The 1992 launch of QuickBooks started the accounting automation revolution for small businesses. Today, 85% of small businesses use QuickBooks on a regular basis to keep track of their bills, invoices, payments, banking, payroll, inventory, general ledger, financial reports and many other accounting related tasks.
Double-entry accounting practices that used to take many hours and days to complete are now handled efficiently and intuitively. QuickBooks takes these common transactions and places all needed double-entries into each account ledger eliminating errors and ensuring proper bookkeeping.
Automate, Automate & Automate
The real advantage of having all your account journals in a digital form is to keep your balance sheets balanced, and to enable integration with other digital systems and processes that your company has and will implement.
QuickBooks for instance, offers off-the-shelf integration with Salesforce.com (customer relationship management), Square (credit card payments), Shopify and Amazon (ecommerce), Stripe (online payment), to name a few. In addition, Intuit, the maker of QuickBooks, has software for tax preparation, point of sale (POS) systems and payroll.
Intuit also offers a very powerful API (application programming interface) for QuickBooks that enables you to custom create interfaces and integrations with proprietary or third-party tools that are important to your business. This opens up many possibilities for automation and integration across all your departments.
Here is a list of key functions your company can automate with QuickBooks.
Every small business with one or more employees has to deal with payroll. Paychecks and taxes have to be calculated accurately for each employee and paid on time. This involves salaries, federal, state, Social Security, Medicare, unemployment, 401(k), plus any other additions or deductions that impact payroll. Any delays or errors can result in substantial IRS penalties that involve paying 10% or more in taxes and interest.
QuickBooks offers many ways to automate payroll. One option is to subscribe to their tax tables that get updated on a regular basis. With up to date tax tables you can easily process the payroll electronically. Another option is to outsource to Intuit or other companies, payroll calculations and filings, alleviating payroll-related risks and liabilities.
If you hire a third party to process your payroll, make sure they allow you to import all payroll transactions seamlessly into QuickBooks using the Intuit Interchange Format (IIF).
Payroll automation takes care of many tax reporting requirements, including federal and state. All payroll tax reporting is handled automatically within QuickBooks or the service you outsource to. This includes mandatory quarterly and yearly reporting for 940, 941, 1099, W2 and others.
Corporations and certain LLCs by law are required to file taxes on a yearly basis with federal and most state departments of revenue. When your accounting is handled in a properly setup QuickBooks environment, your accountant can easily create the necessary 1120 form by using Intuit Proconnect. He or she can also file and make payments electronically.
User experience (UX) with QuickBooks has been greatly simplified over the years. Entering your business expenses in the tool is as easy as entering the vendor’s name, amount, reference number, due date and what expense account to charge. By assigning the expense account, you instruct QuickBooks to automatically create a double-entry in your ledger, debiting your accounts payable and crediting the expense account you chose.
If you use procurement software that enables your suppliers to invoice you digitally, you can automate importing bills into QuickBooks by using its API. Many tools are already integrated with QuickBooks including Procurify, Tradogram, NextProcess, Spend 365, eRequisition, Bellwether Purchasing and Nexus.
Creating invoices with tedious entry methods including manual calculations, printing, stuffing envelopes, affixing stamps and mailing is a thing of the past! Quotes can now be generated in your quoting system and automatically imported into QuickBooks as invoices. Invoices are then dispatched by email or via an API connector to your clients’ procurement tools.
If you don’t have quotation software, QuickBooks can be used to create estimates, bids, quotes or proposals. Once a proposal is created, after being approved and processed, you can convert it to an official invoice with the push of a button.
GlobalVision, a translation service company that deals with thousands of contract translators and clients, processes thousands of bills and invoices every month. To expedite accounting operations, it has integrated its online translation value chain with QuickBooks automating bill payment and invoicing. What used to take days to manually enter thousands of procurement bills and generate hundreds of invoices now takes minutes. These savings are accomplished month after month adding up to significant savings.
All banks now offer online banking options that can be very useful to businesses. Some banks have excelled in creating better UX with their online interfaces and integrating with QuickBooks. Bank of America and a few others have perfected the user experience. With a single push of a button, you can import all your banking activities and synchronize them with your QuickBooks accounts.
These banks have also undertaken the extra steps of integrating bill payment into QuickBooks. With a push of a button, all your check payments can be dispatched to your bank’s bill pay feature, delegating the task of printing, stuffing and mailing checks to your bank. ACH (automated clearing house) and wire payments are also integrated when needed.
With daily bank account balances and transactions electronically delivered to QuickBooks, account reconciliation becomes an easy task to perform. This enables you to know exactly what deposits and payments have already occurred. Lost checks can create an issue with your tax reporting if not tracked and reissued in a timely manner. Furthermore, reconciling your accounts on a regular basis enables you to better manage cash flow and eliminate overdraft fees.
Inventory can occupy a large portion of a company’s balance sheet tying up cash and creating overhead costs. You want to keep a lean inventory while avoiding delays in order fulfillment.
Inventory management software allows tracking inventory, minimizing product shortages and maximizing fulfilled orders. QuickBooks has many features that facilitate inventory management. This includes barcoding, forecasting, reordering and supplier management. QuickBooks also integrates with many inventory management tools that may be better suited to streamline your supply chain like Cin7, TradeGecko, ShippingEasy, Fishbowl, InfoPlus, Finale Inventory, Shopventory, Stitch Labs and Locate Inventory.
Companies offering services or digital products, instead of tangible products, are often spared the need to deal with inventories and their associated hassles.
Companies perform internal or external audits of their accounts for many reasons. Chiefly among them is to verify compliance to federal and state departments of revenue reporting laws. Audits can also be helpful to small company CEOs when there is a need to understand operational costs and expenses to create more efficiency and improve productivity. You can enable QuickBooks to turn on an audit trail that will offer accountability for every transaction you enter or change in QuickBooks. This makes audits easier and less costly.
Income statements and balance sheets are instantly created in QuickBooks. This is in addition to a myriad of reports including sales, costs, payroll, cash flows, forecasts, aging statements, etc. You name the report and QuickBooks will promptly generate it using either the cash or accrual method.
Income statements are perhaps the most vital reports. At the end of each month, quarter and year, you can review these reports and compare them to previous months, quarters and years. QuickBooks identifies previous against current period changes helping you track trends or identify unexpected discrepancies.
If your company operates on a cash basis for tax reporting purpose, it is still useful to have these statements generated on the accrual basis. Generating accurate and timely income statements are essential to tracking the performance of your company.
To understand how healthy their companies are, CEOs have to constantly review their balance sheet. Creating an accurate up to date balance sheet is effortless; the assets, equity and liabilities do balance. CEOs can track the value and health of their company over time.
Cash flow statement
Cash flow is not about being profitable, it is all about having the needed cash at the required time. Profitable companies often fail due to shortcomings in cash management. Generated regularly, cash flow reports and forecasts alert you when needed. If your business is seasonal, or inventory-heavy, or has long payment terms, generate frequent cash flow reports and take the necessary precautions to avoid running out of cash.
Cash flow problems are accelerated when companies are not vigilant with their collection practices and enforcing their payment terms. Without a firm collection policy in place, customers can and will take advantage.
Unless you collect payment prior to shipping a product or executing a service, you will need to pay attention to your accounts receivable. By tracking receivables in QuickBooks, you can establish a process that periodically follows up with delinquent customers. It involves sending them regular notices reminding them of their late payments and contractual obligations. Having a late payment fee in your purchase or service agreement will help. So will checking your clients’ credit ratings before committing significant expenditures to their work orders or offering them a large line of credit.
Automation of Accounting Tasks Works
Accounting should not take up much of your operations costs. Accounting software is mature, inexpensive and works almost flawlessly. Over the past 25 years and since the introduction of QuickBooks, accounting automation has become ubiquitous. Much of the old mundane accounting tasks are now handled with a single push of a button.
By automating tax reporting, payroll, bill paying, invoicing, bank and credit card accounts reconciliation, online banking and by interfacing to PayPal and credit card companies, many of the tasks that took time and resources to complete are now digitalized.
Automatic report generation and financial statements provide up to date information when needed. CEOs can get instantaneous income statements and balance sheets, cash flow forecasts, delinquent accounts and a myriad of useful reports that they can act upon to make strategic and tactical decisions benefiting their companies.
An added bonus to the digitalization of accounting is the massive reduction of the use of paper, filing cabinets and storage space. It turns your accounting data into bits and bytes that are accessible anywhere smart phones operate.
The question is not whether you should invest in QuickBooks, 85% of small businesses already own the software. They question is, are you using the software to its full potential?
By digitalizing and automating repetitive and mundane tasks, your accounting tasks can be completed each month in very little time giving you full control over accounts payable and receivable, cash flow and other vital signs of your company, all with minimal efforts and costs. This gives the Finance team and the CEO real-time metrics and the ability to measure ROI on other digital transformation company projects.
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