While many of us are making merry, it’s hardly the most wonderful time of the year for the accounting staffs at many small businesses.
A rush by employees to submit their expense claims so they can be reimbursed before the holidays, makes today the busiest expense-filing day of the year, according to data from online accounting services firm Concur (NASDAQ: CNQR).
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| New Year new Passion |
On this day U.S. small businesses will process more than twice as many expense reports as the daily average. That’s a lot of unhappy accountants.
Putting off those expenses has a whole host of repercussions, including paying more money in federal and state taxes.
“It’s like sitting in a car and letting someone drive you down the Autobahn going 80 miles an hour with their eyes are closed,” said Nicole Fende, a financial consultant and president of the Small Business Finance Center. “You’re going to crash and it’s going to be bad.”
Fende added that every dollar not expensed costs a business roughly $1.35 in taxes. That figure is derived from adding up the 15 percent in Federal Insurance Contributions Act (FICA) taxes businesses pay to cover Medicare and Social Security costs, and the average 20 percent due in state and federal income taxes.
“If you have a dollar of income and you’re not offsetting it with a dollar of expense, the government will tax it at your effective tax rate,” said Fende, who added there are ways small businesses and self-employed individuals can mitigate this crunch.
Like we do with our children, Fende said offering a reward, or treat, is a good way to get employees to do something they don’t want to do, like filing boring expense reports.
For self-employed individuals, giving yourself a new book or even just a chocolate after the task is completed can make you “more likely to do it next time you’re required.”
If that doesn’t work the Web is full of free and paid services that small business owners can use to outsource the pain of accounting.
Concur offers subscribers the ability to take pictures of receipts with their iPhone and Android devices and submit them electronically, allowing employees to toss away their paper copies.
“That’s helped us to get rid of a whole lot of filing cabinets,” said Christian Metcalfe, co-founder of Seattle, WA-based data analytics startup Context Relevant, which uses Concur for all its accounting needs.
“In the ‘Moneyball’ example, this helps us keep our money on the field and be more efficient in how we’re running our business.”
Metcalfe, whose company is also paid by Concur to organize its data, said no software will eliminate employee procrastination when it comes to filing expense reports on time, but cloud-based services can offset the incidence of paper claims piling up on accountants desks.
Concur, also based in the Seattle area, estimates that inefficient manual expense filing is costing U.S. firms as much as $2 billion annually in additional processing costs.
That calculation is based on a recent study by the Aberdeen Group that showed it costs the average U.S. company $18 to process each expense report. The study also found that cost drops below $8 per report by automating the process through web-based applications.
Xero, a New Zealand-based accounting software firm with more than 110,000 paying customers, also offers the ability to scan receipts by phone and is attempting to get a foothold in the lucrative U.S. small business market.
Jamie Sutherland, who heads Xero’s U.S. operations, said the ability to “knock off” expense reports on the fly from such exotic locations as a cab or airplane makes the process more enjoyable.
“It makes it a little bit more fun and sexy to do expense management.”
However some small business owners remain reticent to try the new technology, preferring to store receipts in a shoebox and hand it over to an actual accountant.
Howie Statland, 41, who sells vintage guitars at New York-based Rivington Guitars, has an iPhone, but has yet to use it to scan a receipt or submit an expense.
“This is the only way I know how right now.”
Article source :http://uk.reuters.com
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