Dental bookkeeping: What are 5 Common Bookkeeping Mistakes Made in Dental Practices

Dental bookkeeping

Do not skip this step, because you want to get a feeling of the bookkeeper’s professionalism and ability to communicate. You should also ask about how they would handle a data breach. Their answer should include a plan to contact clients immediately and notify them of the breach.

  • There are several ways to validate the reputation of the firms you consider hiring.
  • With years of training and expertise, we know how to help your practice achieve greatness.
  • Experience is also necessary because a bookkeeper without dental or healthcare experience may not understand industry regulations, including HIPAA compliance.

You’ll need to ask any bookkeeping firm you’re considering hiring about what they do to protect their clients’ data. Here are some of the common measures you should expect them to use. This is to ensure that data from other accounting periods doesn’t bleed into the current period . 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. Our dental bookkeeping specialists have been working in the dental industry for a number years.

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. 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. Apply for financing, track your business cashflow, and more with a single lendio account. With years of training and expertise, we know how to help your practice achieve greatness.

Why should I hire a dental bookkeeping firm for my practice? 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. 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.

Local or Virtual Bookkeeper

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. Contact a dental bookkeeping specialist today to help you organize your books. Our combined expertise in the dental industry gives us an edge of dental understanding. Similar to incoming money, not all outgoing money is an expense to your practice. Incorrectly categorizing outgoing money as expenses can lower your profit totals and ultimately affect your tax bill at the end of the year.

Of course, we also recommend paying close attention to how well they communicate during the evaluation process. Experience is also necessary because a bookkeeper without dental or healthcare experience may not understand industry regulations, including HIPAA compliance. As we mentioned above, one of the key duties of a professional bookkeeper is to create a chart of accounts. Seychelle is a Maryland-based personal finance writer and business owner. She’s passionate about helping others out of financial pitfalls she’s already dug herself out of. Most of her finance knowledge stems from her career as a Financial Consultant and Branch Manager at the 7th largest US bank.

Dental bookkeeping

In addition to asking about security measures, we recommend asking specifically about HIPAA compliance. You should ask if the firm has ever experienced a data breach or been charged with a HIPAA violation. For example, will they check in with you weekly or monthly?

Review Your Finances Regularly

However, outsourcing can be costly for a small dental office. Fees are a primary concern for many dental firms, particularly those relatively new, and may not have extra money to pay for bookkeeping services. Any firm you hire should be completely transparent about fees and charges. Most firms don’t list flat fees on their websites, so you’ll need to have a conversation about that in particular. Running a dental practice has a lot in common with running any business.

You can also use the data in these documents to create monthly financial reporting for your company. Depending on what works for your business you could also choose to close books annually. At the end of a financial period, you’ll need to close your books. Meaning that the financial information in the reports is finalized. One strictly for the business, and one that’s for personal transactions. It’s confusing and time-consuming to try and remember which purchases or deposits belong to the business.

Simple oversights like these can turn out to be very costly for dental practices. There are bookkeeping firms that specialize in certain industries, including the dental industry. If a company doesn’t specifically mention dental bookkeeping on its website, then it may not have the experience and expertise you need to keep accurate records.

There’s no point in hiring a bookkeeping firm if they don’t communicate with you regularly and make themselves available for support. Ideally, you will hire a firm where you have a single point of contact with someone familiar with your accounts, who can help you if there’s a problem. Ideally, you should hire a bookkeeping firm that is comfortable with technology and automation and can use both to provide accurate and speedy services. You’ll need someone who understands the dental industry and can create an industry-specific COA to help you track your income and expenses. 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.

Importance of Dental Bookkeeping

Understanding which costs can be categorized as a business expense is vital to accurate reporting. The common school of thought is that all money flowing into your practice’s bank account should be classified as income. You can have several various reasons for incoming funds that aren’t classified as profits, such as the sale of equipment or supplies and even reimbursements to your practice. The key takeaway is to remember that you will pay taxes on your profits. Misplacing incoming money as profits falsely inflates your profit percentages, ultimately leading to an increased tax bill.

Dental bookkeeping

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. Hiring a dental bookkeeping firm to keep financial records and help you achieve your practice growth goals is a good investment. You can use this guide to research bookkeeping firms, evaluate their services, and choose the right bookkeeper for your practice.

It allows you to work with a professional bookkeeper for an additional cost. 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.

By outsourcing your bookkeeping, you’re giving yourself the ability to do what you do best– improving peoples’ smiles. 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. Without the following documents stored safely in your records, you could face big problems. When making a dental accounting entry, it’s easy for all of the numbers to start running together.

Because most practices don’t close their books to verify their accounts and prepare monthly statements, errors can go unnoticed for long periods of time. One remedy for this common mistake is to monthly close and reconcile your books. This gives you a chance to verify the month’s transactions, thus providing you the time to make any needed corrections before you get too deep into the year.

Bookkeeping firms may specifically disclose their familiarity with software such as QuickBooks on their websites. Dental bookkeeping reviews can help you spot potential problems that the firm’s clients have experienced. It will also give insight into how the firm responds to negative reviews. If you decide that bookkeeping isn’t your strong suit, they also have a paid bookkeeping service to make the process even easier.

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. Nothing will cripple the growth of your dental practice faster than having cash flow trouble.

The dental bookkeeping firm you hire will be responsible for tracking your cash flows and expenses and possibly managing your payroll too. Therefore, hiring a trustworthy firm with a good reputation is essential. 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.