts your financial reporting, tax planning, and even day-to-day decision-making.

This article breaks down the differences between cash and accrual accounting, their pros and cons, and how to choose the best fit for your business.

What is Cash Accounting?
Cash accounting is a straightforward method where income and expenses are recorded only when cash changes hands. You record revenue when you receive payment, and expenses when you pay bills.

Example:
If you send an invoice in January but get paid in February, you record the income in February not when the invoice was sent.

Pros of Cash Accounting:
Simple and easy to maintain

Gives a real-time view of cash flow

Suitable for small businesses with limited transactions

Ideal for freelancers, consultants, and sole proprietors

Cons of Cash Accounting:
Doesn’t reflect outstanding receivables or payables

Can give a misleading picture of profitability

Not suitable for inventory-heavy businesses

It’s wise to consult a professional before making the switch. Contact our team for guidance - https://taxkitab.com/accounting-bookkeeping/