Dental bookkeeping is a crucial aspect of managing a successful practice. It helps reconcile financial information and protects a growing business from costly mistakes or fraud. A professional bookkeeping service ensures that invoices and dues don’t slip through the cracks. They also help with tax preparation and provide accurate reports in planning cash flow.
Importance of Bookkeeping for Dentists
Accuracy
Keeping accurate records ensures a practice has the information it needs to make financial decisions. The results can be disastrous when these decisions are based on inaccurate data. This can lead to internal theft, unpaid bills, and tax delinquencies. Having an experienced bookkeeper can help you avoid these problems. Look for a firm specializing in dental practices that has experience working with the accounting software you use. A reputable bookkeeping Philadelphia, PA, firm can set up a chart of accounts tailored to your dental office’s needs. It will also be able to reconcile your practice management system (PMS) and accounting software so that the final collected revenue matches up. A specialized bookkeeping firm can also handle insurance billing and claims for your practice. This frees you up to spend more time building relationships with patients. It can also help you create budgets and track your cash flow to improve profitability.
Taxes
A bookkeeper with extensive experience in the dental industry will know what items of your practice’s financial information must be reported to tax authorities. They’ll be able to break out revenue by types of dental services (such as hygienist checkups, braces, and root canals), payroll costs for the dentist, hygienists, and admin staff, and overhead expenses. They’ll also be familiar with dental management software and how it can be leveraged for reporting. A qualified dental bookkeeper will stay updated with the latest accounting technology, which can help streamline processes and provide a more accurate representation of your financial data. A competent dental bookkeeper will also maintain tight control over daily cash collections, petty cash, and company credit card disbursements. This minimizes the theft risk and allows for a review of bank statements and statement reconciliations. This is vital to a comprehensive bookkeeping process and creating a cash flow statement that totals precisely how much your dental business earned versus what it spent.
Financial Reporting
The financial information compiled and utilized in bookkeeping helps dentists to make informed decisions regarding business growth and potential tax liability. When these data are not correctly reconciled, minor problems like internal theft or unpaid bills can escalate to more significant issues like poor cash flow and unpleasant run-ins with the IRS. A common misstep dental bookkeepers often make is relying on a standard chart of accounts to track income and expenses. This can omit crucial information like dental equipment costs and supplies, such as Xylocaine 2%, polishing discs, and sterilization pouches. Choosing an experienced firm specializing in dental bookkeeping can help prevent these issues and ensure that the records a practice maintains are accurate. The best firms also provide a clear breakdown of fees on their websites so dentists know exactly what to expect. They may offer various payment options, including flat fees, hourly rates, and monthly retainers.
Time Management
While it is essential to maintain a solid handle on your practice’s financial information, you should also focus on your patients. If you need more time tracking invoices, balancing spreadsheets, or dealing with tax matters, consult a professional bookkeeping for dentists service. A great bookkeeper will save you time by handling critical accounting tasks like accounts receivable, payable, insurance billing, and human resources/payroll services. They’ll also ensure your books are accurate and detailed. A dental bookkeeper can arrange your chart of accounts to reflect areas unique to your business. For example, a standard COA might overlook costs such as Xylocaine 2%, sterilization pouches, and polishing discs as overhead expenses rather than operating costs. With a dental industry-specific COA, your books will be accurate and up-to-date. This allows you to make informed financial decisions based on sound information. This can help you avoid internal theft, unpaid bills, and even unpleasant run-ins with the IRS.
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