Cash basis counts income when the money arrives and expenses when they leave; accruals counts them when the work is done or the cost is incurred, regardless of payment. Cash basis is now the default for most sole traders and partnerships, and you have to elect out to use accruals. For a trade paid promptly, cash basis is simpler and gives a fairer picture. Where it hurts is if you carry significant unpaid invoices, hold stock, or have large equipment purchases, because the timing distortions can be substantial and some reliefs work differently. Limited companies must use accruals; there is no choice. This is a decision worth making deliberately rather than by default, and it is one of the first things we look at when taking someone on.