You’ve spent many years training as a dentist, honing your skills, and building relationships with patients, and now you’re finally ready to start your own dental practice.
While this can be an exciting time, it’s imperative that if your business is to be a success in the long-term, that you build some solid financial habits from the get-go. With guidance from professional bookkeeping for dentists in Miami, you can implement the following best practices for a solid financial foundation:
Establish a dedicated business checking account and credit card
This critical step helps to prevent your personal spending from getting mixed up with your business spending, which is nothing short of a nightmare when it comes to preparing your taxes.
Blurring the lines between personal and business spending can devalue a practice, make tax deductions unnecessarily complex, and for lenders, it can signal unprofessionalism.
Put a specialized dental chart of accounts into place
A generic chart of accounts isn’t detailed enough for a dental practice, as any dental bookkeeper will tell you, so it’s important to set up a clinic-specific chart of accounts before the bookkeeping even begins.
Categorizing income by production type, such as cosmetic, hygiene and restorative, and dividing expenses into lab fees, dental supplies and staff salaries, you can ensure accurate financial reporting relevant to the industry, and benefit from actionable insights.
Record transactions frequently and reconciliate often
Weekly bank reconciliation in the early stages of a dental practice helps prevent backlogs, and stops errors between EOBs and client deposits from being missed.
Reconciliation on a monthly basis can help practice owners identify potential fraud early on, and avoid non-invoice transactions from being forgotten about. With accurate income and expense recording when each transaction takes place, you can keep your clinic’s books up-to-date and benefit from knowing your true financial position at any given time.
Track and control overheads
Having a regular accounting system set up ensures that new practices don’t spend more than 60% to 65% of their gross revenue on expenses like rent and salaries. Part of this accounting system involves maintaining an accurate inventory of everything spent on lab fees and dental materials, allowing for any wasted expenditures to be identified, and enabling supplier negotiations to go ahead.
Once this information has been thoroughly reviewed, a budget for the practice should be created that’s based upon industry averages. Then, the budget can be compared to actual costs to try and lower the financial strain often experienced by new dental practices in the first few months.
Review data with key monthly financial statements
Reviewing Profit and Loss Reports, Balance Sheets and Income Statements, periodically helps new practice owners evaluate how successful they’ve been at generating cashflow.
With help from specialist accounting and dental bookkeeping, these reports can be assessed to provide practice owners with a detailed breakdown of patient payments and collected dues. Additionally, these reports help with the making of business decisions that are sound and well-rounded in respect to production-to-collection ratios, and the cost of new patient acquisition.
A proactive approach to bookkeeping typically translates into happier patients, as dental practices are able to properly allocate resources, and be more responsive to their patient’s needs. The quicker you put these important bookkeeping best practices into place, the quicker your new dental practice can start developing, growing and becoming successful.