Traditional Accounting

Traditional accounting (also known as “accrual basis” accounting) is a kind of accounting that calculates your profits based on when you send invoices or when you receive them – regardless of whether you actually received or spent the money.

The kind of accounting that looks at when you spent or received money (not invoices) is called cash basis accounting instead. It’s much more straightforward, and almost all sole traders use it.

When do you use traditional accounting if you’re a sole trader:

  • When you register as self-employed, you need to choose either cash basis or traditional accounting. You’ll usually choose the cash basis, as it’s the easiest to use
  • You can only use the cash basis accounting if you earn under £150,000 (used to be £83,000)
  • Once you earn over £300,000 from self-employment, you must switch to the traditional method

Frequently Asked Questions

Search More Terms

News & Insights

Tax
1 week ago

Xero Accounting Services Can Benefit your Business

As a business owner, the more financial information you have access to, the better equipped you are, and Xero accounting...
As a business owner, the more financial information you have access to, the better equipped you are, and Xero accounting services can streamline the way you run your business.  Working with a Platinum Xero advisor like MJ Kane, m...
Case Study
3 weeks ago

Voluntary Disclosure for Limited Company X – Case Study

HMRC disclosure support is often difficult to find. Especially when you aren’t even sure how much you owe on your tax ...
HMRC disclosure support is often difficult to find. Especially when you aren’t even sure how much you owe on your tax position. Making a HMRC voluntary disclosure always seems to be a daunting task to people. However, its one of...
Tax
1 month ago

Corporate Tax Accountants

Keeping up with corporate affairs for a limited company can be a challenge especially with the complex tax legislation, ...
Keeping up with corporate affairs for a limited company can be a challenge especially with the complex tax legislation, alongside the employment laws and reporting requirements. As such it may be a good idea to outsource your comp...
Tax
1 month ago

Director Tax Accountants

It can be complicated for UK company directors to navigate their personal tax affairs whilst running their business. Wit...
It can be complicated for UK company directors to navigate their personal tax affairs whilst running their business. With complexities such as having multiple income streams and complicated tax legislation, it may make sense to ou...
Tax
1 month ago

Corporate Accounting Services for Your Limited Company

Running a limited company comes with its fair share of financial responsibilities. From keeping up with the latest tax r...
Running a limited company comes with its fair share of financial responsibilities. From keeping up with the latest tax regulations to ensuring you have enough cash to meet your liabilities for the month ahead, there’s a lot ...
Tax
2 months ago

Tax Preparation Services

You might believe that as a small company, you have limited things to worry about when it comes to preparing taxes, lead...
You might believe that as a small company, you have limited things to worry about when it comes to preparing taxes, leading you to do this yourself. If you know what you are doing and don’t make mistakes, there is nothing wrong ...
Tax
2 months ago

Small Business Accountant

When looking for an small business accountant, the best place to start is by reviewing exactly what services you need no...
When looking for an small business accountant, the best place to start is by reviewing exactly what services you need now and in the future. If you are starting out as a small business, then it may not make sense for you to pick a...
Load More View All

Subscribe Now

Receive our latest news & insights directly to your fingertips.