If you have started your business in New Jersey, you might want to hire an accountant. Many successful companies work closely with an accountant. While there are helpful accounting software platforms, you need to understand how to work with these packages. An accountant gives you a personalized touch that you cannot find within the software. Let’s look at a few reasons why you need an accountant for your small business in New Jersey.

 

Do You Need To Hire an Accountant?

When you hire an accountant, it can save your small business a lot of money and time. Don’t forget an accountant can prevent any financial headaches. There are several times when you need an accountant for your business.

One necessary time is at the formation of your business. An accountant can help you write a business plan. Yes, you need a business plan, even if you are not looking at funding. If your business plans to rent out manufacturing, retail, or office space, the landlord could require you to have this plan. All successful businesses have a predetermined plan in place. With this plan, you can reach those goals rather than trying to wing it.

All businesses need to determine their entity structures. Many companies start out as sole proprietorships, but certain financial situations require creating an LLC for financial and legal protection. Plus, your business needs all of the appropriate licenses, including business licenses, sales tax permits, and employment accounts. Every state and city has different requirements for business. An accountant can cut through all of that red tape and make sure your business starts out on the right foot.

Remember that accounting software? While you can go it alone, an accountant can help you choose the right software for your business. These software packages are easy to set up, and they can keep track of your financial records. You will still need to delegate some of those financial responsibilities to your accountant, but the software can help you keep track of paperwork and other receipts for your business. You don’t want to set up your business accounting software by yourself. An accountant can establish your charts of accounts, and they might even be able to train you on how to use the software correctly. If your accountant doesn’t offer this service, they might recommend an experienced bookkeeper to help with the initial setup.

 

Help With Tax and Compliance Issues

Now you have a written business plan and gathered all the required licenses and permits. Even your bookkeeping software is ready to go, but you still need the help of an accountant. Unfortunately, there are plenty of stumbling blocks along the way for new businesses. You should never try to figure out these issues by yourself.

Small business accounting services can assist with these complex sales tax issues. In the United States, sales tax compliance can become a headache, especially if you plan to ship products out of your home state. You want to make sure that your business complies with all applicable tax laws. While you can find software to help with these issues, you still want an experienced accountant to keep your small business on the right and legal path.

Payroll is another complex issue that you will not want to handle without a bit of assistance. Labor and wage compliance issues can cause problems for the most profitable businesses. Like sales taxes, you can use a variety of programs and apps to help your business remain compliant. However, a trusted accountant will be able to look over your records and make sure that everything is obliging with the local and state laws.

There are other reporting requirements to consider for your business. Some licensing agencies and creditors will require that you meet specific criteria. In some states, there are tax liabilities that you must meet. If you do business in more than one state, an accountant can determine if you have other financial responsibilities and liabilities.

 

How Accountants Can Help Every Small Business

With an accountant, you have someone who will review your financial situation every year. You don’t want to plan for tax time right before those quarterly taxes are due. Along with that, there are certain compliance issues, like payroll tax underpayments, that you can quickly fix throughout the year. If you wait until the end of the year, you might face penalties and other issues with these reports.

Meeting with an accountant can keep your business on the right track. With a quarterly meeting, your accountant can make sure your business grows in the right way. Too much growth can actually hurt your bottom line. With the assistance of an accountant, you can ensure that your business is on the right path.

Throughout the year, you will need to pay quarterly taxes. When your income for the business increases, your tax liabilities will increase as well. Those initially estimated tax payments might not cover all of your liabilities, especially if you have a surge in business. A regular meeting with your accountant can prevent any unexpected underpayments during tax time.

Finally, an accountant can guide your small business. While you might understand your business, it is hard to look to the future. An accountant will look at that big picture for your business so that you can focus on continuing its growth.

 

Find an Accountant for My Small Business

Every small business could use the help of an experienced accountant. Even if you want to figure out your financial picture by yourself, you need an accountant in New Jersey to provide you with the right advice for your business. Think of an accountant as a small investment to ensure healthy growth in your company’s future.

With over 40 years of experience in Gloucester County, TMD Accounting has been helping individuals and small businesses with their financial needs. Our team can assist with tax services, payroll, and other financial matters. If you would like to schedule an appointment, please give us a call at 1-856-228-2205.

Over the useful life of an asset, there will be some depreciation in its value. Due to wear and tear, the asset value of an item will decrease. There are many ways to determine the depreciation value of an asset. Some of these depreciation values are only applicable to specific industries. With these depreciation methods, you want to make sure to choose the one that offers the best economic benefits for your company. Here are a few tips that you need to know about calculating the depreciation value of your assets.

 

Five Types of Depreciation

Before you can calculate depreciation, you should know about the various types. There are five types of depreciation, including:

• Units of productions
• Straight-line
• Sum of the years’ digits
• Declining balance
• Double-declining balance

 

Let’s look at how to determine these values.

 

Units of Production Depreciation Method

This depreciation method uses the expected number of units produced as the basis for your calculation. With units of production depreciation, the more units made, the more depreciation expenses can be charged. The depreciation expenses are calculated using the total number of units produced in a certain period of time compared to the expected number of units that the asset will produce over its useful life. You can use that rate to multiply with the asset net cost. Make sure to use the following formula:

Depreciation expense = unit production rate / units produced x cost + residual value

Between all of the depreciation methods, the units of production depreciation model are the most difficult to determine because the company must decide how many units the asset can produce over a specific period. For example, if your company purchased a machine for $40,000 and was expected to produce 1,000 units over its lifespan, it has a residual value of $2,000.

 

Straight-Line Depreciation Method

Straight-line depreciation is a little easier to determine for your business. This method spreads the costs of assets evenly over the asset’s useful life. The depreciation expenses are fixed for every year. With that, the depreciation expenses are the same from the first year to the end of its lifespan. Straight-line depreciation is the most common depreciation method used by companies and accountants. You can determine straight-line depreciation by using this formula:

Depreciation expenses = fixed asset cost – residual value / useful life

For example, a company bought a delivery truck for $45,000 and planned to use it for five years. When the company is ready to sell after the period, they list it for $1,000. The straight-line depreciation would determine the depreciation as $45,000 minus $1,000 and multiply by 5 (years). The depreciation value would be $8,800.

 

Sum of the Years’ Digits Depreciation Method

The sum of the years’ digits method for depreciation focuses on the fact that the fixed asset’s productivity will decrease over time. The depreciation amount of the fixed asset is higher in the early years, and depreciation will reduce as time passes. The type of depreciation sums up each digit of the year, from the ending years to the first year. For example, if your asset has a useful life of five years, the sum of the year’s digits depreciation would amount to 15, which comes from 5 + 4 + 3 + 2 + 1 = 15.

 

Declining Balance Depreciation Method

The declining balance depreciation method reduces the net book value of the fixed asset by a fixed percentage rate. With these methods, the depreciation amounts tend to be higher in the early years of the asset. The amount of the depreciation will decline or reduce as time passes. The method assumes that the fixed asset is more beneficial to a company when it is new. Declining balance depreciation uses the following method:

Net book value = cost – accumulated depreciation

For example, if a company bought a machine for $25,000 for production, they can expect the device to last for eight years with a residual value of $800. The company estimates that this machine will depreciate at a rate of 35% on an annual basis. The depreciation value will stop when the net book value is less than the residual value. In this case, the net book value would occur after the eighth year, when the depreciation value is $797. If the asset does not have a residual value, the depreciation will stop when the net book value is insignificant.

 

Double-Declining Balance Depreciation Method

As the name suggests, double-declining balance depreciation reduces the net book value of the fixed asset by a fixed percentage rate. The fixed depreciation rate for this method is double the amount of a straight-line depreciation rate. Along with that, the double-declining balance depreciation method also charges a higher depreciation amount in the first years. The formula to determine double-declining balance depreciation is as follows:

Depreciation expenses + net book value + depreciation value

For example, when a company purchases a computer, they expect to use it for about four years. By the time the company sells the computer, the company expects the sale price to be $150. Before you can determine the double depreciation rate, you need to figure out the initial depreciation rate, which would be four years = 1/4 = 25%. After that, you can determine the double depreciation rate at 25% x 2 = 50%.

 

Why You Need an Accountant for Determining Depreciation

As you can already tell, determining the depreciation value for your asset can be a challenge. While some formulas are easy to calculate, others can be highly complicated. An accountant knows which formula to use for your business. Plus, these professionals have experience calculating these numbers to get the correct amounts for your depreciating values. If you want a reliable way to calculate deprecations, make sure to use small business accounting services.

 

Need an Accountant for Your Small Business?

Depreciation can be tricky to calculate for your business. For that reason, you will want to speak to an experienced accountant. At TMD Accounting, we have over 40 years of experience in Gloucester County. Our team has helped individuals and small businesses manage their financial books. You can schedule a consultation by calling 1-856-228-2205.

When you think about depreciation, it sounds like a complicated business term. Once you understand how this term is essential for your construction company, you will come to appreciate depreciation. Construction equipment costs money. When equipment is sold, the price diminishes. Depreciation is the value deducted from the initial costs over the lifespan of the equipment. If you want to calibrate your equipment’s depreciation accurately, make sure to keep reading this article.

 

What Is Equipment Depreciation?

Equipment depreciation shows how much value your equipment loses on a yearly basis. Unfortunately, your equipment is worth less than when you first purchased it, no matter how much you maintain the asset.

With depreciation, you can tell how much value your asset loses over a period of time. Depreciation allows you to plan for maintenance. In some cases, it might not be a financially feasible decision to maintain the equipment when the asset loses much of its value. As the older equipment breaks down, it is often a wiser choice to purchase a newer model.

Along with that, depreciation can help with your taxes. You may be able to write off the equipment as a company expense, saving your business money. In some situations, you can choose to spread the costs over several years instead of making a one-time payment. With depreciation, you will need to determine the exact costs of your construction equipment to figure out its value.

 

What Information Is Needed To Calculate Depreciation?

Calculating depreciation is a straightforward process if you have all the required information. However, there are some criteria. You can only depreciate construction equipment that is expected to last for more than a year. Plus, this equipment must have a useful lifespan that you can put into a number. You must own these assets. Along with that, these assets must be used to help your construction company earn revenue. Any equipment that doesn’t meet all of those criteria cannot have its depreciation calculated. There are several methods to determine your construction depreciation.

 

Cost Value

If you want to know the value of your construction equipment, you need to know its purchasing price. The cost value is the value of the initial purchase price, including transportation, taxes, and set-up fees. Anything that your company purchases can be considered an asset of the business.

Before you can start depreciating equipment, you need to know how much you paid for it. You want to make sure you have receipts and other proof of purchases for your equipment. For example, if your construction equipment has a purchase price of $5,000, and there were additional costs, such as $400 in taxes and $400 in transportation costs, the total cost of the asset is now $5,800.

 

Salvage Value

With salvage value, that is an estimated sale amount for your asset. Mostly this value is calculated at the end of its useful life. In construction accounting, you can receive the amount after the typical useful life period of the equipment. If you want to calculate this value, you will need to use this formula:

Salvage value = cost value – (annual depreciation x useful life)

If you have construction equipment that you bought for $200,000, you can use the depreciated value at $18,000 for every year, adding up to a total of $180,000. According to the formula, you should be able to sell the equipment for $20,000 after 10 years. Remember that salvage value is just an estimate.

 

Book Value

Finally, the book value is the value of the construction equipment used for tax purposes and not the resale value. This value is determined by small business accounting services to find out the amount to write off for depreciation. You cannot calculate the book value of items that do not depreciate, such as money. If you want to calculate book value, use this formula:

Book value = cost value – (annual depreciation x age)

For example, if five years ago, you purchased construction equipment for $20,000, it will depreciate about $2,000 every year. With that, the book value would be $10,000. When you purchase the equipment, the book value is also known as the cost value. After a certain period of time, the book value might only equal the salvage value.

 

How To Calculate Depreciation for Construction Equipment

Now that you know about values, you can start to calculate depreciation. One accounting term is called “useful life” depreciation. This is how long the piece of equipment is expected to last before you need to replace it. You can measure the useful life in years. Even the IRS uses useful life values to determine how long the asset can be depreciated. The age of the equipment at the time of purchase, equipment usage patterns, and technological advances can affect the useful life of an asset.

Straight-line depreciation is calculated by dividing the cost of the construction equipment by the number of years for its estimated life. The construction equipment will depreciate equally over its useful lifespan with the straight-line depreciation model.

Finally, the declining balance depreciation method is based on an accelerated depreciation calculation. The cost of the equipment is not distributed over a period of time. Instead, the depreciation is determined early in the life of the equipment. The rate of depreciation will decrease over time. Equipment that is used more heavily during the early years of its lifespan will use the declining balance depreciation method.

 

Determining Depreciation Is Important

With equipment depreciation, you can write off the cost of the equipment over several years. Some methods allow you to determine depreciation at various rates. Figuring out depreciation can be challenging for many construction companies. With that in mind, you might want to let a small business accountant determine those sales for your construction company.

 

Let Us Help With Depreciation

At TMD Accounting, we have served the Gloucester County area for over 40 years. Our team has helped small businesses and individuals with their payroll, taxes, and other financial matters.

Need an accountant for my small business? Make sure to schedule a consultation by calling 1-856-228-2205.

As a physician, the main focus in your practice is on providing high-quality patient care. However, it still makes sense to pay careful attention to your medical practice’s accounting. While you are a doctor, you are also a business owner who strives to operate a profitable practice. Making sure that your practice is successful and highly profitable requires you to keep accurate financial records so that you can see areas where your practice might need tightening. It is also critical for ensuring that you remain compliant with the relevant state and federal tax laws. Here are four accounting tips from TMD Accounting to help you keep your medical practice financially healthy.

 

1. Be Careful When Choosing Your Accounting Software.

Many doctors are unsure which accounting software they should use for their medical malpractices. You might think that all accounting software is basically the same and to simply choose the cheapest software you can find. Some doctors rely on spreadsheets, believing they are cheaper and easier to use.

However, trying to keep track of everything on spreadsheets can mean that you are expending too much labor costs and effort, and it can also result in simple inputting errors. Spreadsheets can also make it difficult for you to review your financial information and make fully informed forecasts about your practice’s future.

Choosing the cheapest accounting software off the shelf might also not be the best idea. You need to find software that is relevant to medical practices. When you choose the right accounting software, it can reduce your need to expend added effort, provide you with a better insight into your practice’s profitability, make the tax season easier, and allow you to share information with your accountant via the cloud.

The best way to find the right software for your medical practice is to talk to your accountant and ask for suggestions. At TMD Accounting, we work with many different types of accounting software every day, and we can provide some suggestions about which one will work best for your business.

 

2. Choose the Right Accounting Method for Your Medical Practice.

As a medical practice, you can choose from one of two types of accounting methods for your business, including cash basis accounting or cash accrual accounting. In most cases, your practice manager, administrator, or accounting firm will pick the type of accounting that will work best for your medical practice.

No matter which type of accounting method your practice uses, it is critical that your manager has a deep level of understanding of how the chosen method works and the applicable financial terminology used while performing day-to-day operations.

 

Cash Basis Accounting Method for Medical Practices

If your medical practice uses the cash basis accounting method, you will account for expenses at the time that they are paid. Account receivables will be counted when you receive payments. Most physician-owned medical practices prefer the cash basis accounting method.

If you are using this method, you will receive your payment on a predetermined schedule after all of your practice’s expenses have been paid. It is important for your manager to also think about larger expenses, including your malpractice insurance. Since these types of expenses are normally paid each quarter, it is important for your manager not to distribute money that should be earmarked for these quarterly expenses.

 

Accrual Accounting Method for Medical Practices

If your practice uses the accrual accounting method, expenses will be accounted for as soon as you receive the bills instead of when they are paid. You will also account for your receivables at the time you send a bill to a patient instead of when you actually receive the payment.

Under this accounting method, your income will have already been accounted for at the time your patients pay their bills. Most medical practices do not use the accrual method because of its difficulty. However, the accrual method of accounting might provide a more accurate picture of the health of your practice at any point in time.

 

3. Schedule Profit and Loss Statements

One accounting tip that medical malpractices can borrow from how big businesses conduct accounting is to produce profit and loss statements on a quarterly basis. Depending on your medical practice’s size, your profit and loss statement can be fairly simple or quite complex.

Producing profit and loss statements can be an effective way for you to quickly check the overall financial health of your medical practice. Profit and loss statements help by validating your practice’s daily records, identifying discrepancies, and providing insight into your practice’s patient flow and where you might want to invest money in your business.

While profit and loss statements can be invaluable, most medical practices do not use them because of having fairly simple business models. However, producing profit and loss statements each quarter can provide you with important insight and can be a powerful tool to use for your practice.

 

4. Choose the Right Accountant for My Small Business

Many doctors who have their own medical practices are very busy and find accounting to be overwhelming and confusing. If your practice is very busy, your office manager might also have his or her hands full and feel overwhelmed by the practice’s accounting needs. Hiring the right accountant can help to simplify your practice’s accounting and ensure that you understand exactly where your practice is at financially and areas in which improvements can be made.

At TMD Accounting, we offer experienced small business accounting services for medical practices. When you work with us, you can focus on delivering the best level of care to your patients while we handle your accounting. Our accounting services are comprehensive and scalable, and we can customize your services to meet the particular needs of your medical practice. Some of the types of services we offer include accounting and bookkeeping for medical practices, tax preparation, medical practice controller services, and more. To learn more about how we can help with your accounting needs, contact us today to schedule a consultation at 1-856-228-2205.

As a doctor or other medical professional, you mainly focus on patient care. However, your medical practice is still a business, and you want it to be profitable. You can have a thriving practice with a solid business plan and the right bookkeeping system. Before you can do that, you need to keep your financial records in order. Here are a few ways that bookkeeping can help boost the profitability of your medical practice.

 

Bookkeeping Tips for Your Medical Office

You want to ensure that all of your books are up-to-date and accurate in your practice. If you are a solo practitioner, that can be stressful. There are a few ways to manage your books. First, you need to choose your accounting method. There are two types of accounting practices in the medical industry: accrual or cash basis accounting.

For the medical industry, accrual accounting is the most common form of bookkeeping. With this method, you count for all the expenses when you receive a bill. Along with that, you will note any receivables from your patients at the moment of billing. While using accrual accounting is common, it is not always the best practice.

Some medical practices use cash basis accounting. The method is similar to accrual accounting, but billables and receivables are logged when paid, not received. Many physicians and medical professionals prefer this type of accounting. With that, medical practices will have the most up-to-date view of their finances. There is a drawback. Cash basis accounting cannot help practices prepare for large quarterly expenses, such as malpractice insurance. If you are not careful, big expenses can sneak up in your practice.

 

Managing Your Practice’s Health

When you accurately manage your books, you can keep an eye on the health of your medical practice. If you want to know the pulse of your business, make sure to create a schedule for profit and loss statements. When you create these statements, you have an overview of your losses and gains. You can eliminate any discrepancies and decide where to invest your money with that information. While these statements are not required to operate a medical practice, they will provide you with some insights into your finances. That information can help you to improve your business.

Now that you know the basics of medical practice accounting, here are a few ways to improve your medical practice’s profitability.

 

Review Your Fee Structure

You want to take time to review your fee structure. Make sure that you are charging your patients the correct amount. It might be appropriate to bulk bill your patients in some situations, but you need to have strict criteria and policies for this type of billing. Reviewing your fees can ensure that your practice maintains a higher level of profitability.

 

Control Your Costs

Your medical practice is like any other business. When you manage your costs, you can improve your profitability ratios. Make sure to look at those areas of high expenses, such as rent and wages. While managing wages for a highly trained staff is difficult, you can find ways to reduce rental costs. In some cases, sublet those empty rooms to other practitioners. Not only can you mitigate rental fees, but you will provide better medical options for your patients.

 

Maintain an Efficient Patient Management System

Matching supply and demand can be a complicated process for your medical practice. You could be the best doctor in the area, but you will not earn income without any demand. For that reason, you need to find the right balance between these two factors. You will want to review your system for patient management. Take a look at your booking system. It might not be efficient at creating appointments. Untrained staff members can also lead to ineffective patient management. For example, they might not know which questions to ask to schedule appointments correctly. Along those same lines, you want to make sure you have medical assistants and nurses to help with patients.

 

Hire Professional Accounting or Bookkeeping Help

If you are extremely busy, you will want to have someone look at your books. Your primary focus should be on the patients. However, if you don’t spend time on your finances, your practice might not increase its profitability. You will want to work with a professional accountant or bookkeeper. These experts can give you the right advice about your business. Don’t forget that professional accounting services can save you time and money. Plus, you won’t have to deal with the headaches of straightening out your books.

When you have the best medical accounting management for your books, it can help to keep track of those day-to-day transactions. Along with that, the information becomes more valuable as you gain insights into your business. Once you have a clearer picture of your financial health, you can make those decisions that boost profitability.

It never hurts to speak with a professional who can help you take full control of your medical practice. When you partner with a professional accountant or bookkeeper, you will have more time to focus on patient care rather than struggling with the confusing business side of your practice.

Yes, your medical practice can be profitable, but you need the right system and a solid business plan in place. With some accounting and bookkeeping help, you can achieve those goals.

 

Let Us Help With Those Next Steps

Whether you are starting your own medical practice or need help with an established one, don’t forget about your bookkeeping. There are several areas where you can cut costs to boost profitability throughout your practice. Removing any inefficiencies can turn your medical practice into a successful business.

If you need small business accounting services, make sure to schedule a consultation with TMD Accounting. Thomas M. Ditullio Accounting has over 40 years of experience, and we can help with various services, including payroll, tax services, and financial management. Schedule an appointment by calling 856-228-2205.