Dental business owners have much to bother about besides their patients’ teeth. You must be sure that your clinic is attracting new customers, earning capital, paying all bills, and generating some income. Qualified dental bookkeeping and accounting help control the movement of capital as accurately and in detail as possible. It is valuable if you want to make decisions about the future development of your dental practice. But what are the main aspects of bookkeeping, and how do make all procedures proper?
This article will discuss everything you should discover about accounting for dental practices and share recommendations on properly managing books and maintaining economic records.
The importance of bookkeeping for dentists
Accounting is an integral element of financial reporting. It lets you study economic data, make informed decisions and defend yourself from fraudulent economic activity. Let’s talk about how competent accounting will help to achieve business development:
- Clear organization: every dental business should have properly organized records that make it easy to find the financial information you need when interacting with creditors, investors, or tax authorities.
- Analysis: all the records that a professional bookkeeper creates can be the basis for business development. If you have the necessary economic papers, you may use them to analyze your past performance to predict future expansion and determine the direction of the clinic.
- Taxes: any business must pay mandatory fees, including income and payroll taxes. The specialist will help you calculate the payment amount and ensure the capital is transferred from the IRS so you do not get fined.
A professional accounting company helps you create a complete chart of accounts to control the earnings and spending of the dental office. Experts will help you choose the best software, e.g., QuickBooks instead of spreadsheets. It is vital to comprehend records are valid because you will make decisions relying on this data.
Primary distinctions between dental bookkeeping and other areas
Dental accounting has several unique characteristics compared to other industries, as it involves processing patient records and payments and traditional financial work.
Skilled bookkeeping specialist requires experience with billing and patient data. Consider the main distinctions:
- Balancing patient incomes and operating spending: many small and medium-sized businesses have a single source of revenue, while the dental practice may receive capital in the form of insurance claims, customer payments, co-payments, etc.
- Knowledge of specific medical procedure codes in the event of a claim: it is crucial to enter values correctly so that the clinic and patients receive a fair amount.
- Control of medical inventory, including various consumables and equipment: monitoring their purchase and use is essential so that everything necessary to ensure diagnosis and treatment is always at hand.
- Conducting activities following HIPAA requirements, which regulate clinic visitors’ privacy: Dentists must protect patients’ data in every possible way; otherwise, they will have to pay hefty fines.
Professional accounting assistance allows business owners to determine the optimal inventory level to avoid material shortages or surpluses. The experts will also assist you in setting a budget for your business to always stay within budget and reach your goals.
Main financial reports for dentists
Economical documents are something like x-rays or tomograms for medical professionals; it is necessary to analyze a dental practice report to assess its financial condition. Dental business owners want to explore these three economic papers:
- The balance sheet measures the actual value of the business. It contains data on the assets of the clinic, its obligations, and personal capital. Such a paper explains what the clinic owns and how much money it owes. When drawing up a balance sheet, adhering to the rule that the sum of obligations and personal capital must equal resources is vital.
- The profit and loss statement demonstrates the sum of revenue or loss. The paper also lets you analyze how many resources had to be spent to get these earnings.
- The cash flow statement controls the inflow and outflow of capital during the month, quarter, or year. Such a document allows you to explore the change in account balances. It would help if you analyzed the movement of capital from operating, investment, and financial activities.
Remember, each erroneously recorded transaction can significantly affect the size of profit and loss, and incorrect dental bookkeeping does not allow you to evaluate the actual efficiency of your medical business. If you don’t want to waste your time dealing with financial matters, seek the help of professional accountants.
Common bookkeeping mistakes in the dental industry
Cash flow problems can ruin any business, and dentistry is no exception. Even minor accounting inaccuracies can lead to severe problems. Let’s take a look at a few of the most common economic pitfalls faced by the dental business:
- Registration of transactions in the past: the clinic must close all books monthly, which means you must reconcile accounts, prepare reports, etc. After completing the documents, you cannot add transactions or make any changes. It can lead to errors in future reports and severe sanctions from the IRS.
- Billing issues: these problems arise from false claim denials, unexpected fees, and false charges. The lack of clear standards leads to the fact that sometimes it is difficult to determine whether an insurance company should cover the bills unequivocally.
Dealing with a bookkeeper with experience in dental accounting provides a precise picture of the current economic situation of the medical practice. It ensures all of your financial papers are prepared by IRS rules and guidelines in the dental area.
Some tips for doing a successful dental bookkeeping
Bookkeeping is a tedious process for any dental entrepreneur. While this is critical to your company’s prosperity, financial activities can take away valuable resources that could be focused on improving customer service. With some planning and guidance, you can create a successful practice that may generate a solid income.
Separate personal and business finances
Combining personal and business transactions can seem like a hassle once it gets to the point of sorting. Mixing economic operations makes dental bookkeeping very difficult.
As a result, you will have to spend a lot of time remembering what costs and capital receipts are related to professional activities. It does not provide a complete picture of the business’s financial situation. When we speak about calculating taxes, the problem is even more complicated. The only solution is to open a separate bank account for personal needs and work.
Install the latest accounting protocols
Don’t forget to implement new accounting protocols to handle all financial manipulations. Adding new processes lets you organize and get up-to-date data on the latest issued and paid invoices. Ensuring capital flows correctly across all channels may save time and money in the long run.
Monitor equipment safety and depreciation
The dental office has a lot of expensive equipment. If you pay for all machines at the time of purchase, you may be unable to label the costs accurately.
Such equipment belongs to the fixed asset category; it is depreciated over the entire period of use. You can complete all paperwork without violating audit standards by managing and controlling depreciation costs.
Track your cash flow
Some entrepreneurs confuse profit and cash flow, but they are two different things. Cash flow is the capital that comes in and out of your dental office. Keep track of such fluctuations to see if you have enough money to pay all current expenses. Constant monitoring of capital inflows and outflows will allow you to detect potential risks in advance and adapt to the situation.
Consider outsourcing finance
Outsourcing your dental bookkeeping is an excellent option to ensure optimal financial support. Often in the medical clinic, the conduct of economic operations falls on the shoulders of office managers; usually, such personnel need more knowledge and skills to perform the tasks. Hiring an in-house CPA can be costly and pointless, so outsourcing a financial job is the ideal solution.
Final words
BooksTime professionals offer accounting and business advisory services to dental business owners. The company’s financial specialists are friendly and ready to help with all the economic issues that American dentists face.
A group of experts will help you prepare the clinic’s annual reports, improve your accounting, and help you identify ways to improve your practice’s performance. Specialists offer a complete solution to successfully manage your office while professional bookkeepers work alongside you and your business.
