If you manage inventory, trade publicly on the stock exchange, own a C corporation, or have a gross annual revenue of $5 million or more, the IRS requires you to use accrual accounting. Additionally, if your customers can pay you for products on credit, you should be using the accrual accounting method. Otherwise, you and your investors won't have an accurate understanding of your finances. The first time you file business taxes, you must declare which accounting method you're using. From that point onward, you must stick to that method. You should always meet with an accountant or financial expert as you're setting up your business and filing taxes to get a solid understanding of whether cash or accrual is the right bookkeeping method for you.