The cash basis scheme helps many sole traders and other unincorporated businesses benefit from a simpler way of managing their financial affairs. The scheme is not open to limited companies and limited liability partnerships. It allows qualifying businesses to use the cash basis when recording income and expenditure. However, some small businesses are more suited to using the cash basis than others.
If you fall within any of the following categories, the cash basis may not be your best option:
In a nutshell, the scheme is most suitable for straight forward businesses especially those that provide services. You must have a turnover of £150,000 or less to join the scheme, and you can continue using the scheme until your turnover reaches £300,000.
If you are thinking of using the scheme, we would be happy to help you consider your options and to crunch the numbers to see if the cash basis scheme is a suitable option.