Bench was a terrible service in my experience. I used it for one of my startups a few years ago. I personally invested a lot into said start-up. I checked my books and everything seemed ok. Eventually I found that they had hidden my Gusto payroll line items from view and they were no longer taken into consideration in my books. This led to a $300k shortfall from where I thought I was vs reality. Their team just shrugged when I brought the issue to their attention. The impact was immediate layoffs affecting real people who depended on me.
Sure ultimately everything falls upon me the founder. But something so common as GUSTO payroll should never be miscategorized and hidden from view.
When I was using Bench, they were only doing cash accounting (not GAAP). We had to switch to a different service when we switched over to accrual accounting.
Quick note that cash vs accrual basis accounting is orthogonal to whether the balances are correct or not. IANAA but afaik GAAP does not preclude cash basis accounting, provided the conditions where cash accounting is permitted pertain.
you’re right, although cash basis would only fly under GAAP if you earn revenue at the time of cash receipt. In other words, anyone collecting money for services not immediately rendered (any subscription service) should be accrual
I don't think cash basis precludes having a liability on the books for un-delivered services. It just means you recognize the revenue when the payment is received. Lots of small companies use cash basis because it's simpler and easier to understand. IANAA.
That’s right. Financial accounting and taxation are not the same thing. Even if you are taxed on a cash basis, it’s prudent to manage your business with appropriate revenue deferrals.
I thought by definition you never have any revenue liability on the books (no unearned revenue) with cash basis because you’re recognizing the revenue on the date the cash is received. Nothing is deferred therefore no liability.
If someone pays up front for a service to be delivered over a period, you have a liability, no matter whether on a cash or accrual basis.
The difference is that you can recognize the revenue on receipt of the cash, but at the same time, you also recognize the liability to deliver the service (based on COGS etc for the liability).
The liability reduces as you expense (and actually pay on a cash basis) the cost of supplying the service.
At least that's my non-accountant idea of how it works.
What gave you that impression? I always consulted my financials when making decisions. Unfortunately the books were wrong and I made incorrect choices from that bad data.
This is why you have to do a quick back of the envelope go over of the big numbers and make sure they are at least close. Loosing track of $300K is partly your fault. The scale means you have to be looking at it as part of a big picture summary uncontaminated by technology. With Nuclear Treaties it is called "Trust but Verify" and is applicable to business cash flows. You have to be skeptical of the automated numbers that employees touch as there can be either error or worse fraud.
When I go over my household budget I'd notice if I wasn't paying my mortgage even if someone deleted it from my spreadsheet. It's important enough to me that it's front of mind when I'm thinking about money. I expect to see it on the list. I'd look for it if it wasn't there. Salaries are apparently not that big of a deal in the same way so asking for a higher one seems like a good idea.
Generally good advice in general, $10-20k is nothing to even a small business but is probably a lot to you. It's not often an asymmetry works out in the employees favor.
Sure ultimately everything falls upon me the founder. But something so common as GUSTO payroll should never be miscategorized and hidden from view.