The Importance of Accurate Bookkeeping for Dentists
Bookkeeping is the nuts and bolts of every thriving business, including profitable dental practices. It drives financial decisions and helps a practice stay on track to meet financial obligations and achieve growth goals.
The bookkeeping process includes tracking income through a dental industry-specific chart of accounts and reconciling the information between the patient management system and accounting software (we utilize QuickBooks Online). The final collected revenue in these two systems should match.
Accuracy
Dental practice books require precise and consistent record-keeping. If this isn’t done correctly, it could cause serious problems such as unpaid bills, uncollected receivables, and tax delinquencies.
A good bookkeeper uses a chart of accounts tailored to your business. It includes items such as the costs of Xylocaine, sterilization pouches, new patient records, and equipment purchases. A chart of account arrangement also makes preparing expenses for tax purposes easier.
Inexperienced bookkeepers and accountants often make costly errors. These mistakes include incorrect coding that stifles reimbursement operations and inaccurate internal control factors. It can lead to inflated tax bills, mismatched cash account reconciliations, and theft caused by poor internal controls. Making bookkeeping errors can be detrimental to your business. To avoid this, teaming up with a trustworthy and experienced bookkeeping company is best.
Time
Accurate bookkeeping for dentists is necessary to maintain reliable dental records that can be used for various purposes. These include identifying patient account information, establishing consistent billing protocols for handling payments from patients and insurance companies and conducting data analysis that can improve operational performance and help with financial predictions.
It is also vital that accurate records are maintained to prevent time-consuming errors like accidentally entering transactions from a prior period, which can result in incorrect balance changes that don’t match the bank statement or financial reports. These blunders can be costly for dental practice and may lead to IRS fines.
Another important aspect of dental bookkeeping is reconciling accounts monthly to ensure that the recorded financial information in a financial software program and the bank statement match up. Reconciling accounts can help identify issues with cash flow, internal theft, and other financial mishaps before they escalate. It will also allow more accurate profit and loss reporting to the tax authorities.
Taxes
Bookkeeping is essential for reconciling financial information and making informed decisions based on the results. Financial information not accurately compiled and utilized can lead to significant issues like internal theft, unpaid bills, uncollected receivables, and tax delinquencies.
A top mistake dental bookkeepers often make is using a standard chart of accounts. It could omit important information from your practice, such as Xylocaine 2%, sterilization pouches, and dental equipment costs. The best dental bookkeepers use a chart of accounts designed specifically for the dental industry to avoid these issues.
A professional bookkeeper will also help you understand your taxes. You can receive a larger refund by planning for your future tax liabilities. The more accurate and regular your dental books are, the more you can plan your business expenses, reduce waste, and increase revenue. The key is to keep a system of records that’s easy to manage and maintain.
Analysis
The primary aim of bookkeeping is to reconcile financial information and make informed decisions based on the results. If dental practices don’t have accurate, up-to-date books, they may make critical business decisions based on erroneous data. This could lead to internal theft, unpaid bills, tax delinquencies, and unpleasant run-ins with the IRS.
A common mistake in bookkeeping is using a standard chart of accounts instead of an accounting system tailored to dentistry’s specifics. A dental-specific COA allows for more detailed information and provides better insight into the growth of dentistry practice.
Dentists should analyze their numbers and look for problem areas to maximize profit. For instance, they should investigate why this is the case if they spend more than usual on dental supplies like Xylocaine 2 percent, polishing discs, and sterilization pouches. If they can’t justify the higher expenses, they should consider renegotiating supply costs or changing vendors.
