A successful restaurant business needs up-to-date accounting records. These records can help you assess the state of your restaurant’s finances and ensure profitability for years to come. Tracking your finances can be challenging, especially if you are not diligent about keeping records. If you are a restaurant owner, here are 10 tips to be more efficient with your accounting.

Create an Effective Accounting Strategy

As you already know, accounting is complicated for many business owners. You have plenty of work on your plate. Adding in accounting responsibilities can be a hassle. You might want to consider hiring small business accounting services for your restaurant. However, you don’t need an accountant to implement these tips into your financial strategy.

10 – Make a List of Your Expenses

You will want to perform a general accounting analysis of your finances. Take an in-depth look at your business. Make sure to list all of your suppliers and any other expenses you may have for the month. You always want to examine your restaurant’s profits and losses. With those numbers, you can create an effective strategy for your accounting.

9 – Look at Daily Sales and Costs

Restaurants can lose money when they don’t track daily sales and expenses. You need to have control of everything that leaves and enters your business. It can be easy to skip a day and forget to enter something in the books, but that is a big mistake. You don’t want to have any big surprises at the end of the month. By working with a reliable point of sale (POS) system, you can access all of those variable and fixed expenses. Many of these systems filter the information by date, time, and items. Plus, you can often analyze that data from a mobile device or computer.

8 – Keep the Payroll Updated

Payroll is more than handing out checks at the end of the week. You will have to deal with all of the legal responsibilities of paying employees. Make sure to prepare your payroll before the pay period. Being organized can help prevent any issues. You want to ensure that deductions, hours, and payment dates are all correct in your system. While you could handle this task on your own, some programs will take those numbers and plug them into the right spots. With that, you can be sure that all of the information is correct for your restaurant.

7- Set a Schedule

It is essential to keep a schedule. You never want to wait until the end of the month to review your finances and run those reports. Every week, take some time to schedule payments, evaluate your restaurant’s performance, and review any accounting tasks. As a business owner, you always want to respect this schedule. Letting anything slip through the cracks can lead to a financial headache.

6 – Digitize Your Invoices

In a restaurant, you are working with fresh ingredients. Unfortunately, the costs of raw materials can change throughout the year. Keep in mind that there will constantly be fluctuating prices. Digitizing your invoices can help you track those costs, especially when you work with several suppliers. If you already have a POS, the process is as simple as taking a photo and uploading it to the system. With that, you will know whether your food costs are rising throughout the month.

5 – Choose the Best Accounting Program

All restaurants are not the same. For that reason, you want to choose an accounting system that works for your business. There are several accounting programs on the market. Find one that can adapt to the size and needs of your restaurant. At the minimum, choose one that can assist with invoicing and payroll. If you need help selecting the right system, reach out to your accountant for some suggestions.

4 – Outsource the Accounting

While accounting software and POS can help you, it might be time to outsource those responsibilities. An accounting expert will be able to analyze the restaurant’s financial health. With their assistance, payroll, taxes, and even financial management will be in the hands of a professional. When it comes time to choose someone, make sure that they have experience with businesses in your industry.

3 – Don’t Wait Until the Last Minute

As you already know, you need to have constant control over your restaurant’s finances. Constantly monitor your expenses and costs throughout the week. With that information, you can compare your sales against other periods in the month or year. Waiting at the last minute to analyze data can hurt your finances. You don’t want to discover a mistake that could cost hundreds of dollars to fix.

2 – Review Accounting on an Accrual Basis

You never want anything to get lost. For that reason, stick to accrual-based accounting. Evaluate the data when you receive or spend income. Accrual accounting gives you a more accurate picture of your actual expenses and income.

1 – Always Avoid Cash Accounting

While cash accounting is the simplest form of accounting, it is not an accurate method to keep track of your financial activities. Cash accounting does not cover any of those delays involving payment plans or credit accounts. With that, you never have a complete picture of your expenses and income. Cash accounting is easier to manage, but you should avoid it at all costs.

The Bottom Line

If you want to grow your restaurant, you need to create the right accounting strategy for your business. By understanding your financial picture, you can make decisions for your business. The proper accounting methods allow you to analyze your current sales trends and track all of that valuable data for your restaurant. With these tips, you can efficiently manage all aspects of your restaurant’s accounting.

Need an Accountant for My Small Business?

If you are ready to take control of your restaurant’s finances, reach out to an experienced accountant. At TMD Accounting, our team has over 40 years of experience helping small businesses in the Gloucester County area. We can assist with taxes, payroll, and other financial management matters. Schedule an appointment by calling 1-856-228-2205.

When it comes time to budget for your new restaurant, you need to understand those expenses. Some of the apparent expenses are labor and food costs. Plus, there are other expenses that you need to consider, such as utilities, equipment upgrades, capital improvements, and supplies. If you want to know the biggest expense for a restaurant in South Jersey, keep reading this article.

Several Expenses To Consider

Once you open your restaurant, there will be no shortage of expenses. The mortgage, leases, and insurance costs are often fixed. However, others can fluctuate, like utility bills, food costs, and hourly wages. Along with that, you need to think about those unanticipated expenses. A clogged pipe, food spoilage, and broken equipment will cause a well-planned budget to go off track. When it comes time to create a restaurant’s budget, consider all of those costs to avoid future financial trouble and help better manage your expenses.

Determine the Fixed Expenses

When you list your fixed expenses, you know they fluctuate from month to month. These expenses include loan payments, mortgages, and rent costs. Salaried labor can even fall into this category. Other fixed expenses include membership fees, license fees, and insurance premiums. In many situations, fixed expenses are only paid once per year, but you need to keep them in the budget to account for those costs.

Note the Fluctuating Costs

There are many fluctuating costs in the restaurant industry, including hourly wages, utilities, and food prices. With the start-up of a new restaurant, it can be challenging to predict fluctuating costs accurately. After a few weeks or months, you will be able to better budget for all of those costs, based on the sales in your restaurant.

The Biggest Expense for South Jersey Restaurants

For any restaurant, food and labor are the most significant expenses. You don’t want to focus on the hard number but look at the percentage. For example, you might want to keep your food costs to less than $5,000 per week. You can reframe that by focusing on the percentage. Create a goal that food supply orders shouldn’t be more than 30 percent of your weekly sales. You want to do the same for your labor costs. Make sure to keep that labor at less than 30 percent of your restaurant’s total revenue. Keep in mind that there will be some weeks when your costs and sales could dip or rise. With that, your percentage might not exactly match up with the 30 percent goal.

If your labor and food costs are more than 30 percent of your sales, it is more than likely that the restaurant will remain profitable. It can take a few weeks or months for those new restaurants to see a trend develop for their weekly sales. New restaurant owners need to track their spending during those first few months after opening. When you need a bit of assistance, small business accounting services can help you track all of those expenses.

Keeping All Costs in Check

Unfortunately, you might find out that your costs are rising, but there is no corresponding boost in your profits. When this happens, it can be concerning, and you need to make a few changes. You might want to cut back on your food orders or reduce payroll expenses. While you need staff members and supplies to keep the doors open, trimming down those expenses can help lower your costs below that 30 percent mark.

There are a few ways to make those cuts. You will want to review the food order before submitting it. Some items might not be needed for the kitchen. Take time to check those schedules for the staff. Some weeks might be oversaturated with crew members. Your managers are often not prudent with money. For that reason, you need to have a handle on your expenses. If you want to outsource the job, make sure to connect with an experienced accountant or bookkeeper.

You should also check out those other areas in your restaurant. Make sure that supplies are being used and not wasted. When you reduce spoilage in the kitchen, it can also help to save money. You can outsource some jobs for your restaurant. For example, if you are paying staff to do the laundry, consider looking into a cheaper alternative by outsourcing the work.

Costs will vary depending on the type of restaurant. Food trucks have fewer labor costs than a traditional family-style eatery. Those food costs will be higher for a fine-dining restaurant than a hot dog joint. For that reason, you want to focus on the percentages rather than a dollar amount when you need to plan a budget.

Issues for South Jersey Restaurants

New Jersey is not known for being friendly to businesses. Remember to budget the fees and other costs for municipal licenses. If you don’t plan for these expenses, you could be blindsided when going through the proper regulatory procedures.

Many restaurants in New Jersey have opened as bring your own bottle (BYOB) establishments. With that, you can avoid the liability and expenses of a liquor license. If you want to serve alcohol in the restaurant, you will need to obtain a permit, which is another expense. Plus, you may want to pay for your employees to get a certificate to serve alcohol to the customers.

Along with these costs, think about hiring an attorney and accountant. These professionals should be familiar with the hospitality industry. They can help educate you on food costs and liquor distributors to save on expenses. You want to ensure that you join the New Jersey Restaurant and Hospitality Association to connect with other professionals in the industry.

Need an Accountant for Your Small Business?

If you are opening a new restaurant in South Jersey, you need to find an experienced accountant. At TMD Accounting, we have over 40 years of experience helping small business owners with financial management, tax services, and payroll. You can schedule a consultation by calling 1-856-228-2205.

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

Do You Need To Hire an Accountant?

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

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

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

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

Help With Tax and Compliance Issues

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

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

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

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

How Accountants Can Help Every Small Business

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

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

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

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

Find an Accountant for My Small Business

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

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

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

Five Types of Depreciation

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

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

Let’s look at how to determine these values.

Units of Production Depreciation Method

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

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

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

Straight-Line Depreciation Method

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

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

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

Sum of the Years’ Digits Depreciation Method

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

Declining Balance Depreciation Method

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

Net book value = cost – accumulated depreciation

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

Double-Declining Balance Depreciation Method

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

Depreciation expenses + net book value + depreciation value

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

Why You Need an Accountant for Determining Depreciation

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

Need an Accountant for Your Small Business?

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

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

What Is Equipment Depreciation?

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

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

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

What Information Is Needed To Calculate Depreciation?

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

Cost Value

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

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

Salvage Value

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

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

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

Book Value

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

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

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

How To Calculate Depreciation for Construction Equipment

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

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

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

Determining Depreciation Is Important

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

Let Us Help With Depreciation

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

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

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

1. Be Careful When Choosing Your Accounting Software.

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

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

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

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

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

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

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

Cash Basis Accounting Method for Medical Practices

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

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

Accrual Accounting Method for Medical Practices

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

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

3. Schedule Profit and Loss Statements

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

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

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

4. Choose the Right Accountant for My Small Business

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

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

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

Bookkeeping Tips for Your Medical Office

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

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

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

Managing Your Practice’s Health

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

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

Review Your Fee Structure

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

Control Your Costs

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

Maintain an Efficient Patient Management System

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

Hire Professional Accounting or Bookkeeping Help

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

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

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

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

Let Us Help With Those Next Steps

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

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