What is CASH BASIS accounting? UK small business basics

As part of UK Self Assessment tax you can chose to keep records based on the Cash Basis or Traditional Accounting schemes. In this video I explain what Cash Basis or Cash Accounting means and why you might want to use it as a simpler alternative to Traditional or Accruals (GAAP) based accounts. Remember to always seek professional help from an Accountant and don't forget to Subscribe and Share for more small business tips!

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[denisedixon]

Love how you peeped through the CC on ACCRUALS for a split moment, so they looked like specs.

[pawelk]

Thank you, better explanation than from HRMC.

[elainegarcia]

I love your videos. You are super clear, touch lots of points and make it very easy for lay person to understand. Super!

[lyndawalton]

Thank you very much for this info, just what I needed to understand.

[jancolletti]

Excellent explanation. Thankyou for that. :)

[gusolive]

awesome - gosforth handyman advising on accounting too, thanks!

[drpentecost]

Hi Andy, thanks for all of the great free content that you provide and for this Cash basis accounting information.
If you had a photographer (Cash basis) who took a business portrait on 1st May and then was paid by the client on 5th May, you would record the date of payment in your accounting spreadsheet and you would also have a record of payment in your monthly pdf bank statement.
Since you don't provide the client with an invoice, is it a legal requirement to provide a receipt to your client after receiving payment or is the payment showing up in your bank statement enough ?
If you have to provide a receipt, is there any specific information that is required to be put on the receipt ?
Thanks for your help Andy

[pudd]

Hi I’ve found your videos a great help.... many thanks. Could you answer a question for me please, when using simplified allowances for my van (ie mileage allowance) do I just ad this in the allowable expenses box on my return ..? Many

[kaliraja]

Hi sir How to do account tha principal and loan for cash basis accounting in company? Please clarify

[varshajoshi]

Hi very nice video, would greatly appreciate if you could guide on- will it be considered cash basis if somebody receives payment from an organisation and person on his/her bank account where he/she submits invoice to an organisation for the online payment that is received to his/her bank.

[TheDoosh]

What's best if you're a sole trader with low levels of stock but have to buy expensive parts for customer repairs, sometimes in the £0000s ? I'm think mobile service engineers repairing high value equipment where it is completely unrealistic to be carrying around £100k in parts so they get ordered as and when they're required. So not necessarily a high profit income but a large turnover in value of parts purchasing. Cheers for any advice.

[stuckinthepast]

very informative..im considering trading on Ebay starting next year ...im also employed as well ...so would a cash basis be for me ? it does appear to fit .... regards

[hnia]

as a new YouTuber, should I register as selfemployed and do my tax return by myself or find an accountant?

[pozor]

Hi. I work for one Company as a self employed. What’s better for me ? Money on my account every week. Company is paying tax every month.

[sergiointerior]

It doesnt mean i should get paid only by cash? I can make and send invoce and get paid by bank transfer?

[davidmcbride]

If an individual purchases a furnished holiday let with no capital allowances previously claimed on the property that has a small annual turnover of £20, 000, can he use the cash basis for his tax return and claim for fixtures and fittings already in the property on the date of purchase as a business expense, or would he need to use the accruals basis to benefit from capital allowances?

[gionchekol]

Is it cash basis to those working for agencies in the construction site? Like crane driver, forklift driver....

[ollyparker]

What should I do if I use cash basis but forget to pay the money into my account? I have invoices for the work but no evidence for cash basis in my accounts.

[lorenzogarcia]

Hi is this applicable for ppl like me who are doing amazon flex and ubereats. Sounds like this cash basis will suite me n gives me an easier way to do tax return myself without hiring an accountant?

[fredthomas]

Are you sure about the cash accounting threshold?
I thought it was turnover up to 1.35million