What are the tax implications in the U.S. for doing ones accounting on the cash method versus the accrual method? As I understand it the main difference is in the timing (i.e. which period) of realizing income and expenses. So beyond potentially having more flexibility with an accrual basis, are there specific tax benefits/gotchas/rules for using that method?
In an accural basis, the date of invoice [or expected payment date, if giving a grace] is taken as the date when the payment was received. Similarly on the expense side, the date when the payment was due is taken as expense. So your profit and loss is on this basis.
On the other hand, on cash basis, if when you receive the funds. By this it means when it is available to you in the Bank account