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Going electronic: How this accountant got converted


This is the electronic era, so we should be storing files electronically, right?

But I like my paper files, I say. I am much more comfortable with paper and file folders.
Well, that’s wonderful if you are in the office and can physically access those paper files. But, what if you need to work remotely? Not so good.

While I argued many years for paper, due to a recent move and remote work set up, I am now understanding just how convenient it is to have the files you need stored in “folders” on your network. Now, when someone asks me to email them a document, instead of saying “I will get it to you as soon as I scan and email it,” I say “I will have it to you right away.”

AMPED has developed a system of saving and storing all our files in electronic format, including the biggest storage user of all — paid bills. We have an efficient system of scanning bills to an “inbox,” then to QuickBooks and finally an electronic “paid bills” folder. When the check is written, we add the check number to the bill description.

And we’re not stopping there. Our next step toward complete electronic filing will be integrating to download bills and checks paid into QuickBooks, further reducing storage on your own servers. Here’s the process: Bills are entered into and accessible to whomever would otherwise sign the checks. There, the bills are authorized for payment by the signer. Finally, the checks are printed. No more need to make sure a signer is on hand for that last-minute check request; she can authorize payment from the airport on her way to an important meeting. Need a copy of the bill? Just download it from “the cloud.” Further, electronic bank statements with corresponding electronic reconciliations will be easy for the organization’s treasurer to review and approve.

Consider converting your paper file system to an electronic system. As long as you can log in to your server remotely, you’ll always have access to all of your important files. If I can become a convert, so can you!

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How to survive your year-end audit


Years ago at the start of my career, I was an internal auditor for a large company. We always planned “surprise” audits to our branches so we definitely were not a welcome site. Even then, however, I realized that we were just doing our job and trying to ensure that processes were in place that provided protection to our assets.

Fast forward a few years and I came to the other side of the audit fence. I am pretty sure that the beginning of my career is one of the reasons I am comfortable with audits. Don’t despair if this is not how you began. The more times you go through an audit, the easier it gets. Just remember, the auditors are doing their job to ensure processes are in place to protect the assets of the organization. The most important thing to remember is that auditors are not the enemy, they are there to help the organization and to provide important recommendations.

Usually your auditors will provide you with two lists. One list will include items they need a couple of weeks before the fieldwork begins. They will also provide a list of what they would like upon arrival. Reviewing these lists as soon as they arrive will allow you time to think about how easiest to accomplish what they need in the timeframes provided. The best advice I can give is to not wait until the last minute to try to get everything together. Begin as soon as you can, even if it is only an item here and there.

Make sure that all of your balance sheet accounts are reconciled. They will review each of these. They will also look at year-to-year comparisons of both balance sheet and income statement accounts. Likely, they will ask about variances beyond what they consider normal. One very important thing to remember is that if you don’t know offhand, tell them you don’t know and go back and research it. Many times, they may ask something of you that would be better answered by a colleague within the organization. Enlist others to help! You are the main contact for the audit but you don’t have to be the one with all the answers. If you have a responsible auditor, they would prefer that you allow them access to the expertise that surrounds you. I am a numbers person, I have no clue how meetings are run, how many attended, etc. Let those with the knowledge assist.

The hardest thing for me to produce is the breakdown of expenses by functional allocation. This is required for the 990. It helps if your staff tracks their time by admin, member development, meetings, programs and marketing. Your auditor is there to help you distinguish and provide insight that will make your future audits much easier.

One thing to keep in mind with a not-for-profit organization is that there could be certain types of revenue that are considered unrelated business income. That portion of your business may be subject to income tax. For example, if you have a newsletter or directory in which you sell advertising space, you will likely be subject to unrelated business income tax (UBIT). Again, your auditors will assist you in coming up with an income statement that will support the UBIT.

The auditors are usually onsite for two days and then will likely have a few follow up questions. The process from audit to tax returns and financial statements can take a month or month and a half so be patient. Your auditor will have you sign an extension for filing if you are getting near the due date of four and half months past your fiscal year end.

Find an audit firm and audit staff that you work well with. This is very important since audits could be an annual event. Make use of their expertise, don’t be afraid to ask them questions. I enlist their help with questions throughout the year. They really are there to make processes more smooth and to ensure that all assets are protected. They are not the enemy.

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For finance and accounting personnel, year-end tasks can be daunting — A checklist to keep you on track

Tasks and deadlines related to payroll

  • Review employee information that can affect W2 reporting such as name, address and social security number. Check for eligibility to your company’s retirement plan. Don’t forget about terminated employees. If they worked during the year, they will also receive a W2.
  • Many employers pay year-end bonuses. Make sure you schedule enough time for this task. Remember to remove discretionary deductions from the employee bonus checks such as health insurance, dental, etc.
  • If your company provides more than $50,000 in life insurance to employees, remember to tax the difference on their final check if you are not already doing this each pay period.
  • Many employers will be required to report the cost of their employer sponsored group health plan coverage on the employee 2013 Form W-2. This reporting is informational only, showing the value of the employee's health care benefits, and does not affect the employee's tax liability. Employers who filed 250 or more Form W-2s for the 2012 calendar year will be subject to the reporting requirement on W-2s for 2013.
  • If your company has disability plans and any employee has used these benefits during the year, you may have third-party sick pay to include on W2s. This also affects employer FICA and Medicare.
  • Print and distribute your W2s to employees no later than Jan. 31 of the following year.
  • 941 reports for the fourth quarter are due Jan. 31 of the new year. Remember tax payments are due before that based on your payment schedule.
  • Unemployment taxes are generally paid quarterly and will be due Jan. 31 of the following year.
  • Remember to file your quarterly unemployment report as well as your annual 940 (Federal unemployment). Both reports are due Jan. 31 of the following year.
  • IRS and state copies of W2s are due no later than Feb. 28 of the following year.
  • Verify your 1099 information for reporting. You should have been requesting W9 forms from your vendors throughout the year so you have their EIN on file. If not, take some time to get in touch with them to provide you with this information. 1099s are due to the vendors no later than Jan. 31 of the following year. State and federal copies are due no later than Feb. 28 of the following year.

New Year planning

  • It is recommended that employees review their W4 withholding and make changes if necessary.
  • Many employers provide pay raises at the beginning of the year. Before processing your first pay of the New Year, make sure you have the updated salaries. This could also include changes in discretionary deductions such as health care, dental, etc.
  • You will have received your new state unemployment rates in November-December. Make sure to update in your payroll system before processing the first payroll.
  • Update your sick and vacation pay prior to processing your first payroll.
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