When a financial entry is made in QuickBooks, accountants can often feel lost whether the entry should be classified as income or expense. Accountants working in IT staffing businesses that operate across multiple states with centralized accounting control at the principal office can easily get confused when an entry with regard to consultants or subcontractors has to be treated as income or expense.
Importance of Income/Expense Classification
When a book entry has to be made with regard to a consultant, the first step the accountant has to do is look into the terms of employment and the kind of perks or out-of-pocket expenses for which he is eligible for reimbursement or deduction from his pay account. To ensure that some perks have not been withdrawn or modified, the accountant has to look for information in the contract or a modified terms and conditions agreement.
Accountants cannot apply a universal procedure because not all consultants or subcontractor are employed based on a single rule or place of domicile – it is fact that in many projects, there are multiple locations, consultants come from different states, billable and billing rates different and there may vast differences in allowances and perks. This is where accountants tend to go wrong with classifications. A single wrong entry itself can cause substantial loss when each entry for the same consultant is not classified properly. Only a thorough audit can help to recover money that was paid erroneously. It is pertinent to note that there may be so many consultants that will make manual classification of income/expense almost impractical.
How to Ensure Proper Classification
Manual classification is prone to making wrong entries and there will either wrongful gains or losses for the consultant or the staffing company. It is the duty of accountants to properly notify bookkeepers of the peculiarities of each consultant or subcontractors to achieve 100% accurate classification for income/expense.
IT staffing companies in spite of their best practices still grapple with the classification problem and many are shifting to CONSULT + QuickBooks combine for 100% precision in the income/expense classification process. CONSULT provides a reprieve from the classification task by automating it. Not all classification solutions can classify income/expenses like CONSULT.
The Technology Advantage of CONSULT
Unlike other QuickBooks add-ons (solutions with integrations) that were developed to be used by many different industries, CONSULT was developed with a total commitment to enhancing features that are 100% relevant to the IT staffing business. From timesheet entries to VMS and invoicing to tax classification, accountants can use it for achieving full-fledged enhancement of QuickBooks features to meet the expectations of the staffing business.
What makes CONSULT so powerful, reliable and trustworthy are: software technologies, algorithms and matrices all tested and tried for accuracy and precision. The classification feature is but the tip of the iceberg of features that IT staffing firms use for cutting down operating costs and enhancing productivity levels.