Cash vs. Accrual Accounting: Which One Is Right for Your Business?

CPA for YouTubers, Creators, Online Sellers & Medical Professionals in Los Angeles

Whether you’re a YouTuber managing brand deals, a Shopify store owner processing hundreds of orders, or a dentist running your own practice, one of the most important financial decisions you’ll make is how to recognize your income and expenses.

That choice comes down to two methods: cash accounting and accrual accounting.

At Velin & Associates, Inc, we help creators, online commerce sellers, and healthcare professionals choose the right system—based not just on simplicity, but on how your business truly operates.

What’s the Difference?

Cash Accounting

Income is reported when you receive the money, and expenses are recorded when you actually pay them. It’s straightforward and easier to manage for small businesses or sole proprietors.

Accrual Accounting

Income is reported when it’s earned, not when the payment is received. Same with expenses—they’re recorded when incurred, even if the money hasn’t left your account yet.

Examples:

1. Filmmaker Paid $10,000 for a Commercial Shoot

What would you do if you were a filmmaker who delivered a final cut but didn’t get paid for 30 days?

• Under cash accounting, you’d report the income only when the funds hit your bank account.
• Under accrual accounting, you’d report the income as soon as the project was delivered—even if the money came a month later.

👉 Which one is better?
If your cash flow is tight and payments are often delayed, cash accounting might help you avoid paying tax on income you haven’t received yet.

2. Amazon Seller with Growing Inventory

What would you do if you were an Amazon seller using cash accounting at first, but your business grew and you began buying inventory in bulk?

• Cash accounting may work when you’re small,
• But accrual accounting gives you a more accurate picture of profits, costs, and inventory value as your business scales.

👉 If you’re managing inventory and supplier contracts, accrual may be more appropriate—and the IRS may even require it if your revenue exceeds certain thresholds.

3. Dentist Billing Through Insurance

What would you do if you were a dentist who performed procedures in March but didn’t receive insurance payments until April?

• With accrual accounting, you’d still report the income in March, the month services were provided.
• This provides a more accurate month-by-month view of your practice’s profitability.

👉 If you deal with delayed reimbursements, accrual accounting gives a clearer financial picture—especially for long-term planning.

Pros & Cons

Which Should You Choose?

• Choose Cash Accounting if you:
  • Are a solo creator, YouTuber, or TikToker
  • Have simple income streams
  • Want a low-maintenance system

  Choose Accrual Accounting if you:

  • Run a Shopify or Amazon store with inventory
  • Operate a medical or dental practice
  • Bill clients over time or through insurance

  Important: Once your business hits certain thresholds, the IRS may require you to switch to accrual accounting—so it’s best to make this decision early with a CPA’s guidance.

Need Help Deciding?

At Velin & Associates, Inc, we work with creators, filmmakers, online sellers, and healthcare professionals to set up the right accounting method based on your needs—not just what’s easiest in the short term.

Whether you’re looking for a CPA for YouTubers, CPA for a Shopify Store, or CPA for Dental Practice, we’ll help you make smart, compliant financial decisions from day one.

For more information about our services, please visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org