Cash basis is simpler and what most landlords use. Accrual is more accurate. Here's when to use each and how to switch if you outgrow cash.
By Marcus Patel | April 25, 2026
Cash basis is simpler and what most landlords use. Accrual is more accurate. Here's when to use each and how to switch if you outgrow cash.
The choice that shapes your books
Cash vs accrual is the most basic bookkeeping decision. It determines when you record income and expenses, what your monthly P&L looks like, and how your tax return reads. Most small landlords pick the wrong one — or never pick consciously and end up with a hybrid mess.
This article is general information, not tax advice.
!Bookkeeping spreadsheet on laptop
Cash basis: simple and immediate
Cash basis records income when you receive it and expenses when you pay them. The check arrives, you book the income. The plumber's invoice gets paid, you book the expense.
What cash basis gets right:
Matches your bank account. Your books and your bank reconcile naturally.Simple to maintain — no accounts receivable or accounts payable.Tax timing flexibility — pay an expense in December to take the deduction this year, or wait until January to push it out.Almost universally allowed for landlords with under $25M in average gross receipts.What cash basis gets wrong:
Distorts monthly P&L. A $5,000 roof repair paid in May shows up as a single hit in May, even though it benefits years of operation.Hides receivables. A tenant who is two months behind on rent does not show up as a problem in your income statement.Hard to compare months. Late rent payments, prepaid rent, and lump-sum vendor payments swing the monthly numbers.Accrual basis: accurate and complex