Learn how cash and accrual accounting methods affect VAT.
The accounting method you use — cash basis vs accrual basis — can affect the amount of VAT you owe.
In this article, we'll explain how.
Understanding cash vs accrual
When you use the cash basis method, you report your income when you receive it.
When you use the accrual basis method, you report your income when you bill it.
For example:
View the difference
Depending on your location, there may be additional rules that govern when to use a cash or accrual basis. Talk to your accountant about which method is most appropriate for your company.