Cash basis

Righto keeps your books on the cash basis. The basis tells when income and expenses count in a report.

When income and expenses count

On the cash basis, income counts when you receive it, and an expense counts when you pay it. Income also counts as received when it is credited to your account or made available to you without restriction, even if you do not take it out.

Bills and receivables

A bill is money that you owe a vendor. A receivable is money that a customer owes you. Righto keeps track of each one until it is paid. The expense or income counts on the day that the money moves.

An example

You finish a job on December 20. The customer pays you on January 5. Until January 5, the job is a receivable. The income counts in January, when the money comes in.

Bills work the same way for expenses. See Bills and receivables.

In Righto

Every report is on the cash basis. There is no basis to choose.

Your tax method is a separate decision

The IRS says that you must use the same accounting method from year to year, and that you generally must get IRS approval to change it. Some businesses generally cannot use the cash method, for example most C corporations above a gross receipts limit. Righto does not decide which method your business uses for tax. Ask a tax professional.