One of the greatest benefits of cloud accounting is the opportunity to take your business from being audit prone to be audit proof. The way Hubdoc helps to do this is by digitizing all receipts by using the smartphone in your pocket. Hubdoc is like your digital cabinet as it stores all your receipts, bills and other bank/credit card statements. It’s super easy to send bills received via email that come in the mail by simply forwarding them to the unique email address Hubdoc provides.
Now to address the elephant in the blog. The most frequent question we always get is ‘why do I need to manage my receipts in 2018?’ Well if you have your own corporation the CRA requires you to keep your receipts and documents for their potential review/audit for a minimum of 6 years. If you don’t do this than any expenses you have claimed will be disallowed and added back to your corporate income and taxed with penalties and interest being backdated. As you can imagine the cost of going through this is quite punitive. Comparing this to the Hubdoc monthly fee of $25 seems more than reasonable for what the app does for you.
Hubdoc has a basic proposal which is to organize all financial documents in one place automatically. The key here is automatically. Hubdoc being a smart cabinet uses machine learning-powered data extraction to read the receipt for the key details like vendor name, date, and total amount. These details are extracted and used to ‘file’ the receipt into a folder. All this happens automatically, and the bots do this themselves. It’s quite magical really. #DisneyMoments
Traditionally, Accountants accepted shoe boxes of receipts that clients dropped off which went through quite the process. I think we can create a small film named “the life of a receipt”. Seriously though these receipts were sorted, reviewed and entered in to a desktop based Accounting system. As you can imagine the painful nature of going through this process was not a value addition to clients. Eliminating the need to do data entry switches the focus from administration to strategy. Accountants that use Hubdoc can inherently add more value to their clients by not focusing on receipt sorting but helping a business project and forecast the future performance. Using Hubdoc also helps to work with your Accountant more efficiently by reducing the administration involved in year-end tax preparation.
Hubdoc plays really well with two main online cloud accounting solutions being QBO and Xero. When a receipt photo is taken, the machine-learning powered data extraction technology kicks in and all the necessary fields are generated by Hubdoc. Within 24 hours from the time the picture is taken the receipts are reviewed by our staff and published. When a receipt is published it gets connected to the transaction in the cloud accounting solution. This creates perfect synergy because now your receipt is attached to the actual transaction from the bank. If the CRA ever target the business for an Audit the receipt is easily found as proof of the transaction is attached to the transaction in QBO/Xero. Hubdoc also has the unique ability to ‘fetch’ bank and credit card statements from the bank which helps with bank reconciliations. The bank reconciliations are extremely important for the purposes of knowing that the pro-forma financials are free of material errors.
We at Capex implemented Hubdoc as part of our Core app closet. Hubdoc has helped our clients get more organized, keep our clients audit proof and also help us provide a seamless accounting experience. Our goal has always been to provide the Small business owner with high value and low administration. It turns out people love taking pictures with their smartphone because it ultimately saves them tax money. I highly recommend everyone to start implementing this solution for their respective businesses. If you have any questions on how Hubdoc works please reach out to us as we fully support the platform.
-Written by Jag Bath