Pay Now or Pay Later?
When it comes to paying bills, you have a fundamental choice to make. You can either record and pay your bills simultaneously, or record your bills as they come in but then pay them when they’re due. The first method is easiest, as you might guess, because you do everything at once. The second method, called the accounts payable method, gives you more accurate financial records and makes for more precise management of your cash and outstanding bills.
If you have a small business with little overhead, you may just as well record and pay bills simultaneously. If you need precise measurement of your expenses and bills, though — if you want to use what’s termed accrual-basis accounting — you should use the accounts payable method of paying bills. I should note, too, that using the accounts payable method with QuickBooks isn’t as difficult as it may seem at first.
And now you’re ready to begin. In the next section, I describe how to pay bills by writing checks. A little later in the chapter, in the “Recording Your Bills the Accounts Payable Way” section, you find out how to pay bills by using the accounts payable method.