Recording Your Bills by Writing Checks

When you record bills by writing checks, you’re doing cash-basis accounting. In a nutshell, this means that you count bills as expenses when you write the check to pay the bill.

I talk a little bit about cash-basis accounting in Appendix B, but let me say here that a trade-off is implicit in the choice to use cash-basis accounting. If you use cash-basis accounting — which is what I do in my little business — you greatly simplify your bookkeeping, but you lose precision in your measurement of your expenses. And you don’t keep track of your unpaid bills inside QuickBooks. They just stack up in a pile next to your desk.

As long as you understand this trade-off and are comfortable with it, you’re ready to begin using this method, which you do by following the steps I provide in the paragraphs that follow.

The slow way to write checks

You can write checks either from the register or from the Write Checks window. Using the Write Checks window is the slow way, but it enables you to record your expenses and the items (if any) that you purchase. Using the Write Checks window is the best choice in the following situations:

check.png You’re paying for an inventory item.

check.png You’re paying for something for which you have a purchase order.

You plan to be reimbursed for ...

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