Cash accounting tells you if you're going to be in business tomorrow. Accrual accounting tells you if you're going to be in business next year. Not doing cash accounting will cause problems sooner; but either of them will cause problems eventually if ignored.
If we've elected to use accrual-basis accounting then when we sign the contract for a deal we book that revenue immediately (whereas if we're cash basis it's not on the books until it's in our bank acct). But by using a P&L report that shows us as having made all that money which can be dangerous if you're using those numbers to plan.
I'm just wondering what the conditions are under which it's desirable for a startup to elect to use accrual-basis accounting for their books? You can get the cash-basis view in QB while being an accrual-basis company but what's the advantage of introducing that complexity?
Being in Canada, I never had that choice -- Canadian income taxes require the use of accrual accounting. But I'd use accrual accounting even if I had the option of cash accounting: Tarsnap users pre-pay, so I've got lots of cash which doesn't count as "income" yet under accrual accounting.