Airbnb payment timing & how it relates to accounting/bookkeeping

[Amar P.]

Hey all

We are starting strs with Airbnb being our primary income source currently.

For you airbnbers, when does airbnb pay the owner or the rental property? At time of booking, some other in the middle or when they stay?

That ties into my bookkeeping question. For all you bookkeeping aficionados, do you keep books on an accrual or cash basis and what's the justification for either or?

[Alan Caceres]

@Amar P. There are numerous reasons to use cash or accrual basis when doing your books. Many people choose to go the cash method route because it is much more simple, but there are drawbacks to using either method. 

With regard to STRs, when using cash basis, you don't really get a good picture of how your business is doing and prepaid expenses can make your financial reports look really inconsistent; large income/expenses one month, then very little income/expenses in another. The accrual method of accounting helps smooth income and expenses out and provides a clearer picture of how your business is doing, which makes it easier for you to come up with processes to improve it. The downside to using the accrual method is it can be confusing if you're just starting out using it.