Accounting for interior designers can be complex — but it doesn’t have to be. Learn more about streamlining procurement, developing a budgeting process, and the difference between cash and accrual accounting.
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.
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.
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.
Bookkeeping automation facilitates a structure in which financial management, controls, and oversight are centralized, but the data entry is decentralized. In our wagon wheel example, the applications on the edge of the wagon wheel serve as entry points for your data. Users are granted access to each application based on their needs in that function and they submit data (i.e. expense reports, purchase orders, or timesheets) which then funnel to approval checkpoints and into accounting software (such as Xero or QuickBooks Online).
By pushing data entry down to the person who initiated the accounting transaction, you accomplish a few important things.
Most businesses rely on credit cards to make daily purchases in their company. From inventory to supplies, materials and advertising, almost every purchase makes it on the company credit card. It’s a convenience most people rely on, but it has its challenges as an organization grows. It can be tedious to keep up with all the transactions, but this is vital for the owner to have accurate and up-to-date financial reports.
The other challenge is oversight with the team. There are four areas that should be considered for your credit card policy.
Time tracking is an integral part of many businesses but it’s often a tedious and disliked part. Despite this, time tracking is highly important on both the revenue side and the expense side.
So you’ve made the decision to move from a desktop accounting application to the cloud. The next question is, which vendor will you choose? There are many worthy choices out there that will serve most businesses. However, we’re looking for the most optimized solution and there are certain factors that need to be considered. QuickBooks Online is the most widely used and recognized player in the industry.
Our firm reviewed QuickBooks Online and Xero, another major player in the could accounting space. After reviewing both QuickBooks Online and Xero, we settled on Xero for these four reasons.
Before technology and credit cards ruled our lives, cash was king. It was simple to not spend more than you had because if it wasn't in your wallet, you couldn’t spend it. The “envelope system” became a great way for those struggling to get out of debt to plan their monthly expenses and climb out of the financial hole. After receiving a paycheck, you would cash the check and then place money into each of your envelopes representing a segment of your expenses. Examples of envelopes for an individual may include: mortgage, utilities, savings, insurance, and general purchases. The result is that you take control of your money and plan out your finances instead of being a slave to debt. The same can be done in a business!