In accounting, basis defines how you recognize your income and expenses for accounting and tax purposes. Cash-basis is what most people are familiar with, it is how you handle your personal or household finances. You count income when a deposit hits your bank account, and you count and expense when it hits your bank account or credit card. There is no “accruing” for the future or the past. It’s essentially real-time based on your bank and credit card statements. This is the model most self-employed workers also use as it is what the IRS generally requires. For example, if you send a client an invoice on Dec 20, 2019, and they send you the money (via Venmo, Zelle, ACH, check, etc.) on Jan 5, 2020, you would record that income for tax year 2020.
Namu is cash-basis accounting which is another reason why we’re different than others in the same space. We work to build a product that works for self-employed professionals – always.
