Q: When onboarding a new client who previously used cash-based accounting, does Pocket restate the previous year's financials or start with the new method from January 1st of the current year?

A: Pocket typically does not restate the previous year's financials (Profit and Loss statement and Balance Sheet) when onboarding a new client who previously used cash-based accounting. This is because:

• The previous year's financials were likely used for tax filing purposes.
• Pocket starts administering the client's books from January 1st of the current year.

However, Pocket does work with the client to adjust the beginning balance as of January 1st of the current year. This approach allows for a smooth transition from cash-based to accrual-based accounting while maintaining the integrity of previously filed financial reports.