Recently I was chatting with one of my friends who owns a paper/label recycling business and who also holds a REALTOR license on the side. As most business owners do, we started sharing the ways we deal with admin and tax compliance. Maybe someone has a magic bullet? Nope. He was telling me about the leakage he has with his personal cash expenses (dining & entertainment in particular) that could be applied as expenses to his personal return related to his real estate commission income.
Like most commission income earners, he was missing out on capturing cash expenses such as when entertaining three clients for dinner and the bill for $800 comes, everyone pitches cash and one person puts it on their card. The person who covers the bill on their card and pockets the cash usually takes the paper bill and claims the expense. But if you pitch $200 cash and can’t take home the paper bill, how can you capture this expense if CRA/IRS asks for backup? I told him about a app that another friend uses for his property maintenance business called Xpenditure.
Xpenditure is a pretty cool app that helps capture cash expenses. In the case of the $200 cash expense for a shared cost of dinner, my friend could open the Xpenditure app on his phone, take a picture of the receipt, and Xpenditure will capture the details of the bill and upload the data to an Xpenditure expense report. The expenses captured on Xpenditure can then be exported to other accounting programs such as Freshbooks or Quickbooks.
I use QBO, so I went thru a trial of Xpenditure to see if I could integrate it with QBO. The process of setting up Xpenditure to integrate with QBO was pretty cumbersome and took several days (probably 10 hours total) and several times going back and forth with Xpenditure’s help-desk. One of the annoying things about Xpenditure is since its a small company itself, it has a small support staff. There is no 1-800 number clients can call for immediate assistance. Instead, Xpenditure clients have to deal with an online chat system and the response time from Xpenditure isn’t instantaneous. The result is once a query/question is sent to Xpenditure, it usually means that I’d have to follow up in a few hours or the next day for a response. This made it take longer to overcome integration issues.
When signing up for Xpenditure, make sure to use the same credentials and e-mail sign in as your QBO account. In order to integrate Xpenditure and QBO, they will need the same credentials. Once you have created an account with Xpenditure and downloaded the app to your phone, you will need to connect Xpenditure with QBO by going to the Advanced Settings of the Company Settings Tab. Scroll down to the bottom of the page to view a list of supported software and choose the link button for QBO. Type in your credentials to make the link. You can then sync the two accounts which will upload your QBO accounts to Xpenditure.
You can use your cash on hand account in QBO to receive your expenses, or choose any other custom account to link to particular expense items. You have to go to the Personal Settings tab and create a payment method in order to link any particular expense. Call the category Cash Payment or something easy to understand. Once a payment method is created, capture an expense by taking a picture of a cash payment, the details will be captured to Xpenditure. Make sure to classify the captured expenses to the Cash Payment category that you setup in the Personal Settings tab. Also make sure to link this payment method to the account you want the expenses to flow into on QBO. When you are ready to export expenses to QBO, create an accounting report from the reports tab located in the expense main menu.
If everything was setup correctly, you should see the expense show up in the correct category in QBO under the expenses list. From that point on-wards, as long as you categorize your expenses correctly, the data should flow into QBO without any manual data input, this saves time and hopefully lots of money since you can claim more of your cash expenses.
I’d say Xpenditure is probably really useful for commission income earners as a way to capture more expenses, but like most accounting methods, it requires staff/users to use the process and stick with the system. If they don’t report expenses, no amount of software is going to help.