Help!! Self Assessment Confusion

[JJRD3]

Gosh this is My first tax return (self assessment sole proprietor). I registered for online. Thing is I get my invoices paid from the vendor 2 months time. How do I pair up my expenses? I am using quick books self employed but it is matching the money in the account to the current expenses like parking, travel etc but that money I received will be for the 2 months prior.

Eg: January I do all the work, at the end of January the company send me the invoice and then they pay me at the end of February. So then January’s expenses are being used out the money from November if that makes sense

How do I match the expenses? Is quick books self employed wrong way?

Please help! Thank you!!

You do your taxes on a cash basis.
Money into your bank in March is income, money out of your bank in March is expenditure.
Ignore the time lag and "matching"
do it on cashflow

As a sole trader, you have the choice of cash or accrual accounting - the default/standard way is accrual accounting, but you can "tick the box" to adopt cash accounting.

Depending on which version of QB you use, it may give you figures on either basis. When you produce your P&L report, there may be an option to report either on cash or accruals basis.

Cash basis is usually best for people who don't get paid in the month the work is done or sales made. Accruals basis is usually best for people who don't pay for their goods/expenses in the month they buy them. Cash basis is simpler but not always best.

There can be downsides of the cash basis - i.e. limitations of loss relief, you may end up with taxable profit below personal allowance (so waste some of your personal allowance), etc. Not the easiest of decisions to make if you don't know the full pros and cons.