7 Helpful Tips For Dental Bookkeeping

Even though dentistry is your focus, running a dental practice comes with extra responsibilities that take time away from patient care. One of the biggest and most important of those responsibilities is bookkeeping. It’s an essential part of running a successful dental practice. 

It gives you a clear view of the financial state of the business and can be used to make your business run more efficiently. Whether you’re doing it yourself or delegating it to your office manager there are a few helpful tactics you can use to simplify the process. 

7 Tips For Dental Bookkeeping

Don’t Mix Business And Personal Finances

Combining business and personal transactions might not seem like a big deal until you have to sort through them. Mixing the two types of transactions makes the bookkeeping process much more difficult. 

It’s confusing and time-consuming to try and remember which purchases or deposits belong to the business. That makes it a hassle to get a clear view of the company’s financial status. And when it comes to your taxes, it complicates matters even further. 

Taxes and financial statements aren’t the only areas that could be affected. It might also impact your ability to get approved for financing or find investors. Potential lenders want to see clean and precise financial data when they’re deciding to approve your business for credit. 

The best solution is to have two separate accounts. One strictly for the business, and one that’s for personal transactions. 

Use A Chart Of Accounts For The Dental Industry

A common misstep that happens in dentist bookkeeping is attempting to use a standard chart of accounts to track income and expenses. A standard COA doesn’t provide the same level of usefulness that a dental industry COA would have for your practice. 

You run the risk of omitting important information without the use of a dentistry-specific chart of accounts. This might affect you further down the line when you transfer those figures to other financial reports. 

You can arrange your chart of accounts to track the areas that pertain to your business model. For example, the payroll for your receptionist would be considered an overhead expense. In contrast, the dentists’ and hygienists’ payroll would be considered to be part of the Cost of Sales. 

These are important distinctions that might be overlooked when using a standard COA as opposed to a dental industry COA.

Use A Cloud-Based Accounting Software

One of the best things you can do for your dental practice is to take your bookkeeping digital. It minimizes the clutter that comes with paper and makes it easier to maintain reliable financial records. 

When tackling bookkeeping for your small business, it’s difficult to keep up with all the tax guidelines you’ll have to follow which is why many business owners choose to hire a dental CPA or accounting firm. However, outsourcing can be costly for a small dental office. 

Small business accounting software offers an affordable alternative. Most accounting software comes pre-loaded with a chart of accounts and tax guidelines so you don’t have to be a bookkeeping expert. 

You’ll still need a base knowledge of bookkeeping or accounting to get started, but most accounting software offers basic educational walkthroughs of what to do. 

Lendio’s cloud-based accounting software is a great tool for dental bookkeeping. With their affordable Sunrise Plus version, you can

• Keep receipts and expenses organized
• Easily generate profit and loss statements
• View up-to-date cash flow monitoring
• Send and track invoices

If you decide that bookkeeping isn’t your strong suit, they also have a paid bookkeeping service to make the process even easier. It allows you to work with a professional bookkeeper for an additional cost. 

See how Lendio can improve your bookkeeping process and sign up for your free 14-day trial!

Review Your Finances Regularly

Reviewing your finances is an important part of ensuring your bookkeeping process is working well. It also helps you make the best decisions for your business. Not reviewing your financial situation regularly can leave you with unanswered questions about your business.

For example, If your expenses are running high and you’re not aware, approving the purchase of new equipment could put your finances over the edge. Take time each week or each month to review the finances for your business. There are several benefits to doing this:

• Makes you aware of the company’s financial situation
• Gives you solid information to base decisions off of
• Allows you to target unnecessary expenses
• Helps you identify any financial gaps
• Pinpoints where profits are stemming from

Close Your Books The Right Way

At the end of a financial period, you’ll need to close your books. Meaning that the financial information in the reports is finalized. 

Once the books are closed, that’s it. No more changes can be made. This is to ensure that data from other accounting periods doesn’t bleed into the current period . 

Without closing your books properly, it could result in mistakes and inaccurate depictions of how much profit or loss was experienced within one accounting period. To close your books properly, you’ll need to transfer journal entries to a general ledger account. 

Most small businesses choose to close their books monthly. Depending on what works for your business you could also choose to close books annually. 

Reconcile Your Financial Details

When making a dental accounting entry, it’s easy for all of the numbers to start running together. Before you know it, there are transposed numbers or expenses recorded in the wrong place. That’s why it’s important to reconcile the financial details as you go.

A simple way to do this is to confirm the dental accounting entry amount with a copy of the receipt, invoice, point of sale ticket or other pertinent information that can confirm the amount that should be recorded. 

So while the earlier suggestion of adopting cloud-based dental accounting software is effective at cutting down on paper, it doesn’t eliminate the need to keep certain documents. Without the following documents stored safely in your records, you could face big problems. 

• Company bank account statements
• Medical billing for insurance
• Cash flow statements
• Accounts receivable documents
• Accounts payable documents

You can also use the data in these documents to create monthly financial reporting for your company. 

Consider Outsourcing Your Bookkeeping

There are several reasons why dentists and oral surgeons decide to outsource their bookkeeping to a dental accountant instead of keeping it in-house. You might be running a larger dental practice, or the job is just too much to hand off to an office manager. 

Either way, finding dental bookkeeping services that take the task off your hands can be exactly what you need to focus more energy on your patients. By outsourcing your bookkeeping, you’re giving yourself the ability to do what you do best– improving peoples’ smiles. 

Meanwhile, the accountant does what they do best, which is taking care of your financials. Hiring accounting services comes at a cost but it also comes with plenty of benefits: 

• Increased accuracy
• More time to dedicate to patient care
• Some accounting services may help you run payroll
• Trained professionals who are well-versed in bookkeeping
• May assist in developing tax strategies or tax preparation

Overall, dental bookkeeping requires attention to detail and base knowledge of bookkeeping guidelines. You’ll need to use an industry-specific chart of accounts, reconcile financial data and make sure that the books are properly closed each month. The full process takes time. 

Even if you decide to outsource your bookkeeping, you’ll still need to review the financial reports regularly and avoid mixing personal and business transactions. This will help you stay on top of the company’s financial status and limit mix-ups in the accounting process. 

_{Information provided on this blog is for educational purposes only, and is not intended to be business, legal, tax, or accounting advice. The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. While Lendio strives to keep its content up-to-date, it is only accurate as of the date posted. Offers or trends may expire, or may no longer be relevant.}