Accounting and Financial Outsourcing

Article Dean Dorton

With the year-end around the corner, your heart is probably already racing in anticipation of all the tasks ahead. I know you’ll be ok and you’ll finish everything on time, but here are a few things that you can start doing now to make your life easier in January.

Prepare for 1099 Printing

It doesn’t matter when your fiscal year ends, you must print and mail the calendar year 1099 forms by January 31.

You’ll also have to file all 1099s with the IRS. Be aware the filing date changed this year! If you’re filing 1099-Misc with amounts in Box 7: Nonemployee Compensation—and most likely you are–the new filing deadline is January 31. If you don’t have amounts in Box 7, then the deadline is still February 28th for paper filing or March 31 for electronic filing.

To get ahead of the game you can run a preliminary 1099 report and review it to make sure all your 1099 vendors are set up as such in your system and their payable invoices are marked as 1099 transactions.

Prepare for W2 Printing

You also have to print and mail Wage and Tax Statements (W-2 form) to all your employees by January 31st and file the forms with the Social Security Administration by the same date. The new due date of January 31st applies to W2s for both paper and electronic filing.

To prepare for the W2 printing process, make sure you have all your workers classified correctly. Sometimes workers are classified as independent consultants when they are really employees and this is important because employees are issued a W-2 form while independent consultants are issued a 1099 form.

In addition, check your Employee’s Withholding Allowance Certificates (W-4 forms). Make sure you have one on file for each employee and that they show current employee information including marital status, a number of dependents and other tax related information.

Start gathering information for the auditors

Another task that may fall in your lap when you are working on year-end is preparing for the annual audit. To get a jump start ask the auditors for a to-do list so you can gather as many documents as you can now.

One thing the auditors will check is that all the sub ledgers match the trial balance. Check this before you close the books. A mismatch will raise a lot of questions from the auditors and create a ton of additional work for you. Now is the time to reconcile your accounts receivable and accounts payable aging reports against the corresponding balances in your trial balance. Do the same with every sub ledger.
And since the auditors will most likely ask you for testing samples, ask them if you can have the requirements now. If you start pulling invoices and payroll files for months that are already closed, you’ll only have to extract a couple of months’ worth of data in January.

Install and Test Software Updates for Year-End

If you have on-premise accounting or payroll solutions, you should install and test all year-end related software updates as soon as possible. But if you have a cloud accounting solution like Intacct this is not a reason to be concerned. The team of experts at Intacct will make all changes, test them and install them for you.

Also, with Intacct, you have custom fields that allow you to organize and sort transactions for analysis. You can also upload external or complex journal entries. And Intacct dashboards and standard and custom reports reduce the time you spend producing reports and answering questions.

Contact us so we can give you more tips to prepare for year end and show you how Intacct can save you a lot of time in the process.

Article Dean Dorton

With the effective date of ASC 606 and IFRS around the corner, many people are wondering
subscription based about the effect that the new contract revenue recognition guidelines will have on their specific line of business. We have already talked about what the changes are for revenue management and today we’ll discuss how subscription-based companies are affected by the new standard.

Today I want to spend some time talking about how the new contract revenue recognition guidelines under ASC 606 & IFRS 15 subscription-based businesses and what you have to do to be in compliance.
Under the new guidelines:

When subscriptions and contracts change because of add-ons, discounts, upgrades, etc. revenue will have to be reallocated across the contract. To make things a little more complicated this reallocation will have to be made to all periods, including those already closed.

Not only revenue is deferred across the contract, you will have to defer expenses as well. This could be a big reason of concern if you have contracts that will be active when the new guidelines take effect.

In order to have full visibility of the effects on your business of the transition from the old rules into ASC 606 you will need two sets of books. That’s right. You need to book the same revenue and expenses twice, according to each set of rules.

Can all these be accomplished with spreadsheets or without making significant changes to your accounting solution? Definitely not. You need a contract management system that at least gives you the following:

Automatic reallocation of revenue and expenses when a contract changes.

Dual treatment capabilities that apply both sets of rules to each transaction.

Dual reporting so you can see right away and side by side the effect of the new allocation rules on your business.

Intacct, the best-in-class cloud ERP solution, comes out-of-the-box, with a Contract Revenue Management module. This module automatically takes care of all the additional tasks required to be in compliance with the new guidelines. In addition, you have:

No custom code or dependency on your IT resources to make changes to the system so you can have reallocation of revenue and expenses, dual treatment and dual reporting.

Real time visibility over the effect of the revenue and expense allocations on your financial reports, detailed reports and forecast reports.

Board-ready insights that show the effect of the allocations on key subscription business metrics including Churn, Customer Lifetime Value, Committed Monthly Recurring Revenue, Cash and Customer Acquisition Cost.

Control over the configuration so you can setup your contract and revenue policies. You also have flexible templates that you can customize to reflect your current allocation and amortization methods.

In closing, your Intacct solution takes care of your contract expense allocation and the reallocation of revenue and expenses when subscriptions and contracts change. It provides you with dual treatment and reporting that you can control and configure. It gives you deep and broad revenue insights of your orders, contracts and metrics. And all these is available out-of-the box, not code changes, no dependency on it.

Contact us so we can tell you more about the upcoming contract revenue recognition changes and how Intacct takes care of the transition for you.

Article Dean Dorton

It’s an annual tradition for the President of the United States to pardon a turkey at Thanksgiving. Which president started the trend is up for debate, but White House history dates the first turkey clemency to 1865, when Abraham Lincoln’s son took a liking to a bird intended for Christmas dinner.

Repost from Avalara

Since then, dozens of turkeys have been given a reprieve by POTUS. But is America really the land of the free fowl? In Lincoln’s case, it’s lucky the First Family was living in the White House at the time of the pardon. The former president’s home state of Illinois requires breeders who sell animals (including livestock) as pets to collect sales tax. California, Tennessee, New Jersey and several other states have similar laws. So the Lincolns could have been on the hook for consumer use tax since they didn’t eat the bird as intended.

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Had the Lincoln turkey made it to the White House table, tax would have been a non-issue as the District of Columbia does not charge sales tax on livestock, groceries or chef services. Although 14 states do tax groceries and some, including Washington and California, add retail sales tax to home-cooked meals prepared by professional cooks. Georgia even extended that rule to chefs marketing their home cooking services online, requiring sales tax to be charged on the transaction.

What about the Nixon and Reagan era turkeys that were sent to petting zoos? If they spent their final days on display in Louisiana, Oklahoma, or Maryland, it would cost visitors more to get a glimpse of these fortunate fowl. These states, among others, charge sales tax on admissions to certain entertainment or amusement venues, which can include zoos.

And what about Honest and Abe, the two turkeys plucked from the Twittersphere, flown via Turkey One (seriously) from Foster Farms in Modesto, CA to Washington DC and pardoned by President Obama last year? The duo retired to Turkey Hill in Leesburg, Virginia where they will live out the remainder of their lives. Unless they try to make a run for the border together. Canada is cool with Americans bringing one U.S. turkey into the country, but try and get two past customs and the duty increases by 154 percent!

In addition to Honest and Abe, two other (less fortunate) turkeys, also from Foster Farms, were dressed and delivered to the Obamas in 2015 to donate to a DC-area food bank.

How does all this fly from a sales tax perspective? Foster Farms may have owed use tax on the donated birds because they took them out of their inventory. And possibly on their feeding and care. But if only eight Foster Farms birds made the trip to DC from California in the last six years – four being pardoned (Honest and Abe in 2015; Cider and Apple in 2010) and four being charitable donations – it’s likely that the poultry producer was spared from having to register and collect sales tax in the U.S. capital.

But let’s fan this out a bit for fun. In the 17 weeks it took those turkeys to go from farm to table (or farm to capitol to farm, in this case), a whole flock of sales tax nexus-creating scenarios could have cropped up. What if a third-party trekked those toms from California to the Capital instead of a commercial jet? The gobblers’ Hill staffers (the ones who stayed with them at the Willard Hotel, toured them around the Rose Garden and drove their motorcade to the White House) could have considered remote employees (a nexus triggering activity). And the whole social media campaign, complete with plush turkey toys? Well there’s some click-through nexus for you right there.

Having a hard time stuffing all this into your brain? We don’t blame you. Multi-state sales tax nexus is a lot to have on your plate.

While there is no tradition where state auditors grant clemency to companies for tax compliance, here are 10 tips from 4 (former) state tax auditors that could help. And, thankfully, there’s Avalara sales tax automation software to make the job easier.

Article Dean Dorton

Drop shipping can be a big boon for online sellers, especially small businesses that don’t have the funds or space to stock up on and store inventory. With drop shipping, sellers can take orders from customers for an item and then turn around and order that item from a supplier, which then ships it to the customers. The seller doesn’t have to handle the physical item at all, the customer gets his or her order, and everyone’s happy.

In many ways, this is a win-win, but using drop shipping can create complexity when it comes to sales tax.

Know your nexus

As with any sales tax situation, the first step is knowing where you have nexus or a relationship with a certain jurisdiction that requires you to collect sales taxes. In general, if you have nexus in a state, you will be responsible for collecting the right rate of sales tax for that state on any sales to customers within that state. That applies whether you are using drop shipping or delivering in some other way.

What if you don’t have nexus, but your supplier does?

Drop shipping can be tricky precisely because it’s not only the seller’s nexus that comes into play but, potentially, the supplier’s or shipper’s nexus as well. As the seller, you are generally only obligated to collect sales taxes on the sale when the seller lacks nexus, including California, Connecticut, Florida, Hawaii, and others. In turn, the supplier’s obligation could require you as the seller to either pay sales tax to the supplier or to come up with an exemption certificate so that you don’t have to pay tax.

Exemption certificates

In most states, sales taxes are only levied on retail sales, not wholesale transactions. In this case, even if your supplier has nexus, the supplier will not have to collect sales tax on the transaction with you as long as the supplier can present valid resale exemption certificate from you, the seller.

However, even if the sale between you and the supplier is exempt, if you don’t provide the supplier with a valid resale exemption certificate, that transaction can be considered a retail rather than a wholesale sale and could legally obligate the supplier to charge you sales tax on the transaction.

Resale exemption certificate procedures are individual to each state. Many states will accept an out-of-state resale certificate, multijurisdictional form or alternate documentation in a drop-shipping situation.

However, in the states that don’t accept these, the seller may have to deal with some unexpected requirements. For example, in California and other states that have stricter requirements for resale certificates, a seller may have to register with the state in order to provide a valid exemption certificate. By registering in order to get a certificate, the seller would now be obligated to collect sales taxes from customers in that state even though the seller previously did not have nexus.

Creating nexus with drop shipping

In some states, the use of a drop shipper in the same state as the customer by an out-of-state retailer can create nexus for the seller. States, where this may be an issue, include California, New York, Texas, and Florida.

Getting it right

Drop shipping can be a successful solution for sellers, but it can also add new layers of sales tax complexity. One way for businesses to make the most out of drop shipping and other innovative solutions is sales tax automation software such as Avalara AvaTax. AvaTax’s accuracy is 100% guaranteed, so you can be sure that you’re getting sales tax right no matter how your products are getting delivered.

For more on the rules for online retailers around drop shipping, download the whitepaper – Shipping and Not Handling Sales Tax.

Article Dean Dorton

Still Using Spreadsheets for Your Accounting? It’s Time to Make a Change

Cloud-ERP-switch-Oct-1-blog.jpgYou are a leader in your company and understand numbers. You know you can gain efficiencies and improve ROI by replacing your current accounting system that relies heavily on spreadsheets with a Cloud ERP.

You’ve read thousands of articles, blogs, whitepapers and advice columns confirming that using Excel spreadsheets to complement your financial accounting software is time-consuming and error-prone.

But, still, you’re not getting any traction with the management team. They’re on the fence. Unconvinced. And you wonder: Why, oh why, do they want to continue to use Excel for finance and accounting functions?

Here are some of the most common objections I’ve heard from people who don’t want to give up their spreadsheets and replace them with an accounting software like Intacct. (And I have an answer and a few facts for each objection… )

“It’s fast and reliable.”

Maybe it’s fast if you’re an expert, but it’s definitely not reliable. Hard drives fail and servers crash. Intacct data in the cloud is protected by encryption, real-time transactional data backup and daily full data backup and is always available (1). Intacct guarantees 99.8% uptime (2).

“With Excel the possibilities are endless.”

Yes, but how much time do you spend creating each report? If you are a fast moving company, then you need reports that update in real time and are available on demand –without spending time to download and combine data entered into a spreadsheet. Intacct reporting gives you the capability to easily create reports, graphs and dashboards using dimensions that are updated constantly with new data, and you can do it all without exporting data to a spreadsheet (3). Use the more than 150 prebuilt accounting or financial reports or build your own customized report within Intacct.

“We already have Excel; it is cost effective.”

Intacct customers average an ROI of over 250% (4). DataXu cut monthly financial consolidations from 20 to 8 days across all entities (5). EZShield is saving a great deal of time on employee expense (6) and WebAssign saved $130,000 in annual salary costs (7). There are many more customer success stories on the Intacct web site.

“Excel is the best tool we have for complex calculations such as revenue recognition”.

Really? Will it handle the complexities that are coming with ASC 606? What happens when the terms change on contracts that have tiered pricing or when contracts are changed to add or drop users? You need an accounting system that will standardize and automate these processes as well as ensure compliance with the new standards. Intacct has a contract and revenue management module that gives you the tools to comply with ASC 606.

I’ve heard many more objections for giving up spreadsheets. For each objection, I always find an Intacct advantage. To name just a few…with Intacct:

you don’t have the risk of handling formulas that could eventually get corrupted.
you always know who made a journal entry or any change.
supporting documents are stored in the system making it easier to answer auditors’ questions.
the system automates your process saving you time.
you have a system that grows as your company grows.

Contact us so we can help you create a solid business case for your company to get an accounting system that will grant you independence from Excel spreadsheets.

Article Dean Dorton

Intacct Collaborate can help a company that suffers from any of the problems in the following common scenarios: 

  • An upset customer asks his sales rep to get an invoice corrected because it does not reflect the terms they agreed. The sales rep then has to dig up all the emails that show the finance team approved the terms so the incorrect invoice can be fixed.  
  • A credit and collections person puts a customer on credit hold without realizing there was a problem with the shipping of a big order for that customer. Now all new orders for that customer are incorrectly held up.
  • A frustrated accounts receivable person struggles to reconcile invoices that appear to be short paid because the customer has deducted a discount that does not appear on the order or the invoice.

Fortunately, the days of sales, finance and services teams working on separate systems and using email to keep track of decisions affecting customers and their transactions can be a thing of the past. Situations like those described above can now be avoided.

Intacct, the best-in-class ERP solution, in an effort to remove barriers to fast execution, introduced Intacct Collaborate into its financial system. Intacct Collaborate embeds Salesforce Chatter, the leading enterprise social network, into Intacct to create a secure social layer across all finance processes and across all devices.

The partnership of Intacct Collaborate and Salesforce Chatter means that communications on accounts, projects, orders, invoices, requisitions and more can appear simultaneously in the Salesforce Sales Cloud and in Intacct. This allows the sales, finance and services teams to ask and answer questions, take actions and resolve issues in the system they use daily.  

Intacct Collaborate incorporates many other useful features.

  • With Dashboard snapshots you can create conversations that flag issues or discuss trends.   
  • Collaboration groups can promote communication amongst teams focusing on specific tasks or events such as month-end-close or an audit.
  • Relevant documents that belong to a specific customer or transaction can be uploaded directly into the corresponding conversation.  
  • Individuals can set alerts to receive notifications on tasks or actions and when new comments are posted on followed items.

Intacct Collaborate lets you communicate faster and smarter.  Gone are the days of missing out on important decisions, asking around for a supporting document, having to read endless email chains to understand what is happening with a customer or having your inbox flooded with unwanted emails.

Better communication facilitates teamwork across the entire company and expedites processes and decision-making.  When everyone knows the context, it is much easier to clarify policies, manage exceptions and speed approvals.

Contact us to now to learn more about how Intacct Collaborate can improve communication between your sales, finance and services teams, increasing their productivity and your customers’ satisfaction.