Accounting professionals are often considered to be the “trusted adviser”, working in the best interests of their client and helping overcome obstacles to business success. At the very minimum, business owners recognize that they need their accountant to get their taxes done, and that relationship alone requires a level of trust that no typical vendor can boast.
Accounting professionals are also often advocates for certain computer technology and/or software solutions, largely because they are viewed as tools which facilitate a better working relationship between the client and their accountant, and which may improve the quality of information available to both. Recommendations regarding the selection of accounting software packages and solutions to record and report on business activities may be made by the accountant, and those recommendations are often accepted by the business owner based on the belief that the accountant has the necessary understanding of the client business requirements.
Making software and other technology-related recommendations to clients allows the accounting professional to potentially influence the decision of the business owner, the result of which is often that the client ends up using a solution that the accountant is familiar with and can therefore assist with setup, training, and support services. Because the accounting professional simply made a recommendation to the client, there is some safety in the event that the recommendation ends up not working out. If the client purchases the wrong software or equipment, the professional retains a level of distance from the issue because they were not the vendor of the product. Recommendations are made based on the information available, and the accountant’s defense may be that they did not have all the necessary information to make a better recommendation.
But what happens when the accounting professional BECOMES the technology provider to their client? Accounting professionals should strongly consider whether it makes sense for them to be the technology provider to their client, or simply collaborate with the client on a recommended solution. The areas of concern may include operational impacts to the client business and cost, but one main area of concern should be in the client’s perception of their service provider.
As the accountant, the trusted adviser, you benefit from a high level of respect from your client. The client recognizes that you have knowledge that they need and that can help them. You have a high status level with the client.
When the accounting professional becomes the technology provider, however, changes begin to happen with the client’s perception of their once-trusted adviser. Rather than viewing their accountant as the provider of a valuable service, the client may now view their accountant as a technology provider, responsible for the performance and functionality of IT systems. Now relegated to the position of “technician”, the accounting professional must overcome a variety of obstacles, including those specifically and only related to the technology. Difficulties with technology may overshadow the other areas where the professional is involved, and will often become the focus of ongoing discussions. While the accountant may have been trying to improve their overall value proposition with the client, the actual result may be a reduction of confidence and trust. Where once the accountant was a trusted adviser, they are now simply an IT vendor (and a replaceable vendor, at that).
With accountants and their clients now embracing cloud computing models, many accounting professionals are recognizing the potential benefits of private-labeling and reselling cloud-based solutions to their clients. Particularly if a service becomes a key element to the workflow, or is an enabling feature of the accounting service, there are compelling arguments for incorporating the solution into the “package” offered by the accounting professional. Cloud solutions are, however, just another “flavor” of technology, and the same issues regarding reselling should be strongly considered.
Accountants provide a valuable professional service to their clients. While technology and information systems facilitate and enable this relationship, the relationship itself is not fundamentally IT-based. For this reason, professionals should use caution when considering how to involve IT solutions in their service offerings. Delivering a service under the accountant business brand communicates to the client who their service provider is, but it also communicates a level of responsibility that the firm may not be prepared to take on. When the systems are working well, the private-label model may work very well for the firm. But when systems fail, the risk to the professional is not only lost productivity, but a potential loss of faith and trust – and business – from the client.
A QuickBooks tip for creating a job cost report that displays hours worked.
Creating a job cost report displaying the hours worked by employee, on a specific job or on all jobs, for a specific week or at the end of a job can provide a contractor with vital job costing information so you can see if you correctly bid the number of man hours required on a job.
Luckily, QuickBooks will provide you with this information through the Time by Job Summary or Time by Job Detail Reports, this article will teach you how to modify the reports for your business needs, however, in order for these reports to be useful you must enter employee hours using the QuickBooks Enter Time function.
The Time by Job Summary Report
- From the Reports menu
- Choose Jobs, Time & Mileage
- Time by Job Summary
- From the Dates menu, scroll up to select ALL
This initial report will provide you with summarized information about the total number of hours worked for each QuickBooks Item/Cost Code/or section totaled by job.
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While this can provide you with useful information, perhaps you would like to filter the report to include the total time spent on a single, completed job, by cost code.
- Click the Modify Report button at the upper right – above the Dates option
- From the Modify Report: Time by Job Summary window, click on the Filters tab
- From the Choose Filter box, click on Customer:Job
- From the Customer:Job drop down menu (where it currently says All customers/jobs), select Multiple customers/jobs
- From the Select Customer:Job window, scroll through the list of Customers and Jobs until you see the job that you want and click on it to select it.
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- Click the OK button, twice
- You now have a time summary report for just this single job.
The Time by Job Detail Report
- From the Reports menu
- Choose Jobs, Time & Mileage
- Time by Job Detail Report
This initial report will provide you with detailed information about the total number of hours worked by each employee under each QuickBooks Item/Cost Code/or section; subtotaled by each cost code and totaled by job.
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While this can provide you with useful information, perhaps you would like to filter the report to include the total time spent on a single, completed job, by employee and cost code.
- Click the Modify Report button at the upper right – above the Dates option
- On the Dates tab from the Dates drop down menu, scroll up to select All, you can also add or remove columns to display in the report for Payroll Item, Class, Notes and WC Code.
- Click on the Filters tab
- From the Choose Filter box, click on Customer:Job
- From the Customer:Job drop down menu (where it currently says All customers/jobs), select Multiple customers/jobs
- From the Select Customer:Job window, scroll through the list of Customers and Jobs until you see the job that you want and click on it to select it.
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- Click the OK button, twice
- You now have a time by job detail report for just this single job.
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These reports will help you to see how accurately you bid your man hours on a job, however, they will NOT include payroll dollars. You could export the modified time by job detail report to Excel, add a column for Rate (the rate being the hourly wage PLUS the hourly labor burden), add some simple formulas to the spreadsheet and also get the total cost.
NOTE: Always check the Time by Job Detail Report for a No Item Assigned section, hours that appear in this section have been assigned to a job, but not assigned to a QuickBooks item or cost code and this will make your job costing reports inaccurate.
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You can correct the job costing reports by pulling the original hard copy timesheets and double click on each entry (which will take you to the time entry field) and you can assign the correct cost code. You will also need to go to the paycheck detail and add the cost code there as well.
We highly recommend that you run the Time by Job Detail Report each week after entering employee hours, but BEFORE you issue payroll to make sure that everything has been correctly costed to your jobs.
We hope you’ve found this post helpful – if so please leave a comment.
Top 10 Tuesday Tips from around the web includes our favorite QuickBooks and business productivity tips from other bloggers around the web. We hope you’ll find these articles as interesting as we did.
Office Manager Tips- Negotiating Better Maintenance Terms
- Twitter in Less Than 5 Minutes a Day
- Can QuickBooks Keep Up with Microsoft?
- Which came first, the Balance Sheet, Profit & Loss, or Statement of Cash Flows?
- A Hole in the Safety Net
- CRM Solution Gets High Marks from QuickBooks ProAdvisors
- Audit: IRS Erroneously Gave Out $151 Million in Auto Tax Breaks
- Bad Bosses
- Taking a RIDE on the next E-Verify Release
That’s it for this week’s Top 10 Tuesday, stop back next week to see what we’ve come up with.
A QuickBooks payroll tip for calculating Workers Compensation when it is based on hours worked.
Workers Compensation Insurance is usually calculated as a rate which is applied to gross wages; and that’s how the built-in QuickBooks Worker’s Compensation feature calculates it. Last week, on the Intuit Community Forum, someone asked how you would set QuickBooks up to track Workers Compensation when it was a rate based on hours worked.
I gave a brief overview on the forum, but thought that it deserved a more detailed “how to” here on our blog.
Before you begin, you’ll need at least three accounts in your Chart of Accounts to track your Liability and Expenses:
- one to track the accruing Worker’s Compensation Liability {an Other Current Liability Account}
- one to track job or field related Worker’s Comp Expenses {a Cost of Good Sold or Direct Labor Costs}
- one to track administrative or overhead Worker’s Comp Expenses {an Expense account}
Next you’ll want to get your Worker’s Compensation rate sheet and using the rate sheet we’ll being adding QuickBooks Company Contribution Payroll items for each different classification code/experience rate.
- From the Lists menu -> choose Payroll Item List
- click the Payroll Item button at the bottom left
- choose New
- select the Custom Setup option
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- click the Next button
- select the Company Contribution option
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- click the Next button
- type in the classification code/experience rate name
- check the option to Track expenses by job {this selection is crucial for job costing}
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- click the Next button
- select your Worker’s Compensation Carrier
- select the Other Current Liability Account for tracking your accrued liability
- select your Cost of Goods Sold or Expense account
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- click the Next button
- in the Tax tracking type window, select None, click the Next button
- on the Taxes window, none of the tax items should be checked, click the Next button
- on the Calculate based on Quantity window you can choose two different methods of calculation:
- Calculate this item based on quantity – use this option if your employees perform work under more than one classification/experience rate during the week. You will have full control of the number of hours that count toward each experience rate.
- Calculate this item based on hours – use this option if each of your employees perform work under only a single classification or experience rate during the week. QuickBooks will automatically calculate the rate based on the total number of Straight and Overtime hours worked.
Using the Calculate this item based on quantity option:
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- click the Next button
- on the Default rate and limit window – in the first box, enter the experience rate for this classification, leave the 2nd field empty, and make sure that you UNCHECK the “This is an annual limit” option
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- click the Finish button.
Add this company contribution payroll item to each applicable employee’s record.
When using this method, when you are creating the employee’s paycheck you will manually enter the number of hours that the employee worked under each experience rate in the Quantity column, once you enter the Quantity {number of hours} for each experience rate QuickBooks will perform the calculation and display the applicable amount in the Company Contribution section of the paycheck.
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Using the Calculate this item based on hours option:
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- click the Next button
- on the Default rate and limit window – in the first box, enter the experience rate for this classification, leave the 2nd field empty, and make sure that you UNCHECK the “This is an annual limit” option
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- click the Finish button.
Add this company contribution payroll item to each applicable employee’s record.
When using this method, when you are creating the employee’s paycheck QuickBooks will automatically make the calculations for you by displaying the total number of hours the employee worked against the experience rate in the Quantity column and display the applicable amount in the Company Contribution section of the paycheck.
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When you pay your Worker’s comp do so through the Pay Liabilities option.
We hope that you’ve found this article to be helpful, including Worker’s Compensation costs – regardless of how they are based – is an important part of your job costing.
Freebie Friday’s are all about valuable Free eBooks and eGuides, sometimes they are eBooks that we’ve created and other times they are eBooks that we’ve found on the web that we feel are valuable and could be of interest to you.
Back in the “old days”, when you purchased QuickBooks it came with a manual – yup, that’s right I said a manual – an actual honest to goodness manual bound as a softcover book. I have a bunch of old ones hanging around.
QuickBooks doesn’t come with a printed manual anymore, but there are manuals available in eBook form – downloadable pdf’s, you just have to know where to look for them.
You can find manuals for QuickBooks Premier, Enterprise, and Mac versions straight from Intuit’s support area at http://support.quickbooks.intuit.com/support/Articles/INF12758, once this page loads click on the plus sign next to QuickBooks 2011 Guides – and you’ll find them.
You can also get eGuides for older versions of QuickBooks from this same link for QuickBooks 2007, 2008, 2009, and 2010.
Unfortunately, there aren’t any eBooks or eGuides for QuickBooks Pro users, but you can download the Premier version eGuide or use the built-in Help.
Premier users can also find the link for this eBook directly within the QuickBooks software, by going to the Help menu -> choosing Learning Center Tutorials -> and clicking on the What’s New tab.
Have a great weekend and check back next week to see what is being offered on Freebie Friday!
