As an attorney, you are already well-versed in the law. However, if you own a law firm, you also need to consider accounting and bookkeeping responsibilities. Proper bookkeeping allows you to monitor the success of your law firm and make the best-informed decisions for the future. You are already juggling plenty of responsibility for your law firm, but you still need to keep up on those books. When you fall behind, it can be a mess to untangle. Let’s look at the best law firm accounting and bookkeeping practices in New Jersey.

The Difference Between Law Firm Accounting and Bookkeeping

You might think that accounting and bookkeeping are the same, but they occur at different stages. Bookkeeping is the first step to help you track your cash. You can record every financial transaction, run payroll for your employees, and create invoices with bookkeeping. It is important to be diligent and accurate when recording this information.

On the other hand, accounting is a bit more subjective. You can use accounting practices to uncover business trends, plan for your taxes, and forecast your financial future. Accounting can also help capture those expenditures that were not recorded initially. Plus, accounting is a way to prepare financial statements and other reports.

Without the proper bookkeeping, you cannot get an accurate accounting outlook. You might want to hire someone to handle this task. Many small business accounting services are ready to help with those bookkeeping and accounting duties.

Now that you know the difference between accounting and bookkeeping, here are some tips for implementing these practices at your New Jersey law firm.

Keep a Chart of Accounts

There is one way to keep accurate records, and that is by maintaining a chart of accounts. This process provides you with the framework to organize your data into categories, such as expenses, revenues, client expenses, and trust accounts. Think of these charts as an index of your firm’s financial accounts.

Typically, the chart of accounts includes five categories: revenue, owner’s equity, assets, liabilities, and expenses. The chart of accounts helps ensure that your financial information is recorded correctly.

Make Sure To Separate Personal and Business Expenses

Always keep those business and personal expenses separate to avoid any financial headaches. Intermingling your finances is not only frowned upon by the IRS, but it can make it impossible for you to claim expenses at tax time. Along with that, you will have a hard time tracking the financial health of your business when you don’t separate those expenses. Always keep separate accounts for business and personal finances. If you spot a mistake, like depositing a personal check in your law firm’s account, make sure to correct it in your books.

Don’t Lose Track of Business Expenses

Unfortunately, many attorneys often lose track of their expenses. It is always a good idea to record those expenses daily. There is less chance to misplace or lose an invoice or receipt with that schedule. Don’t forget to go into detail about the expenses. For example, if you had a meal with a client, write down all of the pertinent information, such as the client’s name and reason for the meeting. If you happen to be audited, you can easily prove that the expenses were related to your business.

Ask for Professional Help

Many people believe that they can handle the tasks of bookkeeping and accounting. However, it can be so easy to fall behind on tracking expenses and other financial information. Running a law firm is challenging, especially if you have a small firm. You can take some of the responsibilities off your shoulders by hiring a professional bookkeeper or accountant for these duties. With a little experienced help, you can ensure that nothing falls through the cracks.

Never Procrastinate

If you wait until tax time to track your finances, you will run into many problems. Track these finances on a weekly schedule. Put it on your calendar and stick to the schedule. It is vital to keep on top of those expenses and other financial matters. When you let these bookkeeping duties slip, you will have to spend hours at tax time trying to reconcile your books. When that happens, there is an increased chance of making a mistake.

Double Check Your Entries

It can be easy to make a simple mistake in your books. However, one small mistake can cause pandemonium for your records. Take your time when making entries. You always want to double-check your information to ensure that everything is accurate.

Always Track Transactions

Get an accurate picture of your law firm’s current financial standing with proper bookkeeping. Any missing transactions can create inaccuracies that lead to financial problems. Losing track of those critical transactions often cause issues with your taxes. You can avoid these problems by hiring an accountant or bookkeeper. If you want to track transactions by yourself, use accounting software to help automate the process.

Don’t Mix Up Owner’s Draws and Pay

When you take money out of your business account for personal use, that is known as a draw. An owner’s pay is paying a salary for yourself from the business. These transactions are often confused with one another, leading to inaccuracies in the books. Whether you are paying or drawing, make a record in your accounts to ensure there are no tax mistakes.

As you can tell, there are plenty of things to consider if you want accurate financial records for your law firm. In most situations, you want to find an experienced accountant who can handle these records for precise bookkeeping.

Find the Right Accountant for My Small Business

Accounting and bookkeeping can be challenging to maintain, especially when operating a busy law firm. If you want professional assistance, make sure to speak to TMD Accounting. With over 40 years of experience, our Thomas M. Ditullio Accounting team provides financial management, tax assistance, and payroll services to businesses and individuals throughout the Gloucester County area. You can schedule a consultation by calling 1-856-228-2205.

Even the most experienced restaurants have trouble trying to decipher the language of bookkeeping. It can be intimidating with its moving pieces and complex practices. With tight profit margins, you never want to let your bookkeeping go by the wayside. If you don’t watch those financials, it could be too late to fix problems or straighten out your records. If you need help with your restaurant bookkeeping, take note of these accounting basics.

Good Accounting Starts With You

As a business owner, you need to handle your finances. Whether you outsource your accounting or manage finances by yourself, staying on top of those day-to-day chores is vital. With well-managed bookkeeping, you can stay ahead of those other restaurants and turn a profit with your business.

There are several ways to manage your bookkeeping. Whether you use small business accounting services or monitor them by yourself, here are a few tips to keep in mind.

Use POS To Record Daily Sales

The first basic step of bookkeeping is to record your sales. You can find many types of accounting software for your restaurant. These systems record the daily sales for each day. You can see when the cash and credit card sales hit your bank account with this information. Remember that it can be a few days before those credit card sales reach your bank. Once you analyze the timing of those funds, you can set up your bookkeeping system to mirror that schedule.

After you have the daily sales, set up a sales report. A daily sales summary is automatically built into many POS systems. However, you can always customize the report to meet your specific bookkeeping goals.

Handle Accounts Payable

Setting up your accounts payable is another vital task. You always want to pay those vendors on time so that they continue to supply your restaurant with food and other goods. Enter all of the invoices throughout the week and pay them on time. After entering the bills into the system, some software programs will automatically schedule payments for your vendors.

Set Up Payroll

A successful restaurant needs great employees, and if you want to keep those employees, you need to pay them. Payroll can be a complicated process for anyone. You also have to think about taxes and other financial considerations. If you happen to file payroll taxes late, you could end up with high interest or penalties. There is a lot of liability on the line when you decide to handle payroll for yourself. You might want to outsource this task to an experienced accounting service that understands the needs of small businesses. With that, you can ensure a consistent and reliable flow of paychecks for your employees.

Reconciliation

Reconciliation might be the most crucial step in bookkeeping. You must reconcile credit cards,

lines of credit, loans, bank accounts, and payroll liabilities. All of those accounts with a beginning and ending balance should be reconciled. This step provides you with the most accurate look at your financial records.

Financial Reporting

If you don’t have a financial report for your restaurant, you cannot get a complete picture of your financial health. Within your financial report, you will be able to monitor your profit margins. Look at those costs of goods sold versus the sales ratios. Labor ratios are another critical factor to watch. You want to keep the cost of food, labor, and beverage around 60 percent of your total sales.

Calculate Your Costs

Good bookkeeping tracks your profits and expenses. Some of these costs for your restaurants can include:

• Cost of Goods Sold

Any product you use to create your meals, drinks, or other specialties is known as the cost of goods sold. In other words, these items are the ingredients used to round out your menu. In many cases, restaurants want to keep the cost of food around 33 percent of their sales. Beverages are another expense that can be tracked with the costs of goods sold.

• Cost of Labor

Labor expenses can be high for many businesses. Tracking these costs can be challenging. Many of these employees work for tips or have various pay scales. Not only do you have to pay for the wait staff, but you must also figure out those costs for the hosts, kitchen staff, valets, cleaners, and other personnel. Don’t forget about paying unemployment taxes. Whether you have seasonal or full-time employees, you need to figure out your labor costs to determine how they affect your bottom line.

• Cost of Equipment and Occupancy

Infrastructure costs are another concern for restaurants. Many businesses don’t own their restaurant equipment. For that reason, they need to track those costs. Mortgage, rent, and property taxes are also part of these costs. You might even want to add utilities, insurance, maintenance costs, and signage to your list of expenses.

• Cost of Administration and Marketing

You might have a great business, but no one will know without the right marketing. Billboards, newspaper ads, and even social media advertising can all add up. You might need to offer coupons and promotions to keep those customers coming through the door. Don’t forget to include these expenses in your overall costs of operating a restaurant.

Think About Outsourcing Your Restaurant Bookkeeping

You need to leverage your strengths and outsource those weaknesses in the restaurant business. In many situations, outsourcing bookkeeping duties is a wise choice. It might be tempting to take on the role of bookkeeper, but there is too much on the line with those responsibilities. Hiring someone can help you focus on growing your business. There are many steps to managing restaurant bookkeeping. While you may want to manage those books by yourself, it might be time to talk to a professional.

Choose the Right Accountant for My Small Business

If you want an accurate overview of your restaurant’s profits and losses, consider hiring TMD Accounting for your business. With over 40 years of experience, Thomas M. Ditullio Accounting offers many services, including tax assistance, financial management, and payroll help. You can schedule a consultation by calling 1-856-228-2205.

Many restaurant owners have a passion for food and devotion to the hospitality business. You might think that an exceptional chef and a customer-focused attitude are the only two ingredients for a successful business. However, setting up a restaurant accounting system is crucial for your business. With this system, you can monitor your profit margins while still analyzing those other key performance indicators.

What To Know About a Restaurant Accounting System

Your restaurant’s accounting system is vital whether you have a new business or need to implement a better financial strategy. These accounting systems not only track the financial transactions, but you can prepare reports, gather all the data for taxes, and summarize your financial information in an easy-to-understand format.

With that information, you can make the best decisions for your restaurant. These decisions can minimize costly expenses and boost your profit margin. You could decide not to use an accounting system, but you will be left with messy finances that must be unscrambled for tax time. An accounting system helps you track all the numbers for a clearer picture of your restaurant’s financial health.

Implementing a Restaurant Accounting System

There are several steps to setting up an accounting program. Make sure to follow these tips for a successful implementation of the system.

Hire an Experienced Accountant

Consider using small business accounting services for the first step of the implementation. You will need help to set up a restaurant accounting system. Keeping accurate financial records is important, especially when you need to make business decisions for your restaurant. Taxes are frustrating. These records can help to complete the tax filing process. A professional accountant understands all the tax implications that can affect your restaurant. Plus, an accountant can make a few suggestions to help select the right software for your business.

Select the Right Accounting Software

If you are searching for the best restaurant accounting software packages, there are several options. Make sure to choose one that you can use and understand. Once again, an accountant can help you with this step. You should choose one with solid financial analysis features and reporting options. All of the software should generate profit and loss statements for your business. Think about choosing a software system that tracks accounts receivable and payable, generates invoices, and manages employees’ schedules. Those robust options provide you with the best tools to oversee your business.

Accounting for a restaurant can be complicated, especially when you need to track the different salaries, workers’ tips, and other sources of income. Before you choose accounting software for your restaurant, ask for advice from your accountant. These professionals will know what you need in a software system.

Choose Your Accounting Method

Before choosing your accounting software, decide whether you need a single-entry or double-entry option to manage your books. Since many restaurants have inventory, it is advisable to select software with double-entry bookkeeping.

Another crucial decision is whether to use accrual or cash accounting. Consult your small business accountant for this decision. You might want to select accrual accounting since it provides you with the most accurate financial picture by recording expenses and revenue. Most of those records are tracked in real-time as the transaction occurs in your restaurant.

Choose a POS System

No matter the size of your restaurant, choose the right point-of-sale (POS) system to manage cash and credit transactions, send receipts, track inventory, and report on other details. You can quickly implement a POS system that works with your accounting program for a hassle-free way to manage your business.

Tracking the Restaurant’s Flow of Funds

With a restaurant accounting system, you can keep track of specific accounts for your business.

These flow of funds include:

• Payroll

Payroll can be challenging for even the most experienced restaurant owner to manage. Many of the workers have different rates of pay. You can outsource your payroll services or use payroll software to keep track of these expenses.

• Inventory

All restaurants will have inventory on hand. Remember that there are two classes of inventory: supplies and food. If you have too much stock, it often ends up as waste. On the other hand, too little inventory can hurt your sales and drive away customers. Some accounting software can help you track your daily inventory so that you can find the middle ground between profit and loss.

• Accounts Payable

As a restaurant owner, you rely on supplies to operate your business. If you don’t have a handle on your finances, then you might miss paying those invoices. Accounting software helps manage those bills and maintains a long-standing relationship with vendors and suppliers.

• Cash Flow

You need to keep track of the amount of cash that goes into and out of your restaurant. Accounting software helps you create statements to track your cash flow on a daily, weekly, monthly, or quarterly basis.

• Sales

All restaurant owners need to track their sales. Accounting software helps you see how much money comes from beverages or food items. You can break down the sales from carry-out meals, eat-in meals, and even different menu options on these platforms.

• Cost of Goods Sold

The cost of goods sold (COGS) can distinguish your food and supply costs from other expenses for your restaurant, such as rent or utilities. These accounts list your occupancy costs as expenses while the supplies and foods are identified as COGS.

As you can already tell, an accounting system is vital to help manage your business and keep it profitable for many years to come. Without the right software, you could lose track of your cash flow, miss out on invoices, and lose money on your inventory. Make sure to reach out to an experienced accountant who can help you find the best system for your restaurant.

An Accountant for My Small Business

With help from TMD Accounting, you can finally manage those financial records for your business. Thomas M. Ditullio Accounting has over 40 years of experience. His team provides a wide range of services in Gloucester County, such as financial management, payroll, and tax services. You can schedule a consultation by calling 1-856-228-2205.