What is the Best Time to Hire an Accountant for 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 Transition from In-House to Outsourced 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.


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.


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


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.

Top 5 Small Business Accounting Errors You Might Be Making [+ Tips to Find Them]

Many businesses use software programs for their bookkeeping and accounting. These methods have made bookkeeping and accounting easier for small businesses. Unfortunately, it has also made errors in bookkeeping more common. Some accounting errors are minor and unimportant, while others are more significant and might have a negative effect on your business’s financial health. Here are the top five small business accounting errors and how you can find and fix them.

#1- Listing Potential Profit as Current Cash Flow

Many businesses believe that profit is the same as cash flow. For example, if you have closed a deal for $40,000, you might assume the initial dollar amount could be considered pure profit. However, that is not always the case. Remember, the costs to complete the deal or other problems could cut into those profits. Plus, it will take money and resources to complete the deal. As a result, you may lose a significant portion of the profit before the project finishes. While it is tempting to write down all income as a new cash flow, it gives your business a false sense of security that you are operating a financially healthy business.

#2 – Forgetting to Record Transactions

Accountants must keep a meticulous record of all transactions. From small payments to large ones, it is crucial to ensure that every detail is recorded and categorized in the correct account. Bookkeeping is just as important for small companies as it is for large ones. With the proper accounting and bookkeeping practices, you can access information to assess your business’s financial health.

To keep your business financially secure, you need to establish a serious bookkeeping and accounting system that accurately categorizes your assets and liabilities. It is also important to check your books and accounts monthly. When you are not serious about these duties, it can lead to financial troubles.

#3 – Failing to Reconcile Books With Bank Accounts

You need to check your bank balance against your ledger frequently. This practice is called reconciliation. When you frequently check your record against the bank accounts, it ensures your account balances are accurate.

It can be easy to forget to record small costs and expenses, which can cause problems later. Reconciling your accounts will allow you to track your financial situation. Every time you pay for something, ensure the receipt is recorded in your business’s accounts. This will help you keep track of your business’s financial health.

#4 – Not Communicating With Your Bookkeeper or Accountant

These professionals need to be aware of all the transactions in your business. For that reason, keeping good records of your company’s financial information is essential. In addition to that, you will want to ensure those records are available to your bookkeeper or accountant. When it comes time to monitor your income and spending, you should keep a paper record of all transactions. Communication will help prevent any problems regarding your accounts and books.

#5 – Managing Bookkeeping and Accounting Responsibilities by Yourself

Are you a small business owner who handles your bookkeeping and accounting in-house? It can be tempting to save money by doing these tasks on your own, but it may not be worth the time and effort. While some might think that managing their own accounting is an excellent way to save money, it could cost them more than they realize. Hiring an accountant involves upfront costs, but it will be worth it for your business in the long run.

When you hire an accountant to manage your accounting, you give yourself a chance to save money. Accountants often know about certain tax deductions and can spot errors in your company’s books. You may be hesitant to hire a professional to handle these tasks, but small business accounting services provide many benefits.

How to Prevent and Fix Errors

Now that you know the common errors, how do you find them? Here are a few tips to follow.

Keep an Audit Trail

An audit trail is a set of documents that confirms the transactions you record in your books. You base the entries on your company’s purchases, sales, and expenses when you record transactions. The audit trail details all the information about transactions so you can use it to cross-check your bookkeeping.

Use a Consistent Process

It is important to review your books regularly to spot errors. While the frequency of your bookkeeping review depends on your business, you should conduct a checkup at least once a month. Even small mistakes can snowball into bigger problems when you do not catch them. If you don’t currently have a regular accounting process in place, consider starting one to catch accounting mistakes early and prevent future issues.

Have Someone Else Look at the Books

When it comes to your accounting, you are better off having someone else check your books. After all, you’re a business owner, not an accountant or bookkeeper. If you want to catch mistakes, save money, and prevent headaches, ask an experienced professional to help with these tasks.

Need an Accountant for My Small Business?

When you need help with your small business accounting, reach out to TMD Accounting. For over 40 years, we have served the Gloucester County community and surrounding areas. Whether you need assistance with bookkeeping or accounting services, we can help you get a handle on your finances so that you can focus on operating your business. Schedule a consultation by calling 856-228-2205 today.

What Startups Should Know About Accounting Practices

As an entrepreneur, it can be exciting to open a new startup. Making sure that your accounting processes are established correctly can make a difference in the success of your business. It is rarely a good idea for new business owners to try to manage their accounting because of the potential for errors and the penalties they could face for mistakes. Here is what you need to know about establishing good accounting practices from TMD Accounting.

Bookkeeping vs. Accounting

Bookkeeping and accounting are not the same things. You must understand the differences between these essential functions so that your financial records can be kept properly.

Bookkeeping involves keeping track of daily transactions. Bookkeepers typically do not analyze a company’s finances but simply record transactions. The tasks of a bookkeeper include the following:

  • Record and categorize daily transactions
  • Create and send invoices
  • Record when invoices are paid
  • Follow up with clients who owe unpaid invoices
  • Process payroll
  • Reconcile bank statements
  • Prepare financial statements
  • Provide financial statements and tax documents and give them to the accountant

Bookkeeping doesn’t require any certificate or license and is relatively simple to do.

By contrast, accounting is much more analytical and subjective. Accountants must be certified. Some of the tasks that an accountant might do include the following:

  • Adjust entries to balance books
  • Analyze financial statements
  • Assess a business’s financial health
  • Advise business owners about financial decision-making
  • Prepare and file business tax returns
  • Complete audits

Accountants are generally required to hold Bachelor’s degrees in accounting and/or be certified public accountants (CPAs). They have more experience and education than bookkeepers.

Managing Accounting for Startups

To establish accounting practices for your small business, you should do the following things:

  • Open separate business checking and savings accounts
  • Avoid commingling business and personal funds
  • Choose either the cash basis or accrual basis accounting method
  • Establish your bookkeeping system
  • Purchase accounting software
  • Create your business’s chart of accounts
  • Decide your business’s accepted payment terms
  • Keep thorough transaction records
  • Financial Records to Retain

You will need to create and retain the following important financial records as a startup business:

1. Balance sheet – A snapshot of your company’s finances and can be updated or prepared at any time

2. Profit/loss statement – Summary of your company’s expenditures and revenues over a set period to monitor your business’s growth

3. Cash flow statement – Report used to predict whether your business will meet its obligations and includes both variable and fixed expenses

4. Accounts payable/receivable reports – Provide detailed information about your outstanding invoices and how long they have not been paid as well as what you owe and to whom it is owed

5. Business tax returns – Prepared, filed, and retained for seven years

Other records to retain include the following:

  • Forms 1099-MISC
  • Invoices, gross receipts, receipt books, and bank deposit records
  • Purchase records and receipts
  • Expense records, including proof of payment, canceled checks, credit card receipts, account statements, and paid invoices
  • Documentation of business assets, including acquisition dates, purchase prices, how they are used, when disposed of, selling prices, and improvements
  • Employment tax records for at least four years

Why Good Accounting is Important

Startups need to have good accounting practices to help them understand their financial situations at all times. When you implement good accounting from the beginning, it can help you establish good business habits that can benefit your business and facilitate its growth.

Many startups fail because of a lack of cash flow. Proper accounting can help you monitor your business’s cash flow and the rate at which it spends money. Your accountant can identify trends in your business’s cash flow and cycles during which your cash flow might be heavier or lighter. They can also help you identify areas in which you are spending too much and offer advice for how you to reduce your business’s spending.

Good accounting also helps your business to comply with the tax law and avoid potential IRS audits. When you have small business accounting services in place for your startup, your accountant will prepare your business taxes for you and ensure they are correct. They can also help you understand the deductions and credits for which your business might be eligible and the types of documentation you will need to support them. If the IRS selects you for an audit, your accountant can guide you through the process and communicate with the IRS for you.

A good accountant can review all of your records and help to identify all potential deductions and credits. This can help to reduce your taxable income and the taxes you might have to pay.

Find an Accountant for My Small Business

If you are preparing to open a new business, establishing your accounting practices can help to keep your company on track. The professional accountants at TMD Accounting can help you implement a sound accounting and bookkeeping strategy to help your business grow. Call us today for more information at 1-856-228-2205.

5 Important Principles of Modern Accounting

Every business needs to have a strong accounting system in place so that they can understand their finances and make accurate projections about the direction of their companies. Accounting involves continuously observing and exercising control over your company’s economic activities. The success of your business will largely depend on your accounting, and it’s important for your company to strictly follow the generally accepted accounting principles (GAAP) in your accounting practices.

As a discipline, accounting is strict and follows the GAAP to prevent inaccurate or incomplete information from being reported. Here is what to know about modern accounting and the five generally accepted accounting principles from the professionals at TMD Accounting.

Principle 1: Revenue Recognition

The revenue recognition principle is the first principle your business should know. When you record data, you need to think about the time during which you recognize revenues your company earns through its income statements. When you will recognize your revenues will depend on whether your company uses the cash-basis or accrual-basis method of accounting. If you are using the cash-basis method, you will recognize your revenues during the period in which your company receives them. If you are using the accrual-basis method, you will recognize your revenues during the period in which you provide services.

The revenue recognition principle states that companies should only recognize revenues when they have mostly or totally completed the process of earnings. This means you should record revenues at the time when the purchaser takes possession or when you have completed your service. The revenue recognition principle helps businesses to keep accurate track of their accounts and prevents them from counting profits too early.

Principle 2: Cost

Businesses should also record their assets at the time they purchase a service or product to accurately track their expenses. YOu should record the cost of anything on which your business spends money and properly account for depreciation. Under the cost principle, businesses should not record the resale cost of items in their books. You should instead use the item’s historical cost. For example, if you own an office, use the historical cost of the property instead of its fair market value while making certain to account for overhead costs.

Principle 3: Matching

Businesses should make sure they match the revenues they have recognized with their expenses during the same period and record them when the expenses were incurred. If your business recognizes revenues for services or products you sold, you should also recognize the cost of those services or products during the same period.

Every expense item should match a revenue item under the matching principle. For example, if you sell t-shirts, you should recognize the revenue of a t-shirt when a customer purchases it while also accounting for the expense involved in your business purchasing the item at its wholesale price. When you apply the matching principle, you are using the accrual-basis method of accounting.

Principle 4: Full Disclosure

When your business creates its financial statements, all of the information must be complete and transparent. You should not include any information that is misleading so that your clients or partners are aware of all relevant information about your company.

Prinicple 5: Objectivity

At all times, your accounting information should remain accurate and free from opinions. You should make sure your accounting data is supported by evidence, including receipts, invoices, and vouchers. When you remain objective, your financial reports will be more reliable. You should steer clear of anything that could call your work into question because of your subjective opinion.

Under the objectivity principle, your books should include verifiable information that is supported by objective evidence and should not include any unsupported data. The values used in your reports should not be subjectively measured even when subjective data is more favorable than the data that can be verified. If you violate this rule, it could lead to confusion because of making it difficult to comprehend the subjective data. It is best to only include data that others can verify in your financial reports.

Why Is It Important for Businesses to Know Accounting Principles?

The five generally accepted accounting principles are justified, and they provide a good foundation for your company’s budgeting and planning processes. By strictly adhering to these five principles, you can avoid conjectures that could lead to financial problems.

Following basic accounting principles can also help to improve the cohesiveness of your organization. Depending on your business’s size, different employees might be in charge of different accounting principles. If you don’t have a plan, it could be impossible for your employees to perform their jobs so that you can get a clear picture of your business’s financial health. If left unchecked, this can result in significant financial problems and potential business failure. Making sure your plan is founded on the five generally accepted accounting principles can help to avoid these types of issues.

The basic principles of accounting provide a straightforward method for reporting your finances. Each principle has a role in the big picture of your company’s financial health. When you establish these principles at your business, you can facilitate a more productive and organized environment to track your cash flow and avoid problems such as unverified data and missing funds.

Find an Accountant for My Small Business

When you work with TMD Accounting, we can help you establish the generally accepted accounting principles at your business to facilitate your company’s growth and success. To learn more, call us today at 1-856-228-2205.

Best Practices For Effective Budgeting and Forecasting

If you are a small business owner, you are always on a search to improve your bottom line. Forecasting and budgeting your expenses is one of the best ways to boost your revenue. With that, you can ensure your business is on track for both short- and long-term goals. Here are some of the best practices to incorporate into your business for effective budgeting and forecasting.

Create a Budget

Effective budgeting and forecasting need to start with a plan. You cannot make a solid business decision without a budget. Your business needs to create a budget and stick to it. This step can help your operations stay on track. With a budget, you have a road map to track the progress of the business. Once you have created a budget, please do not ignore it. A budget is there for a reason: to help manage your expenses and other costs.

Plan for Short- and Long-Term Business Expenses

If you want effective budgeting and bookkeeping, you must always plan for your business’s short- and long-term expenses. With this plan, you can ensure you have the necessary resources to meet your current and future financial needs. Take time to list all of your current expenses, including both variable and fixed ones. By doing that, you can see where the money is going for each month. After that, consider your long-term goals. Whether you have to make improvements or expand your business, you need to factor those long-term costs into your business plan.

Always Anticipate Changes

Unfortunately, income and expenses will not stay the same. If you want to ensure your finances stay on track, you always need to anticipate those changes. While it may seem like an impossible task, you will want to review your financial statements regularly with your accountant. With a quick meeting, you can see where all the money is heading and whether there are any potential problems on the horizon.

After that, you can always make adjustments to your budget. If you are spending more than expected, adjust the figures so that your budgeting remains accurate. Forecasting is not always exact, but you can use these best practices to prevent any problems that could harm the financial future of your business.

Forecast To Predict Trends

Forecasting can help with your financial planning and budgeting. Look at past trends and use them to predict future patterns. You can make more informed decisions about where to spend money. There are several ways to forecast your financial future. No matter the method you use, you need to collect accurate data. Also, it is crucial to revise and review your forecasts as new data becomes available. Forecasting can be an invaluable source to help you make better decisions for your business by continuously updating your budgeting and examining the current data.

Review Your Budget

As previously mentioned, your budget will change. You should not think of a budget as a stationary number. Schedule a time to review your budget with your bookkeeper or accountant. If you need to make adjustments to keep you on track, that does not mean there is a problem. All businesses review their budgets from time to time. Use your budget as a tool to track your income and expenses. You can make better decisions about allocating resources and managing your operations with a budget.

Seek Experienced Financial Help

Forecasting and budgeting are vital tools for both small and large businesses. When you have a clear picture of your finances, you will be able to make better decisions. However, many business owners do not know where to start and often struggle to manage their expenses.

In those cases, you may want to seek professional help for your bookkeeping and accounting duties. Many business owners struggle to keep up with books, budgets, and other financial responsibilities. While you may not want to spare the extra expense, think about these professional services as an investment in your business.

An experienced and qualified accountant can offer some guidance and expertise to help improve your bottom line. With their help, you can develop a budget that will work for your business needs, giving you more clarity to make significant financial decisions. You should never be afraid to ask for help, especially regarding your finances.

Effective Budgeting and Forecasting Benefits

An effective budget can help your business save money and keep track of any spending. Along with that, it can help forecast your future income and expenses, which might help if you need to tighten costs down the road.

Don’t forget about forecasting. This tool is vital for making informed decisions for expansions, investments, and other financial moves. When you have effective budgeting and forecasting, you can make the most of your existing resources and keep all those finances on track for your business.

Budgeting helps your business in the present, and forecasting is essential for those future plans. With these best practices, you can ensure that your data is accurate, helping to move the business in the right direction.

Reach Out To an Experienced Accounting Firm

At TMD Accounting, we have over 40 years of experience helping small and big businesses reach their financial goals in Gloucester County. We are here for your business if you need help with bookkeeping, taxes, payroll, or financial planning. We provide affordable, flexible, and reliable solutions for your accounting needs. Schedule a consultation by calling 856-228-2205.

Accounts Receivable Services for a More Efficient Business

Are you looking to become a more profitable and efficient business? Accounts receivable services may be able to help. Small business accounting services can streamline your billing process, ensuring that payments are received on time. Additionally, outsourcing these accounts receivable services allow you to focus on other parts of your business. Here is how accounts receivable services can help you have a more efficient business.

What Are Accounts Receivable?

Accounts receivable is the money a business has a right to receive because it provides services or goods on credit. In short, it is the money customers owe for services or products that have not been paid. For example, if your business sells a product on credit, a customer will have a certain period to pay you for the product. In many cases, the time frame is 30 days.

Your business must record the sale as an account receivable on the balance sheet. Once the company reviews the money, the account receivable would be removed from the balance sheet and replaced with cash. As you may tell, these accounts play a vital role in your bookkeeping since they represent future revenue. Accounts receivable will give your company insight into your overall cash flow and when you can expect timely payments from customers.

Generally, companies with higher amounts of accounts receivable could have more difficulty collecting payments from their customers than those businesses with fewer accounts. Customers who owe a large amount of money could default on their payments, meaning you could lose out on that income.

What Are Accounts Receivable Services?

You can track your customers’ payments and manage your cash flow with a professional accounts receivable service. These services handle many tasks, such as collections, invoicing, and customer service. An account receivable service will also allow you to gain insight into your customers’ behaviors. Also, accounts receivable services can optimize your billing and collection process, helping identify or correct trends. All these services can streamline the billing process, helping improve your bottom line.

Why You Need an AR Service

Using accounts receivable services will provide your business with the resources and tools to streamline invoicing, collections, and payment processes. There are plenty of benefits, and they include:


Reduce Administrative Costs

With an AR service, your business can save time and money by allowing them to handle all aspects of collections and invoicing, including sending payment reminders and following up with customers.

Improve Cash Flow

These AR services can help you get money faster into your account by using automated invoice processing that can optimize your cash flow.

Keep a Focus on Your Business

Managing accounts receivable can be time-consuming, especially if there is no dedicated person or staff to handle these responsibilities. Outsourcing your accounts receivable tasks allow you to free up time to operate your business. With that, you can help grow your company and generate more revenue.

Increase Insight Into Your Customer Base

These AR services will give insight into your customers’ behaviors, including payment trends and patterns. With this information, you can improve your business planning and customer relations. You can see these trends to understand your clients’ spending patterns so that you can tailor your services and products to their needs.

Choosing an Accounts Receivables Service

These professionals are here to help improve and manage your cash flow. Along with that, they can help you reduce the time you spend on administrative tasks. Most AR services will cover a few areas in accounting and bookkeeping, such as reporting, invoicing, collections, and customer services. An AR service can reduce administrative costs, improve cash flow, and increase efficiency.

There are several things to consider when it comes time to choose an accounts receivable provider. First, when it comes time to find an accountant for my small business, they should have the experience and reputation to handle most of these tasks. You need to choose a company that can meet your specific needs. Some accounts receivable services will be able to provide you with generalized services. However, others may only specialize in a particular area. Choose one that will work best for your business operations.

Accounts Receivable Services Offer Many Benefits

When you need to keep your company’s financial accounts up-to-date and accurate, consider choosing an accounts receivable service for your business. Without help, tracking invoices or transactions with customers can become difficult. Selecting a professional AR service provider is essential to pursuing a healthy financial future.

Accounts receivable management is essential to all businesses, but it doesn’t have to be a hassle. When you want to ensure timely customer payments, you need to consider outsourcing these services. With that, you can save time, money, and headaches. Think of these services as an investment in your business. Your AR team will take care of those critical tasks as you manage other aspects of the business. By partnering with a reputable accounts receivable company, all of your invoices will be paid on time and in full.

Looking for a South Jersey Accountant?

If you are ready to choose a professional AR team for your business, reach out to TMD Accounting. We have over 40 years of experience helping companies with their accounting needs in the Gloucester County area. We are a family-owned and -operated business. We pride ourselves on being an affordable, reliable, and flexible solution for your accounting needs. Our team wants to help your business grow. One way to do that is by outsourcing your accounts receivable services. Schedule a consultation by calling 856-228-2205.

Types of Errors in Small Business Accounting

When you have a small business, you do not want to make any type of accounting errors. These errors could throw off your books and lead to penalties from the IRS. If there are errors, it is crucial to spot and correct them. Here are some of the types of errors found in small business accounting.

Error of Duplication

Sometimes, you may have recorded a debit or credit twice in the books. Many of these errors are made when several people handle the bookkeeping duties. Also, when more than one invoice is sent to your business, you may put a double entry in the books. While many duplicate entries are minor, those significant amounts can seriously impact your business, leading you to understate or overstate your income.

Error of Omission

On the other hand, if you fail to enter a financial transaction in the books, that is known as an error of omission. These errors can overstate or understate your income and affect the balance sheet. For those errors of omission in the accounting process, it can significantly impact the trial balance, which is the report for the accounts in the general ledger. Anytime you misplace an invoice or receipt, it can lead to those errors of omission in your accounting books.

Error of Original Entry

This type of error means that someone entered incorrect information into the books. A receipt or invoice should back up all entries. In this case, an individual made the original entry, but the bookkeeper may have transposed the numbers. Like other errors, this one can have a significant impact on the books.

Error of Commission

In some cases, the numbers do not make it to the right place. Errors of commission occur when the item is entered in the wrong spot. For example, you could post the items to the accounts receivable account rather than the account payable, or someone had applied a customer’s payment to another invoice. These errors can affect the balance sheet and income statement.

Compensating Error

In some situations, one account error is balanced out by an error in another account. For example, an incorrect entry in the inventory and a corresponding error in the account payables may cancel each other. These errors do not affect the trial balance since they are both opposite and equal, but they are still errors in your books.

Error of Principle

When an accounting error is made on both sides of the transaction, that is known as an error of principle. Often, these errors happen when the individual recording the transaction does not grasp the basic accounting principles. For example, a fixed asset purchase is entered as an operating expense. These errors will not affect the trial balance. One way to correct these issues is by hiring a professional to handle your books.

Error of Entry Reversal

You may find those reversing entries at the end of the accounting period. In some cases, a credit will be posted as debit, or an invoice is listed in the accounts payable instead of accounts receivable.

Preventing Business Accounting Errors

You can prevent those accounting errors with a few tips. First, you always want to have someone capable of understanding accounting and bookkeeping in charge of the entries. They should be accurate with their typing. In many cases, transposing numbers can throw off an entire ledger. Your would-be bookkeeper needs to understand those financial statements and know where to enter the entries.

While it may be tempting to handle the bookkeeping and accounting yourself, hiring a professional team can make life easier for everyone. An experienced firm understands the basics of the bookkeeping and accounting world. By using professional services, you can ensure there will be no entry mistakes in those books. You can save money using a friend or family member, but an experienced and reputable accountant must adhere to specific guidelines to produce accurate reports for your small business. Get some peace of mind and hire a professional for the job.

When you hire a professional bookkeeper, they will compare bank accounts to the accounting ledger. With that, they will correct any errors before those mistakes lead to big problems. Bookkeepers will also help you stay on track. Hire those small business accounting services for the job. They will track all your financial transactions, whether big or small.

Errors Can Be Costly

As a small business, you need to understand your costs. All businesses need to know whether they are operating at a loss or profit. With those mistakes, you could underestimate or overestimate your costs, leading to financial problems down the road. One error can cause many headaches for your business, making it a nightmare to straighten out. Plus, you can even face penalties from the IRS if that mistake leads to filing incorrect taxes.

While mistakes can happen, and no one is perfect, you need accuracy with your financial statements, balance sheets, and the rest of your books. Hiring a reputable and experienced bookkeeping and accounting firm can help you avoid those mistakes.

When you need a South Jersey accountant for my small business, reach out to TMD Accounting. We are a family-owned and -operated business that has been serving the community of Gloucester County for over 40 years. Our team has helped many small businesses in the area. We are your flexible, reliable, and affordable choice when you need accounting, bookkeeping, and tax services in the area. Schedule your consultation by calling 856-228-2205.

Understanding a Restaurant Cash Flow Statement

Some restaurants might raise money with outside financing or by selling assets. However, the majority of the cash should come from its cash flow. Why is understanding cash flow necessary for your restaurant? Here are a few things to understand about these cash flow statements.

What Is Cash Flow?

This term is the amount of money you have made from food and beverage minus what you spent on operating costs. Understanding the restaurant’s cash flow can help budget for expenses and allow investors to see the potential in your business. If you want to calculate your restaurant’s cash flow, you can use the following formula:

Cash Inflow – Cash Outflow = Total Restaurant Cash Flow

However, there are a couple of things to take into consideration. You will need to know your inflow and outflow of cash. For the inflow, you need to add up all the money that comes into your restaurant during a specific period, including food and beverage sales. You can also include merchandise sales, received loans, catering and event money, and other items your restaurant has sold. That is known as your cash inflow.

Next, you need to determine your cash outflow. During this stage, you will want to add your operating costs for the same period. These expenses include utilities, inventory, rent, insurance, payroll, restaurant furniture, kitchen supplies, and appliances. Adding all of those expenses will give you the cash outflow.

With those two figures, you can calculate your total restaurant cash flow.

Reading the Restaurant Cash Flow Statement

There are three crucial statements for restaurants that help manage finances: the balance sheet, income statement, and cash flow statement. The restaurant’s cash flow statement will determine whether your company is financially healthy. These cash flow statements are broken into three categories:

  • Cash flow from operating activities
  • Cash flow from investing activities
  • Cash flow from financing activities

However, the two most important aspects of the cash flow statement are financing cash and net income.

Financing cash will show that your restaurant has borrowed money or raised funds by selling stock. To an investor, your financing cash will show whether you have the money to pay dividends.

As you may have guessed, the amount of money the business produces is called the net income. This figure does not tell the whole story. Instead of relying on a single number, investors will look at the cash flows. If the restaurant’s cash flow is smaller than the net income, it could be a sign that the company is losing money.

Restaurant Cash Flow Management Tips

Now that you understand the basics of a restaurant’s cash flow statement, how can you properly manage your cash? First, you may want to work with our small business accounting services. We can provide advice to help manage those expenses and assets.

Aside from that, here are a couple of tips for your business.

Have a Restaurant Cash Flow Forecast

By analyzing your restaurant’s point of sales system, you can guess the amount of cash flow for the upcoming year. While sales can always change, you will have a little more insight into what you should be making for the forthcoming year. You can then decide whether to cut back on spending or invest more money into the business. A restaurant cash flow statement allows you to create seasonal budgets. With that, you can navigate those ups and downs in the industry.

Streamlining Your Costs

If you are unhappy with your restaurant’s cash flow, you might want to reduce overhead costs. Take time to talk to vendors and utility providers about whether you can lower your payments. You may want to remove low-profile or less popular items from the menu. Also, you could reassess your schedule and cut down on staffing hours.

Don’t Rely on Credit

When you have to pay back those debts, it can take a massive chunk out of your restaurant’s cash flow. Instead of relying on credit, you might want to talk to vendors about getting a discount when paying in full.

Get Those Books in Order

While bookkeeping is not a glamorous part of the job, you must stay on top of your books and accounting. A clearer picture can give you a more accurate look at your financial health. If you don’t want to handle this responsibility, consider hiring a professional to take on the bookkeeping and accounting tasks.

Diversify the Vendors

When you rely on one vendor, it may be convenient, but it can put you in a bad situation if something happens to their business. You can get the best deal and negotiate on those prices by working with multiple vendors. Plus, you will always have a fallback if a company goes out of business or runs out of an item.

Save for Emergencies

With a large cash flow, you might want to spend it on something big for the restaurant. However, take a portion of that money and set it aside for emergencies. If you are prepared for expenses, you will not scramble to take out a high-interest loan or pay on credit in an emergency.

A restaurant cash flow statement is vital to understanding the financial picture of your business. Without it, you will not know whether you’re making money or spending too much of it.

When you need an accountant for your small business, reach out to TMD Accounting. Our family-owned and -operated business has been serving the community of Gloucester County for over 40 years. We are a flexible and affordable way to keep track of your restaurant finances, including those cash flow statements. Schedule your consultation by calling 856-228-2205.

Assets vs. Liabilities: The Complete Breakdown

As a business owner, you want to keep an eye on your finances, including your expenses. When you process any transaction, it needs to be recorded in the books. For that reason, you need to know the difference between liabilities and assets. Here is a complete breakdown of these terms and what they mean for your small business.

The Difference Between Assets and Liabilities

Before you can know the differences, you need to understand these terms’ meanings. Liabilities are existing debts that a business owes to a vendor, organization, employee, lender, another business, or government agency. Many of these liabilities will help the business owner finance their company, such as a loan. On the other hand, assets are the resources or sums of value that a business owns. These assets can provide long-term benefits to the owner and also help to generate revenue.

You must list all liabilities and assets on a balance sheet, which is a vital financial document for any business.

What Is a Balance Sheet?

The balance sheet is one of the three fundamental financial statements for a business, along with a cash flow statement and income statement. The balance sheet lists the business’s total assets and how those assets are financed. Balance sheets could be called a statement of financial position or net worth.

The balance sheet will be divided into two sections. All the company’s assets remain on the left side. A list of the liabilities and equity stays on the right. The liabilities and assets are separated into two categories: current and noncurrent. Liquid accounts, such as cash and inventory, are considered part of the current category. Property, equipment, and long-term debt will end up in the noncurrent categories.

Liabilities Examples

Liabilities are either long- or short-term. As previously mentioned, short-term liabilities are current liabilities, and those long-term ones are considered noncurrent. Current liabilities often include credit card balances, accrued expenses, unpaid invoices, and payroll taxes. Noncurrent liabilities are leases, deferred tax payments, and mortgage loans. You must pay those short-term liabilities within one year of incurring the debt. Long-term liabilities are often paid over several years.

Examples of Assets

Similar to liabilities, businesses can also have noncurrent and current assets. A current asset is known as a short-term one, while noncurrent assets are long-term. Current assets include investments, accounts receivable, cash, and inventory. Those noncurrent assets include equipment, trademarks, and patents. All of these items provide continual, long-term value to the businesses. However, you cannot convert noncurrent assets into cash within a year. Additionally, these long-term assets tend to depreciate over a period of time.

Along with that, assets are intangible or tangible. Intangible assets are non-physical items you cannot convert to cash, including trademarks, business licenses, logos, and patents. Tangible assets are physical items that you can easily convert to cash. These assets include bonds, equipment, and inventory.

Assets, Liabilities, and Equity

Once you figure out what you owe compared to what you own, you will want to know how much value is left over. That term is known as equity. You can figure that out by totaling your assets and subtracting those liabilities. For small business owners, your equity is the business’s net worth. If you have a partnership or sole proprietorship, the equity is often called the “owners equity” on the balance sheet. In a corporation, this equity is referred to as “shareholders’ equity.”

No matter the name, equity is vital to your company’s relationship between liabilities and assets. On the balance sheet, the assets equal the total returns plus the total equity. There are several accounting equations to use to determine these figures, such as:

  • Equity = Assets – Liabilities
  • Assets = Liabilities + Equity
  • Liabilities = Assets – Equity

With those equations, your small business accounting services can determine if the business finances through debt or uses its own funds to operate the company. However, these equations will only work for those who use the double-entry bookkeeping methods for their books.

Equity can affect both sides of these equations. If the business only has figures for equity and assets, it can easily calculate liabilities with no issues. Remember that bookkeeping and accounting can be tricky for any business owner. For that reason, hiring a professional to help calculate your assets, liabilities, and equity may be a good idea.

Do These Calculations Matter?

Liabilities, assets, and equity are essential for your business accounting system. With these numbers, you know how much you own, how much you have, and what is left over for your business. You will know where your money is at any given point in your business. These numbers ensure you do not make mistakes in recording those transactions.

Balancing liabilities, assets, and equity is the foundation of double-entry bookkeeping. Without knowing these calculations, you will not be able to understand your business’s finances. As a result, you could have a strong cash flow, but you may have an outstanding debt that eats away at your profits. With a better understanding of these terms, you can confidently know the financial health of your business.

At TMD Accounting, we help you track your assets, liabilities, and equity. Our experienced team can assist with your small business’s accounting, bookkeeping, and tax matters. We are a family-owned and -operated business that has been serving the Gloucester County area for over 40 years. You can count on us when you need an accountant for my small business. Schedule an appointment by calling 1-856-228-2205.

1 2