Bookkeeping and accounting may not be the most popular part of the job, but no matter the method you use to run your business it is vital to keep your lights lit.
If you are doing your bookkeeping in-house, then you must be extremely cautious to avoid making mistakes that can be costly to your bottom budget.
Today, we’re going to guide you through the top three mistakes made by dentists in bookkeeping, as well as techniques to avoid these mistakes.
Learn The Difference Between Cash Flow And Profit
It is vital to understand profits are the sum of the sum made by the practice and the amount that is spent for business activities. According to bookkeeping for dentists LLC the most frequent error is reporting profits as the amount the office is able to spend instead of the cash flow.
The term “cash flow” refers to the total amount of money flowing through an organisation at a certain date and time. This will give you a better idea of the amount your office could be spending.
Profit, in contrast, is the amount of money that remains after expenses have been paid, which is not a consideration of cash on hand to make purchases.
Tips: This useful tutorial from Harvard Business School breaks down these two terms in more detail, and shows the steps to understand important financial statements.
Check Your Budget Often
With patients arriving and leaving and out of the blue, constant communication via telephone and email, and also managing vendors, much happens in your practice.
This is why honest errors in financial records are likely to occur: missing numbers and transposed numbers, as well as purchases that weren’t properly documented. Fortunately, such errors can be identified by reviewing your budget.
We are confident when we tell you that you will not need to wait until the close of this fiscal year before reviewing your financial documents.
The last thing you’ll want to do is to go through the last 12 months’ of financial statements and spreadsheets to identify balancing mistakes. It is advised for businesses to schedule time each week to enter and double-check the data.
Tips: Are you worried that you may have a number that has been transposed? Here’s a tip from Old Dominion University: compare the sums of your trial balance to the amount on the bank’s statement. In the event that the disparity between two sums is equal to nine, then you’ve got an error in the transposition of your hands.
Keep All Financial Records You Have And Make Backup Copies
It may sound like a given however, we’re certain most people have at least once scrambled to locate an invoice, receipt or estimate that was misplace or in an unintentional location.
The best way to avoid this tense situation is finding the filing method that is best suit to your needs and being focus to stick with it. When you have your perfect way of filing then you must ensure that your documents are properly back up.
This is vital in the event of a disaster or the computer experiences an unexpect failure. Cloud-base security is sufficient to be use to save files but it’s not enough when your software requires restoration also. In this situation you could be interest in the possibility of backing up your entire PC.
Tip: If you are using your email to supplement your file system, it’s important to be aware that the emails you receive within your inbox aren’t consider backup data, and therefore will likely not be include in an archive of backup files for data.
You’ll have to save your most important messages separately or export your inbox with the backup feature of your email client.
Tips For Accountants Who Work In Dental Or Medical Practices
If you inform people that they’re accountants, everybody needs some tax advice, even your dentist or doctor. It’s true they could request advice when you’re in the middle of a visit!
Instead of giving financial advice in the moment, take a look at these professionals for potential clients. Health care is an expanding sector and dental bookkeeping or medical practices are an integral component of the sector.
While many dentists and doctors might look for someone to assist with their financial accounting, they may not be aware that they need the services of a technology consultant or strategist. In this way, providing the value-added services required by these companies could be a beneficial aspect of your accounting practice.
Integrating The Practice
Dental CFO and medical practices are high-risk businesses. The first thing to be on your list should be to assist your patients integrate their practice.
The incorporation of a company limits the liability of the shareholders of a company, which means they are not liable for any debts, or in the event of a lawsuit.
Incorporation procedures vary from one jurisdiction to jurisdiction; however, certain things are generally the same. This includes:
The filing of articles of incorporation is done with a federal or state office describing where the business is locate, the manner in which shares are distribute and other similar details.
Selecting A Unique Business Name
The creation of corporate bylaws, for example, the time to have annual shareholder meeting
There are fees associate with incorporation registration as well as annual tax filings. However, corporations that incorporate typically pay tax returns at a less cost individuals.
The next item on your agenda is likely to be about buying equipment. Modern dental and medical practices depend on the latest technology; therefore, buying equipment is the most expensive initial expense for these companies.
It’s crucial to be aware that your dental and medical clients aren’t like clients from other industries. Contrary to other industries it’s not always recommend for health practitioners to purchase second-hand equipment.
Instead, You Should Inform Your Dental Or Medical Patients To Adhere To These Guidelines:
All equipment must be update to meet current safety standards.
Make use of a lawyer for the purchase and ensure that the equipment is in compliance with regulations for employment and medical.
The employees must be properly train to operate every piece of equipment, and in particular, equipment that directly affects patients for example, X-rays
Your clients are likely to get loans to purchase their equipment. The tax laws of most states will take into account the cost of capital and depreciation for large equipment purchases.
Revision Of Tax Guidelines
The specific tax regulations for dental cfo office bookkeeping and medical practices will differ by state. But, there are certain accounting and bookkeeping best practices you must be discussing with all your dental and medical clients. They are:
The Accounting For Expenses Of All Kinds
Consolidating accounts every week at a minimum. As their practice grows they may have to do this several times each week.
Maintaining detailed records of every business transaction such as employee wages, the purchase of equipment
Dental bookkeeping services and doctors, especially those who are just beginning their careers, might not be used to thinking of them as employees. Your job as business consultant is to assist them in getting into the habit of looking at their practice from the manager or owner’s perspective.
The hiring, management, the hiring process, and remuneration (though it is best to avoid dismissing!) employees will soon become an integral part of the professional lives of your clients.
As your accountant, you could contribute to the learning curve. Begin by offering guidance on the general employment regulations within your state, including topics like security and minimum wage as well as annual vacations, overtime, and holiday days that are statutory.
The Bottom Line Is
Be aware of how money moves into and out of the system to ensure that you don’t have to pay for spending too much.
Review your records to eliminate errors. Ensure that there is always time for this purpose. Maintain your records of financial transactions in a manner that is best for your business and ensure that you backup them!