Expert Tax Advice from a South Jersey Accountant 

Accounting, Tax Planning

Navigating the intricacies of tax season can be daunting, especially for business owners. Fortunately, there are a few things you can do to streamline the process and make tax time more manageable. Here are a few expert tax tips from a South Jersey accountant.

Start the Recordkeeping Process Early

One of the most important steps in managing taxes for a small business is to set up a recordkeeping system right from the start. It can be easy to put that accounting work on hold when you’re focused on running your business. However, this can lead to chaos when tax season rolls around.

To avoid the last-minute scramble, track income and expenses year-round with help from a company specializing in small business accounting services. They can keep all the information in one place for you, making it easier when it comes to taxes. Outsourcing this work can save time and money in the long run. Plus, you will not miss out on deductions when you cannot find a receipt or invoice. Proper bookkeeping will keep all that information at your fingertips.

Claim All Reported Income

When managing your taxes as a small business owner, you want to ensure that you accurately report all of your income to the IRS. Remember that the IRS receives copies of the 1099-MISC forms, meaning they can cross-reference the income you report against what they know you’ve received. For that reason, you want to ensure that the amount of income you report to the IRS matches the amount reported in your 1099 forms.

Failing to report all of your income is a red flag for the IRS, and it could result in penalties, interest, and even an audit. Even if a client or customer doesn’t send you a 1099 form, you must still report any income you have received.

Along with federal taxes, you need to comply with state tax regulations. The rules regarding reporting and paying state taxes can vary. Make sure to check with your accountant or tax advisor to ensure that you are fulfilling all obligations. By accurately reporting your income and complying with tax regulations, you can avoid the stress and expense of dealing with IRS issues down the line.

Open a Business Checking Account

The importance of separating personal and business finances cannot be overstated. You need to open separate bank accounts for your business use. Separating business and personal accounts can simplify the recordkeeping process. During tax time, these separate accounts are very important. Accurate recordkeeping ensures you deduct the correct expenses and report your income properly. When you mix your finances, it can be challenging to determine which expenses are business-related or personal.

Remember that separate business accounts are not just a matter of convenience. The IRS often needs to determine whether a business is operated for profit or as a hobby. Having a separate account demonstrates that you are serious about your business and not just using it as a hobby.

Learn About All Your Deductions

Staying informed about qualified tax deductions can help you save money on your business taxes. While some deductions may seem obvious, others may surprise you. With tax laws changing frequently, you need to keep updated with laws to know what deductions are available to you.

For example, if you use part of your home to conduct business, you may be eligible for the home office deduction. By itemizing your home office expenses, you can generally receive a higher deduction than taking the simplified deduction. Additionally, you may be eligible for tax perks if you make energy-saving improvements to your business.

With that in mind, you will want to consult with your tax professional or use tax software to help identify potential deductions. You must stay informed and track the tax laws that affect your business. Otherwise, you may miss out on possible deductions that could save you money on your taxes.

Work With a Professional Accountant

If you want to ensure the financial success of your small business, find the right South Jersey accountant who can offer more than just tax preparation services. Your accountant should provide year-round support to help track your income and spending, monitor your profits, and ensure you avoid cash flow problems.

When searching for an accountant, you want to find someone knowledgeable about the specific needs of small businesses. They should be able to offer valuable advice on financial planning, budgeting, and investment opportunities. Your accountant should be your trusted business adviser.

Starting to work with an accountant from the beginning of your business venture can help you avoid costly financial mistakes and ensure the long-term financial health of your business. They can also help you stay on top of new tax laws and regulations and provide strategic financial advice. Hiring the right accountant can provide your business with year-round financial guidance. Along with that, they can help you make informed financial decisions for long-term success.

Do You Need an Accountant for My Small Business?

At TMD Accounting, we are a trusted family-owned and -operated accounting firm that has assisted numerous clients over the years. Our knowledgeable team is well-equipped to help with a range of services, from payroll to taxes. We specialize in helping automotive/body shops, healthcare, construction, hospitality, restaurants, and professional services businesses with their accounting and bookkeeping needs. Our team of professionals is ready to assist your business. Give us a call at 856-228-2205 to schedule a consultation.

Avoiding Common Payroll Mistakes: How NJ Companies Can Benefit from Outsourcing 

Payroll

Operating a business can be exciting and fulfilling, but it can also be challenging, especially when it comes to handling payroll. A business owner wants to keep stakeholders happy and one of the most important stakeholders is staff who expect to be rewarded financially for their skills. TMD Accounting provides you with these tips to help you avoid payroll errors and offers details on how outsourcing may be beneficial.

Payroll Delays

One common mistake when processing payroll is failing to complete the process in a timely manner. This can lead to delays in employees receiving compensation. With many people now setting their bills to be paid automatically and if their payroll is delayed, this could lead to overdraft charges as well as payments being returned for insufficient funds. This can also lead to dissatisfaction among employees. Small business accounting services recommend running payroll three to four days prior to payday. It is also important to keep in mind that bank holidays may also lead to a delay, so if a holiday falls around the date you normally process payroll, you may want to add an additional day of processing, so your employees are paid on time.

Tax Payments

Once you withhold taxes from your employees, you must then pay them to the proper entity. Most employees will have Social Security, Medicare, federal and state taxes deducted from their check while some areas may also have a county or city tax. In addition, you may have to withhold insurance payments or payments to retirement funds. It is imperative that anything withdrawn from an employee’s paycheck is sent to the proper location. South Jersey accounting services understand the law and are able to make sure that the proper amounts are withdrawn and that payments are made in a timely fashion and sent to the proper entity. Failure to properly handle employee withholdings can put your business at risk. In addition, paying your taxes late can incur a 10 percent or higher penalty.

Employee Classifications

One of the biggest mistakes businesses make in payroll is not properly classifying employees. Your staff is generally classified as either an employee or an independent contractor. Often, businesses will try to claim a staff member is an independent contractor in order to avoid paying payroll taxes. However, there are specific requirements that must be met for an employee to be an independent contractor. For instance, if your employee must report to work at a certain time each day and must request time off, they are likely not an independent contractor. Using the wrong classification can lead to significant penalties, according to a small business accountant in NJ.

Improper Records

Another common mistake is not keeping proper payroll records. Small business accounting services point out that pay stubs and other forms may be needed by employees many years after you issue them. This means you need to archive the data should they be needed in the future. In most cases, you will need to retain records for between three and seven years, although some may require retention even longer. If you issue paper checks on occasion, such as for bonuses, you will also need that information included in your payroll system.

Expense Reports

If your employees have expense accounts, you will also need to track those in your payroll system. South Jersey accounting services say that in order for an expense reimbursement not to be taxable, it must be for a documented expense that is business related. For example, if you have employees who travel, their meals and lodging are a business expense, so they are not subject to payroll withholding. However, you must have documentation to confirm that these were valid expenses and not actual salary. If employees take home company cars, that may be a taxable benefit as well.

Delayed W-2 Forms

The law requires that every employee receive a W-2 form unless they are an independent contractor, in which case they would receive a 1099 form. Those forms must be mailed to your employees no later than January 31 each year. Filing deadlines may vary depending on your state and local government, a small business accountant in NJ says.

Payment of Unemployment Tax

The federal government requires all states to offer unemployment compensation programs. Failure to pay state employment could result in the loss of federal unemployment credits at the end of the year. You may also pay an incorrect rate which is why using small business accounting services is recommended. In addition, some states. Have both employee-paid and employer-paid unemployment taxes.

Payroll Outsourcing

There are several benefits to outsourcing your payroll. South Jersey accounting services are able to provide you with expert tax advice while also making sure your taxes are paid in a timely fashion. Outsourcing payroll can also save you time. Research shows that the average business owner spends almost five hours calculating, filing and paying payroll taxes every quarter. Working with a small business accountant in NJ frees up that time so you can spend it building your business.

Outsourcing also provides better security as your employee information is protected. Employees are also more satisfied as they are paid on time and their paychecks are calculated correctly. There is evidence that just two payroll errors will lead over half of your workforce looking for another job.

If you would like some help with managing your payroll, contact TMD Accounting to see how our experienced team can help. We offer South Jersey accounting services that are flexible, reliable, and affordable. With over 40 years’ experience, our family-owned and operated accounting agency continues to live up to our motto: “Where numbers matter and people count.” Contact TMD Accounting today by calling 1-856-228-2205.

Can I File Multiple Years of Back Taxes At Once?

Tax Planning

Falling behind on taxes can be a frustrating experience, but you want to take steps to rectify the situation as soon as possible. You might be wondering whether you can file multiple years of returns at one time. There are options available to taxpayers who need to file several years of back taxes. Whether you are an individual taxpayer or a small business owner, understanding your options when filing back taxes can help make the process less stressful and more manageable.

What Are Back Taxes?

You may owe back taxes if you have not filed or underpaid them in the past year. These taxes can be a significant problem for individuals and small business owners. Over time, it can lead to a buildup of interest and penalties, making it more difficult and expensive to fix the issue with the Internal Revenue Service.

The process of resolving these back taxes can be complicated. You will need to review and correct past tax returns and financial records in many situations. Consider working with a company specializing in small business accounting services for this task, especially if you have multiple years of back tax returns.

An experienced accountant can ensure that your tax information is accurate and up to date, helping minimize potential tax liabilities. They can also help you understand the tax laws and regulations that apply to your situation. Plus, these financial professionals will guide you through resolving any outstanding tax debts.

Unfortunately, many small business owners can fall behind on their tax obligations for many reasons, such as having fears of receiving a large tax bill, requiring clarification about the tax process, or needing to prioritize tax planning. No matter the reason, you will want to address back taxes as soon as possible. If you neglect your taxes, it can lead to significant financial consequences and legal penalties. By working with a knowledgeable South Jersey accountant, you can take a proactive approach to resolving your back taxes, putting you in a better position to succeed and grow your business in the long term.

What Happens If You Don’t Pay Back Taxes?

The consequences of falling behind on taxes can be severe. If you don’t file tax returns or pay taxes owed, it can result in a range of problems, including IRS notices and letters, wage garnishments and bank account levies, and the accrual of tax penalties and interest.

The IRS will first send notices and letters to collect taxes. In many cases, these notices contain language stating you are at risk of further enforcement action if you do not settle your tax debts. If you ignore these letters, the IRS may take additional measures to collect the taxes owed to the government.

In addition to these enforcement actions, failing to file tax returns or pay taxes owed can also result in the accrual of tax penalties and interest. The longer you wait to address your tax debts, the more penalties and interest you will incur. As a result, those financial penalties make it even more difficult and expensive to fix the issue. Remember that interest and penalties can add up quickly. They can make a significant dent in your finances, especially if you do not take action to resolve your tax obligations in a timely manner.

Can You File Two Tax Years Together?

Yes, you can file multiple back taxes at once. In fact, it is often recommended to file multiple returns at once to catch up on all of your taxes from the previous years. You can file back taxes by obtaining copies of your old returns or estimating your income and expenses for the missing years. Once you have that, you can submit the returns to the IRS.

Filing multiple tax returns for several years can be time-consuming. If you need to file multiple years of back taxes, the process can take longer, especially if your tax situation is more complex or you have many deductions and credits to claim. Filing several years of returns can take several days, even a week or more, depending on the circumstances.

If you owe taxes for multiple years and cannot pay the full amount all at once, you can work out a payment plan with the IRS. These plans can help you avoid penalties and interest. Additionally, they can give you more time to pay off your tax debt. However, setting up a payment plan does not relieve you of your obligation to file all of your missing tax returns.

Once again, it is always a good idea to seek the advice of a tax professional if you need to learn how to file back taxes or have concerns about your ability to pay your tax debt. They can help you navigate the process and ensure that your returns are filed correctly and promptly.

Get Help With Your Taxes

When you need assistance filing one or multiple years of taxes, TMD Accounting is here to help. With a track record of serving small and large companies for over four decades in Gloucester County, we have the experience to handle your payroll, tax, and bookkeeping needs. We want to help you rectify any issues you may have with past back taxes. As a family-owned and -operated business, we take pride in providing personalized and professional services to our clients in South Jersey. If you would like to schedule a consultation, call us at 1-856-228-2205.

What is the Best Time to Hire an Accountant for Small Business?

Accounting, Small Business

When you operate a small business, you sometimes feel like there are not enough hours in the day to keep your business running smoothly. For many small business owners, it goes beyond the products and services they offer or interacting with customers. There are also those not-so-fun requirements, like balancing checkbooks, doing payroll and organizing finances. Although you may be an expert in your field, very few business owners can manage the strict financial requirements necessary to keep a business running. That’s where small business accounting services can help. However, when you decide it is time to bring in an expert to handle your company finances, you want to be sure you bring them in at the right time for both you and the accountant.

Don’t Wait for a Crisis

The first thing to consider when deciding to hire a South Jersey accountant is to do so when things are running smoothly. You don’t want to bring in an accountant after there is already a crisis. This may include falling behind in filing your taxes, a need to file an extension on your tax filing or failure to make timely payroll tax payments. If you are already buried under in receipts and other bookkeeping tasks, hiring an accountant is a good idea, but you may pay more for them to get you organized.

How Do I Know if I need an Accountant?

There are signs that you may need to bring on an accountant like TMD Accounting. If you are finding yourself spending most of your time working on financial matters than you do in the day-to-day operations of your company, you may need expert assistance. Business owners who find themselves staying late to complete accounting tasks or taking the work home with you to do when you could be spending time with family. If you are asking friends or family members to assist you with complex financial matters or if your company is growing rapidly, small business accounting services may be the answer.

Tax Repercussions

One of the main reasons to hire a South Jersey accountant is to avoid any tax repercussions that may occur due to errors. The United States tax code is very complicated, and it is unlikely you are familiar with some of the rules and regulations required of a small business. It is very easy to miss a filing deadline or to misunderstand questions asked during tax filing season, but an accountant is trained to understand the codes, even those that may have changed since filing last year. If you are facing an audit, you definitely want an accountant to be on your side, guiding you through any dealings with the IRS and helping minimize any penalties.

Starting a New Business

If you are just starting a new business, an accountant can help create financial projections and reports while also helping your plans look more professional. They can help you choose the right legal structure for your company and provide you with advice on how to best set up your accounting systems so that they run smoothly and more efficiently. As your new business grows, the accountant will continue to guide you so that your growth is optimized. Because they were with you from the beginning, they will have a better understanding of your vision.

Seeking Financing

Many businesses neglect to hire an accountant before seeking additional financing. Banks don’t simply hand out money, especially to small businesses who may not have the track record a large company may have. When you have an accountant working with you, banks are more likely to offer funding as they will see that you are serious about the success of your company. A small business accounting service can also help you choose the best funding for your business in order to save you higher costs in the long run.

Time Savings

Probably the best reason to hire a South Jersey accountant is to save time. Part of operating a business means creating reports, reconciling accounts, entering data, scanning receipts and reviewing expense reports. Shareholders want to see accurate profit and loss statements as well as professional balance sheets. The average business owner does not have the expertise necessary to excel at all these tasks. This is where an accountant can help. Accountants offer a range of packages. You may only need them to compile monthly or annual reports, or it may be time to turn over all your financial tasks to a professional, including payroll, accounts payable, accounts receivable and more.

Business Expansion

When it comes time to expand your business, an accountant will be an invaluable asset. An accountant can help improve your returns on investment by advising you the best way to allocate resources properly. They can also help you identify consumer behavior so that products or services are tailored to specific needs. An accountant can also monitor your operations and make recommendations on areas where you can improve your company’s financial health.

If you are considering hiring an accountant for your business, contact TMD Accounting today to see what options are available. Our motto is “where numbers matter and people count,” a statement we live by every day. With more than 40 years of accounting experience, you can be sure that our accountants will handle your every need. Contact TMD Accounting today by calling 1-856-228-2205 or by visiting our website to learn more.

How to Prepare Your Business For Tax Season

Tax Planning

As the year’s first quarter approaches, businesses should prepare for the upcoming tax season. During this time, you want to have a comprehensive plan in place to ensure the accuracy of the tax return and minimize any unexpected financial liabilities for your business. Early planning can help you achieve a more streamlined and stress-free process when filing your taxes. Here are a few tips to prepare your business for the upcoming tax season.

Know All the Deadlines

As a business owner, you need to be aware of the important dates related to tax filing. Keeping track of estimated quarterly payments, form due dates, and other deadlines is essential to ensure that you are meeting your tax obligations promptly and accurately. If you want to stay organized, you can maintain a calendar of all the necessary tax deadlines. During the quarter, you should regularly review and update it to ensure that you stay informed about any changes.

Remember, some dates will vary from year to year due to weekends and holidays. You should double-check the calendar each year to avoid missing any critical deadlines. Staying informed about important tax dates can help you take the necessary steps to ensure that your business complies with tax laws and regulations.

Get Those Books in Order

You want to ensure that all financial documents and books are ready for the tax season. Make sure that all business transactions are recorded in your general ledger. These transactions should be categorized accurately and consistently. When you have a consistent system, it can help you to avoid errors. Contact a professional accounting team or bookkeeper if you need help organizing your transactions.

It is essential to reconcile your books with your bank records to ensure a complete and accurate record. You always want to avoid any discrepancies in your books. Additionally, you will want to separate personal and business expenses. If you don’t do this immediately, it can create headaches during tax time. When expenses are mixed in one account, it takes more time to sort through them, and you might miss deductions. Consider opening a separate small business account as soon as possible to simplify the process.

Collect Your Statements and Records

If you want to prepare your business for tax season, you will need to have the proper documents for your tax preparer or accountant. There are three crucial financial statements that you will need for tax time: the income statement, balance sheet, and cash flow statement.

The income statement is a report that details your company’s revenue and expenses over a specific period, showing your net profit or loss. On the other hand, the balance sheet is a snapshot of your company’s financial standing at a particular moment, showing what your business owns and owes. Finally, the cash flow statement tracks the movement of cash in and out of your business, giving you an idea of the company’s overall financial health and liquidity.

If you don’t have these statements, you should contact a company specializing in small business accounting services to help you compile these documents. Even after tax time, these documents are a valuable tool to help you track your company’s financial health.

Stay Current With Payroll Obligations

Staying organized during tax season is crucial for small businesses to ensure an accurate return. One way to maintain order is by keeping a payroll checklist that covers all necessary information. You will want to verify employee information, report special procedures, and document additional compensation and benefits information. With a list, you can reduce the chance of missing important details during the tax preparation process.

Set Aside Money for Taxes

No one wants to pay taxes, but you must have the funds to cover your tax obligations. You should set aside sufficient funds to pay your taxes for the year. With that, you can avoid any potential penalties and interest that might result from underpayment. Many individuals and businesses will use a 30% rule. Setting aside 30% of your income ensures you have enough money to pay your federal taxes. Remember that this is a general estimate and may not reflect your tax situation. You should always consult with a tax professional or utilize tax estimating tools to get a more accurate assessment of your tax liability.

Hire an Accountant

Preparing and filing taxes can be overwhelming. You should seek professional support from an accountant. While they can assist you during tax season, these professionals provide invaluable services to businesses throughout the year. Many times, you will want to consult with an accountant before making decisions for your business.

Hiring an accountant can provide several benefits for your business, including tax savings, cost reduction, and an increase in profitability. Along with that, an experienced accountant can offer valuable insights and guidance to help you make informed decisions that can positively impact your bottom line. It may seem like another expense for your business, but hiring a South Jersey accountant can be a huge relief for you during tax season and the rest of the year.

We Can Help Get You Ready for Tax Season

Let us help you take care of your tax needs efficiently and effectively. TMD Accounting is the top choice for small and large businesses in Gloucester County. With over 40 years of experience in the industry, we can help you with your payroll, tax, and bookkeeping needs. If you want to schedule a consultation, call us at 1-856-228-2205.

How Much Should a Small Business Set Aside for Taxes?

Small Business, Tax Planning

There is no question that every small business owner dreads the arrival of tax season. Between gathering all the information you will need to complete your taxes, finding all the forms necessary and then completing all those forms, it can be frustrating, time-consuming and stressful. Add to that the possibility you could have to write a hefty check to the government, and it is easy to see why businesses may not look forward to filing taxes. TMD Accounting offers these tips to help you avoid a big payment on April 15.

Understand Tax Obligations

As a business owner, there are more things to consider than filing your return at the end of the year. You need to understand what taxes need to be filed each year in order to enter the correct information on your tax forms. As a small business owner, you may be subject to self-employment tax as well as income tax. If you have employees, you must also file quarterly employment taxes. States with sales tax also require that you file those quarterly while some states require corporations to pay franchise tax. This may be once each year or also may be needed quarterly. If you must pay indirect taxes on goods sold, known as excise tax, you will need that information as well.

The 30 Percent Rule

One method many small business owners use, according to small business accounting services, is the 30 percent rule. Setting aside 30 to 40 percent of your revenue should cover the amount due on your federal and state taxes each year. This is highly recommended for sole proprietors who don’t have employees as they are more likely to owe at the end of the year than an LLC or a corporation. You can accomplish this a number of ways. One way is to place 30 percent of every client payment into a business savings account. This is a great way to save toward a tax bill if you have a small number of clients who only pay you a once or twice a month. If you have a higher volume of clients, however, you can simply total your income for a week or the entire month and put 30 percent of that total in an account.

Monthly Method

Another way to determine what to put away for taxes a South Jersey accountant says is to calculate your average monthly income. Add up the total amount you have earned and divide it by the months you earned it. For instance, if it is April, add up your income from January through March and divide it by three to get your average monthly income. Once you have determined that figure, calculate 30 percent of the average monthly income and place that in an account. You can also calculate this amount by using the previous year’s income. Simply divide your entire revenue by 12 and then compute 30 percent.

Underestimating or Overestimating Taxes

According to TMD Accounting, as long as you pay 100 percent in the present year that you paid in the previous year in quarterly estimated tax, you can’t be penalized for underpaying. If your income is over $150,000, that number rises to 110 percent. You will know if you have underestimated when it comes time to file your taxes as you will have a balance owed to the IRS when you finish computing your income and expenses. There is no penalty for overestimating. However, those funds that you set aside could have been used in other areas of your business. The good news is that if you overestimated what you would owe, you have funds in your account that can be applied to the next year.

 

Even better news is that the funds will continue to earn interest until you need to use them for your taxes the following year. However, don’t make a habit of overestimating as that is pulling money from your business you could be using. If you consistently find yourself over or underestimating taxes, it may be time to talk to small business accounting services to be sure you are not assessed a penalty or tie up funds unnecessarily. The good news is that if you overestimated what you would owe, you have funds in your account that can be applied to the next year.

When Should I Start Setting Aside Funds?

The best time to start setting aside funds for taxes, according to a South Jersey accountant is as early in the year as possible. Taxes don’t take a break which means as soon as the new year rolls around, you need to move past the previous year and start fresh for the new year. If your fiscal year is the same as a calendar year, start putting money away as of January 1. If your fiscal year is different, such as from July 1 to June 30, begin putting money away on July 1. Even if you have not paid your taxes for the previous year, you can still tuck the funds away.

When Do Taxes Have to be Paid?

If you anticipate that you will owe more than $1,000 for the year, taxes must be paid quarterly. Income earned from January 1 to March 31 must be paid by April 15 while April 1 through May 31 must be paid by June 15. Any income earned from June 1 to August 31 is due by September 15 and September 1 through December 31 taxes paid by January 15 of the following year.

If you are struggling to prepare for tax season, it is time to call TMD Accounting. With 40 years’ experience with small business accounting services, TMD Accounting can help you get your taxes filed and make sure you pay only the amount you are required to pay. Contact our experienced team today by calling 1-856-228-2205 or by visiting our website.

Why Use a Professional for Your Tax Preparation Service?

Tax Planning

Most Americans dread tax season even if they will not have to pay the government. Most of the dread comes with gathering the documents needed, figuring out which tax forms have to be filed, and taking the time to put it all together. This all needs to be done whether you are filing your personal taxes or own a business. One of the best ways to make tax season less stressful is to hire a professional to handle the stress for you. Today, the tax preparation pros at TMD Accounting will explain the main reasons why letting a professional prepare your taxes can not only relieve stress but also ensure that your taxes are filed properly.

Free Up Your Time

The average time it takes the average person to complete their taxes is 20 hours. With people living very busy lifestyles today, giving up 20 hours can be extremely difficult. This is the equivalent to half a work week for most Americans and it could be time spent with family and friends, focusing on your business or doing things that are more important to you. Also keep in mind the amount of time it may take should your return be audited by the IRS, something that is less likely to happen if you use small business accounting services.

Lower Your Tax Burden

You may ask “why should I hire an accountant for my small business to do my taxes?” The fact professionals undergo significant training so that they understand the complicated tax code as well as the many changes that can occur year-to-year is one of the primary reasons to use a qualified tax professional. Companies like TMD Accounting know what needs to be done as well as what should not be done to get you the biggest refund possible while following IRS rules and regulations.

 

In addition, tax preparation services are aware of deductions that you may not know exist and the cost of tax preparation may be deductible, which also saves you money. The more deductions you are eligible to take, the lower your tax burden is, giving you a higher refund or at least reducing the amount you must pay to the IRS.

Avoid Costly Errors

There is research that shows as many as 80 percent of Americans make mistakes on their taxes. Most of them are minor, but they often cost you money in the form of a reduced refund or higher tax bill. However, some errors can be catastrophic and could result in high penalties and fees. They could also result in criminal charges filed, even if the mistake was unintentional. Small business accounting services can help prevent those errors. If you are audited, they will work with you and the IRS to explain the situation.

Less Stress

There is no question that completing your taxes can be stressful, complicated and confusing. When asking yourself “why should I hire an accountant for my small business,” consider that tax professionals are trained to deal with all of the complicated processes that come with taxes. All you have to do is deliver them your information and they will put it all together and make it make sense to the IRS. You don’t need to worry that you file the wrong form or that you put the wrong number on the wrong line. They are trained to be sure that all the numbers are entered correctly and that the proper forms are filed.

Audit Assistance

One of the best features of using small business accounting services to prepare your taxes is that, should you be audited, a professional will help you through the entire process. If there was an error on their part, many tax professionals will pay any fees or penalties you incur as a result of that error. Even if the error was on your part, such as a missed W2 or interest statement, they can work with the IRS to help minimize the impact of the error. This is another layer of stress relief that comes with hiring a professional to prepare your personal and/or business taxes.

Major Life Changes

If you have prepared yourself in the past, there may be other reasons why you should look to an expert to prepare them this year. If you experienced a major life event, such as getting married, buying a home, receiving an inheritance or moving to a different state, you may want to get a professional to prepare them for you this year. Life changes can lead to additional deductions, or they may lead to a higher than normal tax burden.

 

Even if you have not experienced a major life change, there are circumstances where you should think “maybe I should hire an accountant for my small business this year.” If you are self-employed or you own rental property, a professional is highly recommended. The same is true of you are an active stock trader or you have foreign accounts. All of these situations can lead to complicated tax structures that only a professional can unravel for you.

Contact a Tax Preparation Service Today

If you are ready to prepare your taxes, consider reaching out to TMD Accounting first. Our amazing team can prepare your taxes for you, relieving stress and helping reduce your tax burden as much as possible. You can learn more about our services by giving us a call today at 1-856-228-2205 or visiting us online. Those 20 hours you spend on taxes can be better spent with your family. Let the professionals handle your taxes for you.

How to Transition from In-House to Outsourced Accounting

Accounting

As your business expands, self-managing your finances can quickly become daunting. Many companies, which initially handle their accounting in-house, often realize that outsourcing is a more efficient option. While outsourcing your accounting may seem like a relief, transitioning from in-house to outsourced accounting can be challenging. Here are a few tips to help you make the transition as seamless as possible.

Pros and Cons of Using an Outsourced Accountant

Outsourcing eliminates the time and costs of the hiring process. Along with that, it provides access to expert accountants and bookkeepers. Additionally, outsourcing makes it easier to scale accounting services, leverages automation technologies, and provides a valuable advisor to help make the process more efficient. By choosing the right outsourcing company, you can ensure that your accounting is in the hands of a reliable and knowledgeable firm.

One of the main disadvantages of using an outsourced accountant is a need for more control over the quality of the work. When you outsource small business accounting services, you rely on a third party to manage crucial financial information. It can be challenging to monitor their performance and ensure that the work is being done accurately and efficiently.

Another potential issue is a need for more direct collaboration with your accountant. When working with an outsourced accountant, communication may be limited to email or phone calls, making it more difficult to establish a close working relationship and receive timely and personalized support.

Make the Switch by Choosing the Right Partner

Choosing the right financial partner is vital to a successful accounting transition. With the right support, the process can be smooth and effective. If you want to ensure that you choose the best fit for your business, consider the following qualities when selecting an accounting firm.

Proactivity

A good accounting firm should be proactive in helping you transition from in-house accounting to outsourcing as seamlessly and stress-free as possible. If they aren’t offering support during this stage, it may be a sign that they are not the right fit for your business.

Communication

A strong communication style is crucial in any business relationship. Look for responsive, clear, and proactive communication from the accounting firm.

Expertise

Make sure the accounting firm you choose has the experience, knowledge, and technology to meet your needs. You will want to consider their track record and reputation in the industry.

Customer Focus

A quality accounting firm should be in tune with your needs from the start. You want them to be committed to making your life easier. Your prospective accounting firm should be customer-focused and dedicated to your success.

Get an Early Start With the Right Plan

When transitioning from in-house accounting to outsourcing, you need to plan and budget enough time for the process. You want to ensure that your financial statements and reports are received promptly. Keep in mind that the switch may take several weeks to complete. To make the transition as smooth as possible, plan to spend two to four weeks gathering your financial records and documents for your new accounting firm.

Once you’ve handed over your financial records to your new accountant, they should be able to provide you with an estimate of how long it will take to start monthly accounting services. Remember that if you need to catch up on bookkeeping or taxes, your accountant will need to complete them before moving forward with future financial statements. On average, it takes 60-90 days to complete one year’s worth of back taxes.

You should be cautious of accountants who make unrealistic promises, such as claiming the transition will be “a breeze” or take “no time.” These promises may be a sign that the accountant needs to be more serious about the financial health of your business. On the other hand, if they finish the work too quickly, you might want to be skeptical of the quality of their work.

Set Achievable Goals

Before transitioning to outsourced accounting, you will want to understand and communicate your specific pain points and goals. Knowing why you want to outsource and what you’re nervous about can help establish clear expectations and ensure a successful partnership with your new accountant.

To get the most out of your accounting relationship, take the time to list everything that frustrates you about your current accounting process and your future financial goals. By providing this information to your accountant, they will better understand your needs and tailor their services to meet those concerns.

A quality accounting firm will have established processes to ensure your success, including meetings designed to help you establish best practices and a plan for working toward your financial goals. Your accountant should thoroughly understand your business and be equipped to provide the guidance and support you need to succeed.

Find an Accountant

Transitioning from in-house to outsourced accounting can be a significant step for your business. Whether you have an in-house accountant or use a combination of an in-house bookkeeper and an external accounting professional, there are certain advantages to working with an outsourced accounting service.

By following these tips, you can be better equipped to smoothly transition to outsourced accounting and enjoy the benefits of working with a professional and experienced South Jersey accountant.

Choose TMD Accounting for Your Small Business

We are a family-owned and -operated accounting firm. We have helped numerous clients over the years. Whether you need help with payroll or taxes, we are here to assist you. Schedule a consultation by calling 856-228-2205.

How to Find the Best CPA Bookkeeping for Your Startup or Small Business

Small Business

As a small business or startup owner, you want to ensure your enterprise thrives. While you may want to focus on your company, you need to take care of those other matters, such as financial planning and taxes. It may be time to seek professional help. Working with a certified public accountant (CPA) is an excellent way to ensure you make the most of your financial success.

Not only will an accountant help you with the necessary forms and paperwork, but they can also provide you with valuable advice on financial planning and projections. Together, you can get help to set realistic and achievable financial goals for the future, ensuring continued success for your business.

Do You Need a CPA for Your Business or Startup?

Knowing when to hire a certified public accountant is half the battle. While there is no set time for every small business owner to hire a professional, some signs indicate you might need one.

No Experience With Financial Matters

If you are starting your business and are unfamiliar with accounting basics, a CPA can help you develop your financial strategy, teach you how to manage your finances, and ensure that you avoid mistakes that could cost you in the long run.

Need to Establish a Legal Structure for Your Business

When deciding on your company’s legal structure, an accountant can explain the options available, helping you choose the best one for your business or startup. Many business owners need to become more familiar with business taxes since most have only filed personal taxes in the past. A CPA can ensure you pay the right taxes for your business type and industry. They can also help you take advantage of tax credits and deductions to save money.

Require Help With an IRS Audit

If your business is growing rapidly, an accountant can manage your cash flow, help you use your money more effectively, and identify areas where you can cut expenses. Unfortunately, there are times when you could face an audit from the IRS. In that scenario, a certified public accountant can guide you through the process and ensure that you comply with tax laws.

Find Funding for Your Business

Finally, if you need a small business loan, an accountant can help you prepare the financial documents required by lenders and ensure that your loan application is well-organized and detailed. When looking for a company that offers small business accounting services, here are a few tips to choose the right professional for the job.

Finding the Right CPA for Your Situation

A business accountant can benefit your company at every stage of its growth. From managing finances to providing valuable insights and advice, the right accountant can be your business’s trusted advisor. You want to ensure you find the right fit for your small business or startup.

Search for Referrals

First, ask for referrals from lawyers, business advisors, bankers, and other professionals. Many of them have worked with CPAs that they trust for their financials. You may even want to attend local business events hosted by your Chamber of Commerce. Also, utilize your existing networks, such as family, friends, and colleagues. Someone is bound to know a reputable CPA to help your business or startup.

Skip the Internet

Finding a trustworthy business accountant is crucial for the success and growth of your company. While you may come across multiple options by doing a quick online search, you may want to avoid hiring someone you find on Google or online directories. Some CPAs may pay to add their names to a list of local business professionals. However, you don’t have to discount an online search completely. If you cannot find a personal referral, use the internet to read reviews about the local CPAs in your area.

Choose a Certified Public Accountant

Keep in mind that not all accountants are the same. Working with a certified public accountant can provide numerous benefits for your business’s financial health. CPAs have passed a rigorous examination and must be licensed. That ensures they possess the necessary knowledge and experience to provide reliable financial advice.

Additionally, a CPA’s certification must be periodically renewed to keep their skills and knowledge current with the industry’s standards. Many business owners and startups want to work with a CPA to get a handle on their business finances.

If you’re looking for a CPA, you can start your search by reaching out to the American Institute of Certified Public Accountants (AICPA). The AICPA maintains a directory of CPAs, accounting firms, and accounting organizations that can connect you with the right professional.

Once you have found a CPA, ask them a few questions. First, find out the accountant’s experience with small businesses or startups. A qualified accountant should understand the complexities of running a small company. Along with that, they should have references from past clients. Also, ask if the accountant has experience in your specific industry. You will want to work with someone who understands your business’s needs.

Make sure to also inquire about their services. Many of these professionals provide tax and auditing assistance. However, other CPAs can offer to help with bookkeeping, business valuation, or budgeting. Additionally, ask about the billing process. Most accountants charge by the hour or offer a monthly retainer.

Need an Accountant for My Small Business?

At TMD Accounting, we provide you with the flexibility, dependability, and affordability you need in an accounting firm. With over 40 years of experience serving Gloucester County, we have helped numerous small businesses and startups manage their financial health. If you would like to schedule a consultation, call us at 856-228-2205.

How to Use a Comparative Income Statement for Your Small Business

Small Business

While running your business, you might not have time to analyze financial numbers. However, knowing how decisions affect your company’s financial health is crucial. When you review your books and records, you can make plans to grow your business. It is time to become familiar with a comparative income statement if you want to boost your profits. Here is how this financial statement can help your small business.

 

Is This Document the Same as an Income Statement?

Some people may refer to an income statement as a profit and loss statement. No matter the name, the report shows your sales minus any expenses. At the top of the statement, you will see the number of sales earned in a period. After that, the business expenses are deducted, giving you a net profit at the bottom of the statement. This income statement can show how your business decisions affect the net income for that period.

Looking at an individual statement will only give you the results for one specific period. In many cases, you will want to compare one period to another to see the long-term effects of your decisions. That is where a comparative income statement can help. If you need help compiling an income statement, any company offering small business accounting services can assist you with that document.

 

Is a Comparative Income Statement Important?

A comparative income statement will combine the information from several statements into a single report. This statement can help you measure your business performance and identify financial trends. It also allows you to compare your profits and losses to other businesses. The statement is usually organized into two or three columns representing an accounting period. The most recent periods are usually closer to the left side of the page.

 

A comparative income statement can assist with many types of accounting tasks, such as:

 

  • Provide a review of the business’s performance
  • Compare profit and losses to previous periods
  • Determine a pattern in sales
  • Measure your business against others

 

A comparative income statement makes an excellent tool for business owners. For instance, an income statement might tell you that sales dip every April. You can boost your marketing efforts for the month when you have access to that specific information.

When you compare several financial statements, you can see a trend in performance. Comparing reports is time-consuming and confusing, but this statement allows you to track your business’s performance trends. With a comparative income statement, you will not have to flip between the documents. You have all that information right in front of you.

 

How to Read a Comparative Income Statement

If you want to understand your business’s financial data, take a look at your comparative income statement. You will want to analyze the information in two ways: horizontally and vertically. With these types of analyses, you can understand the business’s performance. Additionally, the statement can help you see patterns to help predict future trends.

 

Horizontal Analysis

The horizontal analysis examines your business’s trends over a period of time. It can help you see growth patterns. To calculate growth rates, you need to analyze the change percentage between accounting periods. If you want to find the change in the percentage between two numbers, you need to determine the difference in dollar changes for each period. For example, if you gain $55,000 in 2021 and $60,000 in 2022, then your business’s dollar change is $5,000.

You can divide the dollar change amount by the year’s profit. For example, if the base year profit is $55,000 for 2021, then the result is 0.09 ($5,000 / $55,000 = 0.09). After getting that number, you will want to multiply the result (0.09) by 100. With that, you will have the percentage of change. For this specific example, there is a 9% change.

 

Vertical Analysis

Vertical analysis helps compare the size of different line items in a financial report. To use vertical analysis, you have to divide each line item by the total amount of revenue from a product or service. After that, you can multiply that number by 100 to get your business’s percentage. With that, the number tells you what percentage of each dollar was earned as profit.

 

Why Are Comparative Income Statements Crucial?

You have to measure performance when you are a small business owner. When you don’t understand a comparative income statement, you might not know whether your decisions work for your business. Additionally, these statements help you track profitability over several periods.

The comparative income statement shows you how your business has performed. For example, you can compare your return on investment (ROI) from last year to the current year. When it comes time to sell the company, some buyers will use comparative income statements to determine whether the business is a good investment.

Accounting is a challenging part of running a business. However, it can be an eye-opening experience, especially when you review your financial statements. You want to know whether the time and effort are paying off for your business. A comparative income statement will provide detailed insight into your business’s financial health.

 

Contact the Professional Team at TMD Accounting

When you need an accountant for my small business, call TMD Accounting. We’ve served the Gloucester County area for over 40 years. Our team assists small business clients with their bookkeeping and accounting needs. To learn more about what our professionals can do for you, give us a call at 856-228-2205.

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