To “Plan Forward with Strata-G” means we bring you insightful, time saving, forward looking solutions in Service, and in Text. In this Four-Part Series, we set our sights on Intuit’s QuickBooks App, breaking down the functionality of the App into streamlined, repeatable steps to realize the advantages of cloud-based accounting solutions for your business, saving you time and money… for Empire building.
How to Build an Empire with Cloud Accounting
QuickBooks App: Part 1 of 4
For some, accounting is not the source of passion that drives your entrepreneurial spirit. Your days are filled with the pursuit of reducing inventory waste, generating free cash-flow, following up on significant leads, researching product enhancements, investing in the right technology to open your company to new markets – and cloud or not, debits and credits do very little to check any of these boxes.
As the saying goes, ‘time is money’ – so let’s create both!
Over the course of four articles we will unravel some very easy to use, timesaving features that Intuit has built into the QuickBooks App, while increasing your company’s cash-flow as a direct result of the streamlined, cloud-based functionality. In Part I, we specifically dive into Mileage, yes Mileage, to explain how to use the App most effectively.
Before we get started, this article makes the following assertions:
- You currently have a QuickBooks Online Subscription, making the APP Free!
- The App referenced throughout the article is “QuickBooks Accounting”, but if you are Self-Employed, there is a Self-Employed version you may want to consider instead, with similar functionality
- Each article within the series will discuss many of the prominent features of the App, but if there is a specific feature that is not addressed and you would like additional information, please contact us at Strata-G and we would be happy summarize the capabilities for you, and even write an article about it.
PART I: Mileage… yes Mileage!
Query
I do not currently track mileage, so how is commencing a process for tracking mileage going to save me time?
Glad you asked!
- Who has a company vehicle, or fleet of vehicles?
- Who employs Account Managers?
- Who drives to more than one location for work (Clients, multiple work sites, airports)?
- Who has had their mileage audited as part of Payroll, Income Tax, and/or GST-HST Audit?
- Who has never thought of being audited for mileage, but just started?
If you fall under any of the categories above, the Mileage tracker provides straightforward, some might even suggest – fun, interactive tools to track, organize, and manage business and personal kilometres throughout the year. The result of which, increases deductible expenditures on your profit and loss statement (direct deduction for self-employed individuals, or determining what rate to record business related costs for corporations), while creating an effective log for audit purposes; all sourced directly from the App into your Company’s QuickBooks Online accounting platform. Accounting made easy, while audit documentation is created in real-time with accurate reporting of mileage, removing all guesstimates, and those year-end scrambles to hit 50% business usage for taxable benefits – you know who you are!
To Begin, simply select Go
To make the most out of Mileage tracking, it is advised to begin by setting Auto-tracking to “On”. As illustrated, Intuit makes it very easy to walk through the required tasks by simply selecting “Go” and walking through the necessary cellular settings required to auto-track kilometres.
Some of the key benefits of tracking mileage include:
- increased expenditures for deduction purposes
- managed business usage for taxable benefit purposes
- accurate, well documented log for audit purposes
As QuickBooks puts it so succinctly: “Take a drive – We’re ready to track your trips”. It is that easy!
Query
Setup is easy, and I have an App that tracks every trip I take – Great! Who is going to go through the 30,000 kilometres I drive per year and sort between business and personal?
That is a fair question, and if you are not familiar with Cloud Accounting, let me introduce to you one of the major advantages that the Cloud offers over traditional accounting models: Artificial Intelligence (“A.I.”): Machine self-learning designed by Rules.
The Mileage tracker allows you to create rules based on common travel patterns associated with your daily schedule. Once programmed, you simply “Take a drive”, and QuickBooks automatically applies rule-based business trips to business kilometres. Where might this tracking be the most convenient?
- Who has a company vehicle, or fleet of vehicles?
- Who employs Account Managers?
- Who drives to more than one location for work (Clients, multiple work sites, airports)?
- Who has had their mileage audited as part of Payroll, Income Tax, and/or GST-HST Audit?
- Who has never thought of being audited for mileage, but just started?
To save a Business mileage rule, you may need to enter a Business purpose, such as “Meeting a Client”, “Construction site”, “Waste disposal”, “Airport”, etc. Once complete, select Save, and future trips between the locations listed in the rule will automatically be applied as business, or personal.
Query
You mentioned that an advantage would be creating an accurate audit log. What if I drive passed a Client, to get to get my morning coffee, and the first half of the commute matches a Rule?
Another fantastic question! For which, we had no answer, so we took a drive. First, we setup a rule for Business purposes and drove to a Client’s location. From there we proceeded to pull into the driveway, park for a moment, and then carried on our way. The trip did not register as a business trip, as we did not remain at the Client’s premise long enough for the trip to register as completed. Therefore, morning coffee pursuits should not result in overstated business mileage by simply driving passed a Client. You can also edit trips within the Mileage App, and directly within QuickBooks Online, as necessary.
Swipe Right:
Yes, this App has that too!
At this point, we have set-up rules for our regular business and/or personal commutes, the question before us is what about every other trip in between? Remember, QuickBooks is automatically recording your trips, your job is to just drive. As such, trips not associated with specific rules are itemized in an “UNREVIEWED” list, within the App, or listed as Uncategorized in QuickBooks. To make review seamless, Intuit offers the ability to quickly swipe transactions in the App as personal or business related, with maps of your recent trips as a friendly reminder.
Swipe right, in this context, means Personal Expense – an important point of reference for any water cooler talk about your exciting new Mileage tracker! As illustrated, you can quickly swipe personal expenses away, and easily organize Business Expenses for your various business needs: Audit Log, Deduction, lowering your taxable benefit on employer provided vehicles.
If swiping per trip is not falling within the parameters of an efficient use of time, you can also complete a Bulk itemization in QuickBooks Online: by toggling to your Mileage section and selecting multiple trips to categorize. Select all the trips that you want to allocate, and then select “Mark as Business”, “Mark as Personal”, or “Delete”.P
Final Word
Perhaps the following situation may resonate with you, your business, or for some who may have Clients that they serve: It is year-end, and it is time to calculate a mileage deduction for a Sole-Proprietor, or to allocate eligible expenses between personal and business use for a small corporation. It has been determined that the total kilometres driven in the year were 25,000, and business mileage should be 70%. After the review of a fragmented mileage log it is estimated that only a few thousand kilometres have been entered as business eligible.There are multiple problems here, you are either leaving a significant expense off of your books, or other calculations (capital cost allowance) are being calculated based on a business usage of 70%, but perhaps business usage has been over estimated, leaving you in a vulnerable audit position.
With the advancement of the mileage tracker that Intuit has integrated so well with QuickBooks Online, within minutes you will be able to set-up an automatic mileage tracker that auto-fills an A.I. managed audit log, while ensuring you have captured all of the appropriate business kilometres for deduction purposes. The report captured below, reflects data captured over two days of travel, after 5 minutes setting up Mileage Rules. From this report, we can see that the rules are tracking correctly, and if we were driving a company car, we would be able to see on a daily basis how we were tracking towards a reduced stand-by charge for taxable benefit purposes (need 50% or more business usage).
No time wasted at year-end, or with audit, and as QuickBooks puts it “Tax savings ahead”: Time and Money created!
Tax Tip
If you have an employee that is required to use a company vehicle to perform their duties, and the employee uses the automobile more than 50% for business purposes – a reduced standby charge can be calculated for taxable benefit purposes. In some cases, this may reduce the employee’s taxable income by thousands of dollars. Based on the report below, the employee would know that they need to reduce personal km driven or check in on a few more clients.
The information contained herein is of general nature and is not intended to address the circumstances of any particular individual or entity. This article expresses the opinion, experience and expertise of staff at Strata-G Tax Professional Corporation (“Strata-G”) and does not reflect the opinion, nor certification of Intuit, or any of their affiliates. Although we endeavor to provide accurate, timely and value-add information in all we do, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. At Strata-G we would be pleased to tailor the facts presented in this document to your specific entity needs to ensure the advice received is appropriate to your particular situation.
