Cash vs Accrual Accounting: A Guide for Wedding Photographers
- John Gates
- 4 days ago
- 4 min read
Updated: 2 days ago
As a wedding photographer, it’s easy to get wrapped up in lighting, lenses, and location scouting — but understanding how your business finances are recorded is just as important.
Whether you're a seasoned professional or just starting out, choosing between cash accounting and accrual accounting can have a big impact on how much tax you pay, when you pay it, and even whether you hit the VAT threshold.
This guide will walk you through the differences between the two methods, help you understand which is right for you, and explain the hidden tax traps many photographers don’t see coming — especially when it comes to taking deposits for weddings booked 1, 2 or even 3 years in advance.
What Is Cash Accounting?
Cash basis accounting means you record income and expenses when the money actually enters or leaves your bank account.
Example:
You shoot a wedding in March 2025.
The client pays you in April 2025.
Under the cash basis, you recognise that income in April 2025 – not when the wedding was actually shot.
What Is Accrual Accounting?
Accrual basis accounting records income and expenses when they are earned or incurred – not necessarily when money changes hands.
Example:
You shoot a wedding in June 2025.
Even if the client doesn’t pay until July, you still record the income in June.
Similarly, if a couple pays a £1,000 deposit in 2025 for a wedding in 2027:
Under cash accounting, the income is counted in 2025.
Under accrual accounting, the income is deferred and only recognised in 2027 when the wedding happens.
Why This Matters for Wedding Photographers
Wedding photographers often take deposits well in advance — sometimes two or three years ahead. That means, under cash accounting, you could be showing income long before you've done the work. This has two key implications:
1. Tax Timing
You may be taxed on money you haven’t earned yet, which can create cash flow problems — especially if you have to refund a booking later.
2. VAT Threshold
If you operate under the cash basis and take a lot of future deposits, your total income in a 12-month period may appear inflated. That could push you over the VAT threshold (currently £90,000 as of 2025), even though you haven’t actually earned the income yet.
Who Can Use the Cash Basis?
The cash basis is designed for smaller businesses, and sole traders or partnerships with income under £150,000 per year can choose to use it. Limited companies must use the accrual basis.
So, if you're a self-employed wedding photographer, you can choose between the two methods.
Pros and Cons of Cash Basis for Photographers
✅ Pros:
Simple to understand – track income and expenses as money comes in or out.
Helps with cash flow – you don’t pay tax until the money hits your bank.
Less bookkeeping – fewer adjustments needed.
❌ Cons:
Deposits are taxed immediately, even if the work is far in the future.
Refunds or cancellations can complicate things if you’ve already paid tax on the deposit.
May trigger VAT registration sooner due to deposits, even though services are not yet delivered.
Pros and Cons of Accrual Basis for Photographers
✅ Pros:
More accurate reflection of your business activity.
Deferred income – deposits are not taxed until the wedding is delivered.
Better for long-term planning, especially with many bookings in the pipeline.
❌ Cons:
More complex – you’ll need to track income and expenses by date of service, not payment.
May require help from an accountant or use of software like Xero or QuickBooks.
Doesn’t align with your actual cash flow – you could be taxed on income not yet received.
VAT: A Hidden Trap for Wedding Photographers
Let’s say you charge £500 deposits for bookings 1–2 years ahead. If you book 30 weddings in one year with £500 deposits, that’s £15,000 of income on paper.
Under cash basis accounting, that £15,000 counts toward your income this year for VAT purposes. Add that to your regular income and you could unintentionally cross the £90,000 VAT threshold — even if your actual workload doesn't reflect that.
Once you're VAT registered, you'll need to charge 20% on top of your services, which can price you out of the market if you primarily serve couples on tight budgets.
So, Which Should You Choose?
Here’s a quick guide:
Situation | Best Option |
You’re a sole trader earning < £150k | Either (but consider accruals if taking lots of deposits) |
You take deposits 1–2 years ahead | Accruals (to avoid early taxation and VAT issues) |
You’re a limited company | Accruals (mandatory) |
You want simplicity and don’t deal with large advances | Cash |
You need a clear picture of income matched to jobs done | Accruals |
Final Thoughts
Choosing between cash and accrual accounting isn't just about tax — it’s about having a system that works for your business model, especially when advance bookings are common.
If you're a wedding photographer with a long booking calendar, you should seriously consider accrual accounting, or at least understand how cash basis can distort your income and cause unexpected VAT liabilities.
Need Help Choosing the Right Method?
At Duo Accountants, we work with creative professionals like you every day. Whether you’re just starting out or scaling your wedding photography business, we’ll help you:
Choose the right accounting method
Stay below the VAT threshold (if it makes commercial sense to do so)
Keep more of your hard-earned income
Contact us today or book a free discovery call to chat through your options.
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