Payroll Archives - Page 2 of 3

One of the most time consuming aspects of running a business is payroll processing. Although it may sound simple to compute the hours an employee works and cut them a check, the fact is that there are many other aspects to payroll processing that many business owners do not consider. These include payroll taxes, wage garnishments, labor regulations regarding hours and breaks as well as making sure payroll is executed and issued in a timely manner. The team at TMD Accounting offers these tips for simplifying your payroll processes.

Budget for Payroll

One of the biggest mistakes business owners make, according to small business accounting services, is not budgeting for their payroll costs. Keep in mind that payroll involves more than just paying your staff. You will need to have enough budgeted to not only cover employee salaries, but also withholding taxes that must be submitted to the Internal Revenue Service, your state, and your local government quarterly. What many new business owners don’t understand is that although your employee has FICA and Medicare tax withdrawn from their checks, as an employer you are also required to match those amounts. Therefore, you want to be sure that your budget includes the salary plus the taxes you will be required to submit.

Consider a Separate Bank Account

Although you are able to pay your staff from your main business account, using a separate account for payroll may help make your cash flow more transparent. When your company is growing, this can help you budget more easily. It will also help you keep better track of your payroll taxes, the cost of the benefits you offer as well as other deductions you may need to withdraw from your employee’s payroll checks.

Choose a Payday and Stick with It

Your employees expect to receive a paycheck at regular intervals and while there are pros and cons to the various time periods you use for payroll, whether it is weekly, bi-weekly, twice a month or monthly, once you decide when payroll will be issued, small business accounting services suggest you stick with that schedule. Keep in mind that the more often you pay your employees, the more you will need to track your withholdings which is why many employers use the bi-weekly or twice monthly methods for payroll says a South Jersey accountant.

Salary or Hourly?

One of the most frequently asked questions when people ask “is an account for my small business necessary” is whether paying employees a salary or paying them hourly is the best option. This may depend on the business you are in as well as what each employee does. In most cases, management will be placed on salary as their duties are more complex. Paying hourly requires a bit more work as you will need a method to track each employee’s hours every pay period. If you outsource your payroll to small business accounting services, they often have mechanisms in place that will track your employee hours for you.

Use Direct Deposit

Research indicates that more than 80 percent of all Americans are paid via direct deposit, and this is one of the best ways to streamline your payroll services. Direct deposit allows you to review reports before you transfer funds to your staff. There is no need for stacks of checks that need to be signed, envelopes to keep payroll private concerns about lost checks or any of the other issues that you face when you issue paper checks.

Payroll Policies

Another critical error many business owners make is not having policies in place for their employees and this is especially true of payroll. When you hire a new employee, there will be documents they need to provide, including copies of Social Security cards, filling out a W9 form as well as any benefit paperwork. Consider issuing a payroll policy that has time sheet deadlines, information about taking sick or vacation time, reimbursement for business expenses and more. You and the employee should sign the policy with a copy given to the employee as well as one in their personnel file.

Set Up Reminders

It is likely your employees will not be pleased if you forget to pay them, and it will be difficult to retain staff if you consistently make mistakes in their paychecks. Although using a South Jersey accountant will help prevent these errors, you can also make sure things are done in a timely fashion by setting reminders for yourself. These may simply be a reminder to submit approved forms in time for checks to be issued or one so that you remember quarterly taxes must be submitted.

Electronic Tax Filing

The IRS offers the option to file payroll taxes rather than mail in forms and a check. It is likely your state and local governments offer that as well. This helps eliminate the risk of payments arriving late and helps you remain compliant with the law. Usually, you will receive an instant confirmation that your payment was received which you can file for your records.

If you are asking “will an accountant for my small business help with payroll,” the answer is yes. TMD Accounting has been offering accounting services for more than 40 years as a family-owned and operated South Jersey accountant. Contact our team today about your payroll needs by calling 1-856-228-2205 or fill out the easy online contact form.

20 Apr

The Benefits of Working with a Local Payroll Company in NJ

When it comes to outsourcing payroll, as a small business owner you have many options. You can choose to use a large national company to handle your payroll processes, or you can go with a small business accountant in NJ. If you are considering outsourcing your payroll, then one of the best choices you can make is selecting a local payroll company, such as TMD Accounting.

Personalized Solutions

One thing that national companies do not offer that a small business accountant in NJ would is services that are personalized specifically for your company. Many times, national companies have a “one-size-fits-all” approach to payroll, requiring your employees to use the same time sheets that giant corporations use. This may mean that the options don’t fit what your staff actually does or that the computations are not as accurate as they could be.

Local Customer Service

Whenever you use a national service for a business process, you run the risk of customer service representatives that are in another city, another state, or even in some cases, in another country. Using a South Jersey accountant to handle your payroll needs brings you someone local who will understand your needs better than a person who lives hundreds or thousands of miles away. In fact, by choosing a payroll company in NJ, those working with you may be friends, family or neighbors of many of the people who work for you, bringing you even more personalized interaction with the people who are paying your employees.

Compliance and Regulations

Although the national companies are well-versed in IRS regulations, they may not be as knowledgeable about the requirements in your state. Even if they offer an office within the state which means they understand those regulations, they still may not understand local requirements and regulations. By choosing a South Jersey accountant, you are more likely to get someone who thoroughly understands the regulations and requirements of the area and not just IRS regulations.

Keep in mind that the United States passes around 8,000 laws each year and many of these can impact the tax code. At the state level, a recent study found that the average state passes 128,000 laws each year, 23 times more than the U.S. Congress. This is why having a small business accountant in NJ handling your payroll makes more sense than a national company who may only understand federal tax law.

Less Costly

When you choose to outsource your payroll to a small business accountant in NJ, it will likely cost you less than it would a national company. Although national companies may offer basic packages that seem to cost less, these usually are extremely basic and may not cover all the options you will need to adequately handle your payroll. By hiring a local payroll company in NJ, you may find that their basic package includes many more options which will actually save you money in the long run.

Dedicated Representatives

Another benefit to choosing local is having dedicated representatives who get to know your business and your employees. For example, at TMD Accounting, a knowledgeable payroll company in NJ, one of our team members will be tasked with learning the ins and outs of your business. The staff gets to know you and will have working knowledge of how you need your payroll system to operate. This will help your payroll system run much more smoothly and will actually save you money in the long run.

Human Interaction

Small business accountants in NJ offer a personal touch that many large, national companies do not offer. When you need a question answered and are working with one of the large companies, you may have difficulty reaching someone to help you. In fact, you may have difficulty talking to a human at all. Many offer websites that they claim have “the answers to all your questions” only for you to find out the questions have to be ones that a chatbot can answer. That means if your question is at all unusual, there will be no one who can help you. With a South Jersey accountant, you know that the phone will be answered by a human and your question, no matter how unusual, will be answered by a human.

Local Specialist

The main reason to choose a payroll company in NJ is that they are local specialists when it comes to payroll. They not only understand state and local laws, they also understand the people who work for you. They know how important payroll that is correct and timely is to your staff. They also understand how important complying with laws is to you as failing to do so could put your entire business at risk. A South Jersey accountant will make sure that your company is following the law and paying your staff correctly. Not only that, using a small business accountant in NJ can save you time, allowing you to focus on the things that will help your business grow rather than focusing that time on payroll.

If you are considering outsourcing your payroll, contact the expert South Jersey accountant firm of TMD Accounting. With more than 40 years’ experience in the industry, our team of accountants can help get and keep your payroll on track, make sure you are compliant with all laws and allow you to focus on the things that will help your business grow. Our motto, “where numbers matter and people count” is one we have lived by since we opened our doors. Family-owned and operated, we are here to help with all your payroll needs, so give us a call at 856-228-2205 or fill out the online contact form for more information.

14 Apr

Navigating the Complexities of Payroll with a South Jersey Accountant

Payroll management is a crucial task for any business, no matter its size. However, navigating the complexities of payroll can be complicated, especially for companies in South Jersey. With federal, state, and local regulations, tax rates, and compliance requirements, you will want an experienced accountant who can guide you through the process. Learn how to navigate payroll complexities with the assistance of a qualified accountant.

The Challenges of Payroll Management

Many factors can complicate payroll management in New Jersey. For example, the state has specific laws and regulations related to employee classification, overtime pay, sick leave, and vacation pay. Employers must follow these laws and regulations to avoid legal issues.

Additionally, there are specific requirements regarding recordkeeping and reporting, meaning employers must keep accurate records of their employees’ hours, pay rates, and deductions. If you fail to maintain accurate records, that can lead to legal issues and penalties.

Along with that, you must file both state and federal taxes. Once again, failing to file can lead to penalties and legal problems. New Jersey businesses must also pay state unemployment, workforce development, and disability insurance taxes.

State payroll management can be a complex and challenging task for businesses. For that reason, all companies can benefit from hiring an experienced accountant who can help them navigate through the complexities of payroll management and ensure compliance with all regulations.

The Benefits of Hiring a South Jersey Accountant for Payroll Management

Hiring a South Jersey accountant for payroll management can bring numerous benefits to your business, especially when navigating the complexities of processing and administration. An experienced accountant fully understands the regulations that impact payroll management, including minimum wage laws, tax rates, and unemployment insurance requirements.

Processing payroll can be time-consuming and tedious for businesses with many employees. An accountant can handle all aspects of payroll processing, from calculating employee wages to filing taxes. With help from a South Jersey accountant, you can save time and reduce the risk of errors.

Compliance is critical when it comes to payroll management. An accountant can help ensure businesses comply with all applicable regulations and avoid potential issues in the state. As previously mentioned, non-compliance with payroll regulations can result in penalties, fines, and legal issues. When you work with an accountant, you can reduce the risk of these negative consequences.

Services Provided by a South Jersey Accountant for Payroll Management

A South Jersey accountant can provide various services to help businesses with their payroll management needs. Here are some of the critical services that your accountant can offer to your business.

Payroll Processing and Management

An accountant can handle payroll processing, including calculating employee wages, tracking hours worked, and processing payroll checks. These professionals can help track payroll for both salaried and hourly employees.

Tax Filings and Compliance

When you hire an accountant, they will handle all payroll tax filings, including preparing and filing quarterly and annual tax returns. These professionals can also conduct any payroll tax audits that may occur.

Employee Benefits Administration

These individuals will help manage your employee benefits programs, including health insurance, retirement plans, and employee contributions.

Recordkeeping and Reporting

When you need accurate payroll records, turn to an accountant. These professionals will provide your business with regular payroll reports, handle payroll-related audits, and manage investigations.

Hiring a South Jersey accountant can streamline your payroll management processes, reduce the risk of errors and compliance issues, and ensure that the payroll records are accurate.

How to Choose the Right South Jersey Accountant for Your Business

When it comes time to select a South Jersey accountant for payroll management, there are several factors to consider to make the right choice. First, you want to look for a professional with relevant experience for the job. When evaluating potential accountants, find someone with experience working with businesses similar to yours. In addition, you should choose an accountant who understands the specific payroll tax laws and regulations that apply to your industry.

Effective communication is important when it comes to payroll management. Businesses should look for an accountant who is responsive to their needs and questions. These individuals should also be able to provide regular updates and reports on payroll processing.

While cost is important, you need to understand the value of small business accounting services. A low-cost accountant may seem like a good deal, but if they cannot provide the support needed to ensure accurate payroll management, the cost savings may not be worth it in the long run. You should look for an accountant who offers fair pricing and can provide a clear breakdown of costs and services.

By working with a knowledgeable and experienced South Jersey accountant, you can ensure they stay compliant with all applicable payroll tax laws and regulations. They can also streamline your payroll processing and reduce the risk of penalties and legal issues. You want to find an accountant with the expertise and skills to manage your payroll processes effectively.

Need an Accountant for My Small Business?

Contact TMD Accounting today to explore your options for hiring an accountant for your business. We provide personalized and attentive service to all of our clients. Our TMD Accounting team serves businesses in the automotive/body shops, healthcare, construction, hospitality, restaurants, and professional services industries. With over 40 years of accounting experience, our team will ensure your accounting needs are handled professionally and accurately. If you want to schedule a consultation, please call us at 856-228-2205.

3 Apr

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

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.

6 Aug

The Ultimate Guide to Independent Contractor Taxes – New Jersey

CColeman

Accounting, Bookkeeping, Payroll, Small Business, Tax Planning

Independent contractors have to worry about federal income tax, self-employment tax, and local and state taxes when they file their returns. Sole proprietors use Schedule C with Form 1040 to report their business profits and losses to calculate the taxes they will have to pay. To avoid an underpayment penalty, independent contractors must also submit quarterly estimated tax payments each year. When you begin working for one or more companies, they should determine whether you should be treated as an independent contractor or employer based on several factors. If you are classified as an independent contractor, you will be responsible for paying both your portion and the employer’s portion of your taxes and will receive a 1099-NEC at the end of the year instead of a W-2 for your annual earnings. Here is what you need to know as an independent contractor about taxes from TMD Accounting.

Taxes Self-Employed People Must Pay

Independent contractors must pay federal, state, and local taxes and the federal self-employment tax. Here are the taxes self-employed people must pay:

Federal income tax at a rate ranging from 10% to 37% based on the total income for the tax year
Self-employment tax to pay into Medicare and Social Security with tax rates of 15.3% for net profits of up to $147,000 and 2.9% for net earnings above that amount
Additional federal taxes in some situations such as the net investment income tax, alternative minimum tax, and additional Medicare tax
State and local taxes, including income tax, registration and licensing fees, and business tax
Sales tax if you sell goods
Excise tax if you sell items such as guns, cigarettes, alcohol, or telephone services

Understanding the Self-Employment Tax

The self-employment tax includes a 12.4% Social Security tax on your net profits up to $147,000 and a 2.9% Medicare tax on all net earnings. This means you will pay a total self-employment tax of 15.3% on your earnings up to $147,000 and 2.9% on any earnings above that amount. If you have net earnings of more than $200,000 as a single taxpayer or $250,000 as a joint filer, you might also have to pay an additional 0.9% Medicare tax.

Available Deductions for Independent Contractors

There are many different deductions that might be available to independent contractors, including the following:

Home office deduction for contractors who work from home and use the office space solely for business purposes on a regular basis
Health insurance premiums
Retirement plan contributions
Depreciation of your equipment, machinery, and furnishings for your office and business use
Truck and auto expenses if used for work
The qualified business income deduction
Expenses for outside services and contract labor
Miscellaneous business expenses

Preparing to File Your Taxes as an Independent Contractor

Before you file your taxes, it is important for you to organize everything. You will need to know the gross amount you made as an independent contractor and how much you spent on tax-deductible expenses. Gather your 1099-NECs, profit and loss statements, expense statements and bills, receipts, and other relevant documents together.

Report Income and Deductions on Schedule C

When you fill out your Form 1040, you will use Schedule C to report your business income and deductions. You will report other sources of income, including rental income, dividends, and interest on Form 1040.

Report Net Self-Employment Income on Schedule SE

Once you complete Schedule C, you will then carry over the self-employment income to Schedule SE to calculate your self-employment tax. The self-employment tax will then need to be entered in your Form 1040 tax section.

Complete Form 1040

On your Form 1040, you will include all of your other non-business income. You can also claim non-business deductions on Form 1040, including things like student loan interest, charitable donations, self-employed health insurance, itemized deductions, and others.

Calculate Your Federal Taxes

When you enter everything into your Form 1040 and perform the calculations, you will see your total federal tax obligation. After you subtract your estimated tax payments made during the year, you will either owe taxes or have an expected refund.

Estimate Your Taxes for the Next Tax Year

As a self-employed person, you will need to estimate the taxes you’ll likely owe in the next tax year so that you can divide that amount into quarterly estimated payments to send each quarter throughout the year.

Complete Your State Income Tax Return

Once you have completed your federal tax return, you will then need to complete your state return.

What Happens if You Can’t Pay?

If you can’t pay your taxes in full, you can complete Form 9465 to request an installment arrangement. However, you can’t owe more than $25,000 and must show that you do not have the means to pay your taxes. You will then have three years to pay. The IRS will penalize you for waiting to pay your taxes after the deadline. If you fail to file a tax return by the deadline, you will be assessed a 5% penalty for each month of the outstanding amount you owe but haven’t paid. If you submit your return on time but do not pay what you owe, the late payment penalty will be 0.5% of the tax owed for each month you are overdue.

Find an Accountant for My Small Business

Small business accounting services can help to make filing your taxes simpler. If you are self-employed, working with TMD Accounting might help to ensure your taxes are filed on time and correctly and that you claim the deductions that are available to you. Contact us today to schedule an appointment at 1-856-228-2205.

17 Jun

How to Pay Yourself From an LLC

Jeff

When you have an LLC (limited liability company), paying yourself can be complicated. How you take out money will depend on whether you are a multi-member, single-member, or corporation LLC. Here is how you can pay yourself through an LLC and make sure those earnings meet the IRS guidelines.

What Is an LLC?

An LLC is a business structure that combines the features of a sole proprietorship and corporation. Like a corporation, LLCs have limited protection against personal liability and debt. You will report business profits and losses on a personal tax return rather than a business one. There are three types of LLCs: single-member, multi-member, and corporate.

Single-member LLCs will have only one member. The IRS views single-member LLCs in the same way as sole proprietorships for tax purposes. Multi-member LLCs have more than one member. For tax purposes, the IRS treats these LLCs as a partnership.

Finally, there are corporate LLCs. In these situations, the LLCs are taxed as a corporation. If you want to establish your business as a corporate LLC, you must make a formal request to the IRS.

How LLCs Are Taxed

There are different ways that the IRS taxes an LLC. If you have an LLC, you will want to work with a company that specializes in small business accounting services. They can help simplify the process as your tax situation becomes more complex with an LLC.

Sole proprietorships and single-member LLCs are considered “disregarded entities.” That means the company’s losses, profits, deductions, and other financial information are reported on a Schedule C with a personal tax return.

Multi-member LLCs are a bit different. These partnerships do not file separate tax returns. Instead, they file a return with Form 1065 or Schedule K-1. These forms detail each member’s guaranteed payments and distributions for the year.

After that, the members will report their income with a K-1 on Schedule E for the tax return. Plus, they must report all self-employment tax on Schedule SE. Single- or multi-member LLCs do not pay corporate taxes. Keep in mind that single owners and LLC members are responsible for income tax on the company’s income. Along with that, they must pay a self-employment tax on their withdrawals for the year.

If the LLC is a corporation, the business must file Form 1120. All of the standard corporate tax rules apply. If the LLCs have elected to be considered an S corporation, all owners must report their portion of the corporate income, and the company needs to file Form 1120S.

Taxes can be tricky for LLCs. Some of the rules are different depending on your LLC structure. While you can use software to figure out your taxes, consider hiring a professional accountant for the job. With their help, you can make sure you pay the right amount of taxes for your LLC.

How You Pay Yourself as an LLC

The business structure of your LLC will determine how you can pay yourself. Even if you are an employee of your business, you need to find the proper way to pay yourself to avoid tax liabilities.

Single-member LLCs will function as sole proprietorships. According to the IRS, these companies are considered a “pass-through” business, which means the income “passes through” the partnership to be taxed under the owner’s personal income tax. As a result, an owner of a single-member LLC or sole proprietorships can pay themselves using the owner’s draw method. With that, you write a check from your LLC to your personal account.

The pass-through designation also extends to multi-member LLCs. According to each partner’s ownership percentage, all partners are taxed on the LLC’s income. In some cases, the partners will receive an owner’s draw. That income is considered a prepayment for profit distribution, and these draws can happen at the end of the quarter or year.

Other owners prefer a steady salary and will take a guaranteed payment. These payments are paid out even if the business has income loss. Guaranteed payments are considered business expenses, and they will increase the company’s net income. Multi-member LLCs will pay their members with owner’s draw, guaranteed payments, or a combination of these options. Once again, an owner’s draw is simply writing a check. The owner’s draw payments are subject to the self-employment tax.

Some LLCs have elected to be treated as an S corporation or C corporation. In those situations, the payout can be more complicated. With these tax classifications, the owners cannot take an owner’s draw, and they must be treated as an employee of the LLC. The owner-employee must receive reasonable compensation. You must issue all payments through a payroll system that withholds employee taxes. Along with that, the owner-employee can take a dividend or distribution of the company’s yearly profit. Those payments are considered taxable income.

Guidelines for Paying Yourself

While you might want to forgo paying yourself to help the business grow, you will still be taxed on the total amount of business income. Remember to pay yourself. You want to follow some basic guidelines when forming your payment structure.

If you have a partnership, always establish a guarantee payment amount or dividend schedule for the other members. You can set this up using your articles of corporation or partnership agreement.

You will want to work with an accountant to figure out your estimated tax payments. Ensure there is always a paper trail for your payments, whether guaranteed payment or owner’s draw. Record the payments in your company’s books so that you are protected in the event of an audit.

Understand Payouts for Your LLC Situation

As you can tell, LLCs do protect you from debts and liabilities, but they can lead to complications for tax time. At TMD Accounting, we can ensure your small business is covered for tax season. We have over 40 years of experience helping small and large companies with their taxes, payroll, and bookkeeping. When you need an accountant for your business in South Jersey, schedule a consultation by calling 856-228-2205.

7 Feb

What are the Major Roles of Accountants for Law Firms?

Jeff

Accounting can be intimidating even for the most seasoned attorneys. Law school might teach about torts and statutes, but there are no classes for accounting or bookkeeping. Whether you have a small firm or large corporation, accounting is vital to keep your books compliant with ethical rules and prevent you from leaving money on the table.

What Can an Accountant Do?

Accountants play a vital role in almost every business. Law firms are no exception. Many lawyers don’t want to handle monetary transactions or keep up with their financial records. For that reason, they often hire someone to manage those accounts. While you could hire a part-time bookkeeper, law firms should look for an experienced and trusted accountant to address these financial matters.

Legal accounting includes recording and analyzing the financial transactions of the law firm in an accurate manner. These professional accountants can help in other ways as well. They can act as an advisor and interpreter. An accountant needs to have strong attributes like attention to detail, an understanding of business ethics, and excellent monetary skills. These professionals can help finish audits, ready tax returns, and investigate fraud. A legal accountant has many different roles in a law firm.

Legal accounting contributes to the success of the practice. All financial statements need to be accurate, up-to-date, and complete. Your law firm can meet all of those obligations to your clients, partners, and the state bar with a clear financial picture. With all that in mind, here are some of the major roles that accountants can play in your law firm.

Provides Professional Financial Advice

If you are searching for financial advice, a trusted accountant can help with future plans. Accountants track your expenditure and revenue trends. In addition to that, they can help your law firm make important decisions, such as taking out a loan. If there are irregularities or discrepancies in your financial records, an accountant will straighten out those problems.

Helps With Taxes

No one wants to deal with filing taxes, especially busy attorneys. Hiring a professional accountant can help this stressful process become a little easier for your firm. Everyone knows that tax preparation can be a headache, especially if records are not appropriately managed. As a result, your practice might face penalties from the state and federal tax departments. With an accountant, you can ensure that all tax returns are filed and completed accurately and timely. You will not have to worry about missing out on deductions or paying extra penalties.

Deals With Outside Parties

Law firms have to deal with outside parties on a day-to-day basis. An accountant will act as a firm representative while speaking to tax authorities or loan officers. By allowing the accountant to handle these tasks, law firm members can focus on those other duties within the practice. Plus, an accountant can smoothly move these financial issues through the appropriate processes without any snags.

Handles the Law Firm’s Payroll Process

When you have employees, they will expect to be paid promptly. Payroll is a critical process for any business, especially legal practices. With an accountant, you can have a professional manage these processes to pay all your employees correctly and on time. An accountant can also take care of other payroll aspects of your law firm’s business.

Chooses the Right Financial Tools

There are so many choices on the market for accounting tools. It can be challenging to choose the best accounting software option for your law firm. An accountant will help with these decisions. Your accountant understands the needs of your law firm, and they are better equipped with financial knowledge. With that guidance, the accountant can help you find the best software for the practice.

Accounting Practices for Your Law Firm

Need to find a great accountant for your law firm? Before you begin the search, you must understand some basic accounting practices. With this basic knowledge, you can keep an eye on your financial records and understand the processes in your practice. There are plenty of functions that an accountant will handle on a day-to-day basis, including reconciliation and reports, accounts payable, invoice accounting, and financial compliance.

Why You Need a Professional Accountant

You can streamline your books and not worry about those financial inaccuracies when you work with an accountant. Hiring a professional accountant just makes sense for your law firm. As an attorney, there is enough on your plate. You don’t want to add the title of accountant or bookkeeper to your list of responsibilities. Outsourcing these duties helps your law firm focus on growing your practice and assisting the local community.

As you can tell, a professional accountant goes beyond just checking your books. These professionals will ensure that your paperwork and finances are ready for tax season. They can advise you during the process for a bank loan, and accountants are a great option to help with office tasks, such as payroll and revenue tracking. When you need help with those financial records in your law firm, make sure to hire a trusted and experienced accountant for your practice.

Let Us Help With Your Legal Accounting

You want to find the right accountant for your legal practice. Thomas M. Ditullio has nearly 40 years of experience offering small business accounting services. He has built a solid reputation throughout Gloucester County, providing services for businesses and individuals. At TMD Accounting, you can access a wide range of services, including financial management, tax services, and payroll. If you would like to schedule a consultation, please give us a call at 1-856-228-2205.

24 Jan

How to Do Accounting for Your Construction Business in New Jersey

Tom DiTullio

Construction accounting is very different from those other types of businesses. You must keep track of the accounts receivable, accounts payable, and payroll transactions. Along with that, construction companies need to monitor job costs, change orders, retention, customer deposits, and progress billing. All of these components can make construction accounting a challenging task. Here are a few tips that you need to know about construction accounting.

Record All Financial Transactions

The double-entry methods are the best techniques for recording financial transactions in the construction industry. With this, there must be two entries on the ledger for every single transaction. Some companies track these transactions with the help of accounting software or an outsourced bookkeeper.

Keep a General Ledger and Chart of Accounts

A chart of accounts lists all of your general ledger accounts to categorize those transactions. You have the names and a brief description of every account in the list.

Some of these account types could include:

Current assets
Current liabilities
Equity
Cost of goods sold
Indirect expenses
Administrative expenses

Know the Common Cost Types of Construction Accounting

There are several types of cost types associated with construction accounting.

They include the following:

Job costing: Construction accounting keeps track of the costs of the job. You need to know the project costs as they relate to specific jobs. All of the expenses must be tracked throughout the project’s life. The actual costs and projected estimates are compared during several points of the project. With that information, you can see whether the project is on or over budget. Job costs affect the income of the construction company. In some situations, companies can receive financial incentives for delivering a job under the projected budget.
Work in progress: Any active or under contract job is known as a work in progress. Construction companies need to track these jobs since it can help to indicate the income and cash flow. Some companies use this cost type to determine the current project’s progress, recognize any revenue, and list other costs coming from the job.
Cost of goods sold: These costs refer to the expenses incurred for those projects in progress. These costs include labor, equipment rentals, material, and other costs tied directly to the project.

Recognize Your Revenue

In the construction industry, there are several ways to recognize revenue. Those methods can change depending on the type and duration of a project. For example, some companies recognize their revenue through cash or accrual accounting. Income and costs are recognized when cash changes hands with cash basis accounting. With that, the payables are not recognized until the bill is paid, and there is no record of the payment until the money is in the company’s account. This type of reporting allows the construction company to represent its cash flow. Unfortunately, it does not accurately recognize all costs and revenue.

Accrual accounting is much more accurate. The income and costs are recognized when received from the vendor, and the client is billed. Many companies use accrual accounting over the cash accounting method.

Completed Contract vs. Percent Completed Income Recognition

You can track income in two ways: completed contract or percent completed. With percent completed, the revenue is recognized on the percentage of costs for the project. When revenue comes in from the project, it is tracked. A completed contract only records revenue once the project is considered completed. Many companies track their revenue with the percent completed method for better accuracy.

Construction Accounting Common Reports

If you want to know the financial health of your construction business, you should know these common reports.

Accounts Receivable Aging

Within your accounts receivable (AR), you can track all of those outstanding payments that have been billed but not paid. The accounts receivable aging report shows which companies need to pay their bills by indicating the age of the invoices. With that, you can know which accounts are heading to collections by splitting them into categories for 30, 60, and 90 days past due. You will have healthier accounts receivable reports when there is a shorter time between billing and collection. Keep in mind that the construction industry has some of the longest payment delays out of any sector.

Accounts Payable Aging

On the other side is the accounts payable aging report. This report keeps track of the money you owe to other contractors or vendors. Like the accounts receivable, this report shows when those invoices were created. You can prioritize vendor payments with these accounts payable aging reports.

Profit and Loss/Income Statements

As you may have guessed, a profit and loss report shows the amount of expenses and income accrued during a specific period. You can also view the net loss and profit for any period of time.

Balance Sheet

This report shows your liabilities, assets, and equity holdings in the company. You can use these numbers to determine your financial position to lend or borrow money.

Job Cost Report

During a specific project period, you can get a breakdown of the costs. These reports are helpful to show the progress of the project and inform the customer of billing amounts.

Job Profitability Report

You need a job profitability report to analyze the difference between the actual and estimated costs. These reports show you whether the project is profiting or losing money in the process.

These tips are some of the basics of construction accounting. It can be complicated for anyone to figure out, especially if you don’t have experience with accounting or bookkeeping. These duties should be left in the hands of a professional. For that reason, there are small business accounting services for the task. These accountants understand your company’s needs, and they can help you reduce the headaches associated with managing your finances.

Finding an Accountant for My Small Business

At TMD Accounting, our company has over 40 years of experience. We will help you manage your finances with various services, including payroll help, financial management, and tax assistance. Schedule a consultation by calling 1-856-228-2205.

17 Jan

Smart Accounting Practices for Independent Contractors In New Jersey

Tom DiTullio