[pplante]

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.

[MichaelZuo]

How could this kind of ‘hiding’ comply with GAAP standards in any scenario?

What sort of accounting books were being prepared where such a function is even needed?

[cj]

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.

[dboreham]

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.

[cj]

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

[SoftTalker]

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.

[jwsteigerwalt]

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.

[cj]

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.