Inkle strongly recommends Accrual Method (over Cash Method,) because:
- it's gives a much truer picture of your finances.
- prevents you from getting any nasty surprises.- it is easier for forecasting.
- it is GAAP-standard, and most VCs will ask for it.
- you will eventually have to do Accrual Method anyway after you cross $25mm in revenue (by law) or sooner, so why not start with it.
- the IRS does not permit you to switch to Accrual (from Cash) in the middle of a year.
- restating and translating prior years' Cash books into Accrual method would be a nightmare, if you want to compare later.
Cash Method is possibly OK if you have very little activity, or just started out or have no real revenue operations in US, but consult us for a discussion on this.
Because Accrual Method is more complex, we can only offer this to monthly customers. Trying to do Accrual Method once per year would just be too difficult for you and us, as we would have to discuss every transaction and invoice.
