Cash basis sounds like it means keeping a biscuit tin full of notes under the bed. It does not. It is simply a way of deciding when business income and expenses go into your accounts.
How cash basis works
Under cash basis, you normally record income when you actually receive the money and expenses when you actually pay them. It is now the standard accounting method for sole traders and partnerships without corporate partners unless they choose traditional accounting or cannot use cash basis.
A simple example
You send a £1,000 invoice on 20 March but the customer pays on 15 April. Under cash basis, the income is generally recorded when the £1,000 arrives in April. Under traditional accounting, timing is based on the invoice and accounting period instead.
Why sole traders like it
For a straightforward business, it tends to match the way you naturally think about money: paid in, paid out. It also means you are not normally paying Income Tax on customer money you have invoiced but not yet received.
It does not remove the need for records
You still need records of business income and expenses and supporting evidence. Simple accounting is still accounting.
TaxSnapper is designed around straightforward sole-trader record keeping, making it easy to record money as it comes in and costs as they are paid.