My growing startup business has many small recurring expenses for different subscription services. There are over 25 recurring expenses ranging from $10 to $500 each month. Some are billed in advance and others are billed in arrears and the service periods vary on each, ex. 5th to 5th, 17th to 17th. Can I set a threshold for accruing and deferring these expenses or will I need to make painful adjusting entries each month?
Accounting For Subscription Expenses
Answers
Although my real recommendation is to evaluate per subscription, I would NOT even bother adjusting (as I understand by your post) by the day for the "small" amounts. Materiality. the cost of doing it, and most of all, consistency of treatment are key. I would also look at just taking a "hit" (meaning your month's number will be out of whack) for ONE month and align everything and just expense as you pay going forward. You can just adjust your YEAREND numbers if your
But that is just me. I am a practical kinda guy. As you grow and the numbers become material, of course this recommendation will change.
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As a P.S., I would rather have you and your team concentrating on product/service and traction than figuring out what part of $10 should be accrued or deferred.
In addition, can you call your (larger) vendors and ask them to align them all to calendar month?
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