An accountant can use the chart of accounts (COA) for optimizing tax payments, especially in the IT staffing business. Using the right COA is no mean job and doing it manually for each entry is not a practical way to do things. Automation can really work wonders when choosing the right COA. However, there is always room for confusion especially in multi-state projects, with consultants and subcontractors coming from different states when the choice of COA is done manually.
How Automating can help in Using the Right COA
Automating QuickBooks is the best way to ensure that the right COA has been used for getting the best tax benefits. Selecting the right COA cannot be automated in QuickBooks but automatic invoicing processing software such as CONSULT can help you make the right choice.
CONSULT is a QuickBooks-specific automation tool that enhances the accounting application’s features and provides features that are not built into it. Here are 5 ways to do it in the staffing business.
- Categorize your invoices based on the tax rate. When you categorize your invoices based on tax rates, you will know which state offers you the best rate and how to apply the right COA for making the best tax savings. IT staffing firms use CONSULT for automatically using the right COA for the right state in a multi-state scenario.
- Instead of allowing perks without categorizing each benefit, you will not be able to claim tax benefits. If a tax allowance or perk is permitted for getting tax benefit, use this COA and avail applicable benefits.
- Segregate those expenses that qualify for tax rebates. Prepare a list of expenses that allow IT staffing companies to seek a rebate either under the general tax laws of the state or federal tax and claim rebates.
- When all qualifications are equal and you have to choose your consultants who are in states that help you to lower your tax burden. A few states don’t tax some activities.
- Offer special incentives to consultants and subcontractors that you can claim under tax laws. This will not only help you to reduce your IT staffing firms’ tax liabilities but also help you to make a bigger profit.
Why “CONSULT” and Not “Manual Process”?
COA is usually an extensive list and by making an inappropriate choice, the benefits you will derive otherwise can come down. Looking at the right COA each time for optimum benefit is a time consuming process and may delay your accountant’s core activity. CONSULT is programmed to select the right COA based on an array of complex algorithms, matrices and AI that make it possible to claim tax rebates and reduce tax liabilities leading to higher profit levels.