Dental Bookkeeping Best Practices

Did you know that excellent bookkeeping can lower the chances of errors? You can avoid significant losses in business expenses. Keep reading if you want some helpful dental practice bookkeeping tips.

In this guide, you’ll learn about the importance of dental bookkeeping services. Make sure you keep excellent records so you don’t have to deal with these problems.

Ready to learn more? Check out the tips below.

You Should Set Up Your Charts 

When you set up your accounting software, you’ll have a general chart of accounts.

But to have insight from your books, you’ll want to see your finances organized. Get a chart of accounts set up. This will help you report and measure the factors of your business every month.

Various dental practices will track things differently. This will depend on their unique business model. Dentists’ and hygienists’ payroll expenses will go under Cost of Sales.

Your bookkeeper and receptionist’s payroll expenses will get tracked beneath overhead costs.

Track the revenue from the different services. You’ll gain an understanding of the profitability of the service lines. Working with a reputable company will help you set up a chart of accounts.

You Should Monitor the Cash Flow

Cash flow will get confused with profit. Remember, profit, and cash flow aren’t synonymous. Most dentists think profit will represent the excess cash they spend on purchases.

Cash flow refers to the money flowing in and out of your clinic. You should monitor the fluctuations to understand whether your practice has enough cash to pay for expenses.

Monitoring cash flow will help you identify potential shortages early on, so you can deal with the situation. 

Track Your Equipment

Most dental practices will have a lot of pricey equipment. If you expense this equipment when you buy it, you misstate your expenses. 

Your dental equipment is a fixed asset. It will depreciate over time. You should manage and track the depreciation value of your business equipment. You’ll remain compliant with your audit requirements. 

You’ll Need Excellent Tracking for Multiple Clinics

Do you have multiple dental practice locations? You’ll want to use location or class tracking found in your accounting software. This will help you determine how the site performs.

It’s essential to understand the performance of different locations. This will help you understand the financial comparisons across the various practices. You’ll learn how to improve the different clinics.

You’ll Want to Review Your Tax Guidelines

An effective way to make sure things work is by accounting for the expenses. It’s easy to see deductibles when you need to file your taxes. Follow the bookkeeping best practices, so you can stay in business.

You will have to reconcile your accounts every week. When your practice continues to grow, you will do this more often.

You’ll Need to Close Books Properly

Reconcile different accounts. When you complete your dental bookkeeping, you should close books each month. This will make it easier to prepare the yearly and quarterly financial statements.

You will need to keep in mind that it’s not wise to change the accounts after closing them. This could cause you to have inaccurate financial records.

Alterations could cause errors, and you will increase the chances of misfiling taxes.

Use Business Management Tools

You can make your dental bookkeeping go smoother when you use Xero or QuickBooks. Remember that installing them isn’t going to make a huge difference.

As your business grows, you’ll make some changes. You’ll need more equipment, payroll, and hiring. You will also need to ensure the accounting tools match your practice’s specific needs.

Make Sure to Use Industry-Standard Chart of Accounts

Most dental offices don’t use the correct COA to track their spending and review.

An industry-standard one will have specific features for dental bookkeeping. You can lower the chances of making mistakes and leaving out important information.

You might need to use the chart as you prepare the financial statements. A wrong chart could end up crippling your practice’s potential. This will attempt to streamline and grow your dental clinic.

Records that have missing details and errors will affect your business.

You Could Outsource Bookkeeping

As your business grows, it’s challenging to meet your new goals and handle bookkeeping.

Outsource this aspect of the business to a reputable bookkeeping business. All your bookkeeping needs will get taken care of by experienced professionals. This frees up your time. You can focus on your dental clinic.

You could work with a local accountant or Drilldown Solution.

Don’t Mix Your Business and Personal Expenses

Most businesses make the mistake of mixing their business and personal expenses. This could end up complicating things down the road.

Combining personal finances with the clinic won’t give you a realistic view of your finances. It will also make your tax season super complicated.

Lenders and investors will need precise and professional bookkeeping records.

You Could Use Cloud Software

Some people will choose to go digital with their bookkeeping. They use cloud-based accounting software. This lets you collaborate with your bookkeepers without bringing them to your office.

Cloud software will help you export documents to your accounting software. This streamlines the process. It will get rid of the need for someone to enter information manually.

You won’t also have to worry about storing your physical documents on-site. It’s helpful to have a paperless work environment. Store your information in the cloud.

Improve Your Dental Bookkeeping 

Did you find this guide helpful on dental bookkeeping? Look at working with a reputable company that can help organize your financial books. You could also hire someone to handle this job for you.

Make sure you check your cash flow regularly, consider going digital, and don’t mix your expenses.

Need more helpful business tips like this guide? Check out our resources on the blog today.