The 1099-MISC is issued each January by businesses and nonprofits to vendors they paid in the prior year that meet certain criteria. There are a variety of different payments that must be reported on this form. The two most common are rent payments and payments to subcontractors that performed a service for your business. The purpose of this article is not to get into the rules for which payments to include on the form, but how to automate the process. The 1099 filing is mandatory but it doesn’t add value in terms of improving your bottom line. So how do you streamline and automate this process to save time and money?
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Tools – Invoicing and Integrated Customer Payments
There will often be times where a software may not connect to your accounting software, but you can still automate the entry of data through an excel upload template. Bookkeeping automation is about getting your data entered as quickly and accurately as possible so that you can analyze your data and use it to drive your business’ performance. You should always be thinking of ways to streamline and improve processes. Excel upload templates essentially act as bridge connection on your wagon wheel when a direct connection doesn’t exist. In accounting softwares like Xero or QuickBooks Online, you can upload contact data like vendor or customer information, but you are also able to upload transaction data for bills, invoices, or credits. Xero stands out in this area due to its open platform and the fact that excel data importing is an included function of the software (see Why Xero instead of QuickBooks link). QuickBooks allows transaction uploads, but it’s provided through other vendors who charge for the service.
What is the maximum amount of revenue you can generate based on your current processes and systems? This answer to the “Maximum Capacity” question should serve as a target for you before making any changes within your business. It also serves as a gauge of when to ramp up staffing and beef up your internal systems and processes.
In today’s post, we’re going to review the concept of a “burden rate” and why it is important. This term may have differing names by industry or have varying calculation methods, but the underlying reason for doing it is the same: you must know the cost it takes you to produce revenue. Let’s look at an example to illustrate this point.
We’ve spent time discussing the structure of bookkeeping and the necessary tools to get a complete and accurate product. In this section, we’re turning our focus to a second layer of tracking called project accounting. This adds another level of complexity to the accounting process, but with the right system, it can be done efficiently and effectively. Often times the success or failure of a project-based business is determined by how well they can execute this process.
Most businesses have a disjointed process for submitting, reviewing, and approving purchase requests. Many don’t have a process at all. If you’ve spent anytime using a spreadsheet to track purchase requests, you know firsthand how difficult, time consuming, and frustrating this process can be. A poor functioning purchasing system leads to a disconnect between your company’s financial goals and what actually gets spent. There is a solution though and it functions within the wagon wheel of your automated bookkeeping system! A simple purchase request system that is integrated with your accounting software will bring enhanced financial controls to your business, align your actual spending with your budget, and improve communication between accounting and operations.
The wagon wheel concept is a visual representation of how multiple accounting applications come together to form a unified, customized system. It involves decentralizing the modules of a typical accounting system to gain automation and efficiency from the technology advances. When we talk about the wagon wheel, the primary accounting software sits in the middle of the diagram. Around the spokes of the wheel are all the singular modules that solve a specific problem. The goal with this concept is to leverage the strength of each application to create the best possible accounting system.
A core bookkeeping automation tool is a document collection / bill entry software. This type of software is incredibly helpful and serves several important functions. First, it acts as a central document collection hub for your business. Employees can upload bills and receipts directly to the application via email or by taking a picture of the bill or receipt on their mobile phone. In addition, anyone outside your organization can upload bills by sending a pdf attachment from an email. This effectively decentralizes the entry of bill data by getting it into your document hub from multiple sources. The second function of this type of software is it reads the scanned copy of the bill and pulls important data from the document such as vendor name, invoice date, due date, invoice number, and amount and then enters the data into fields for your review. After quickly reviewing the data, you publish both the bill data to your accounting software and a pdf copy of the actual invoice to the transaction in your accounting software. You can set it up so that no bill goes into your system without your review or have bills automatically enter the system once they are uploaded after you become more comfortable with how it works. The software also remembers previous entries so if you use a vendor frequently, it will pull all the data from the current bill and then remember the general ledger account you assigned to that vendor previously.
Like time tracking, payroll processing is often a tedious and disliked process. It’s an important part of any business though and there are ways to reduce the administrative hours involved in payroll, all while providing a better experience for your employees. A beneficial strategy of bookkeeping automation is to decentralize the entry of data to your employees. Payroll is no different. Many payroll softwares offer the ability for employees to fill out W4s, personal bank account info, state filings, I9s, and upload documents securely from their own user account. The entered data can be reviewed for accuracy by HR and your accounting department before you start paying your employees. Many payroll systems offer self-service options to employees so they can retrieve pay stubs, change bank info, change withholdings, request time off and download year-end tax statements like a W-2. Training employees to be self-sufficient will help save you a lot of administrative time. With better onboarding processes and employee self-service options, you will ensure a more seamless payroll system that better serves you and your employees all at the same time.