If I am a year or more behind with recording my business bookkeeping, which method of accounting should I use to get caught up?
In about 80% of all cases you will more than likely use the cash basis method of accounting to get caught up. You would only use the accrual method in this situation if it was imperative to know the ending balance, each month, of accounts receivable and accounts payable. Most small to medium sized businesses would use the cash basis method of accounting to catch up with the bookkeeping if they fall behind one year or multiple years.
I have had clients bring me 10 years of accounting/bookkeeping information all at once so that it’s up to you organize the information in such a way that you record everything that went on each and every year. Cash Basis Accounting For Quickbooks teaches anyone what information to gather up, how to organize it and then how to record the information month by month, balancing the bank account and credit card accounts each month to make sure all the pieces to the puzzle have been accounted for. In fact, it’s best to think of recording entire years as a jig saw puzzle. Unless you are sure you have all the pieces to the puzzle you will not be able to see the picture correctly. In order for this to happen the bank and credit card accounts have to be reconciled each month, to the penny, or you cannot be sure you have all the pieces to the puzzle.
If the business owner does not mind taking the time to do this catch up work themselves they can save a lot of money each and every year. Depending on the size of the business, organizing and recording an entire year or more can be expensive to take to your local accountant. The accountant will more than likely want to be paid up front for this type of work and it can cost anywhere from $1000 to $3000 per year.
For those business owners who are looking for a way of saving money this could be very significant! Cash Basis Accounting for Quickbooks can be learned in just 4 to 6 hours and then be used year after year to stay current. This book teaches contractors, lawyers, shop owners, IT businesses, real estate brokers & agents, accounting students, doctors and many, many more how to catch up when you are a year or more behind with your bookkeeping on the cash basis of accounting.