Most dentists who choose to open a practice of their own, do so because they enjoy helping patients better manage their teeth and oral hygiene; they certainly don’t do it out of love for bookkeeping and accounting. That’s why many dental professionals hire specialist bookkeepers and accountants to help them maintain their financial records, and make sound financial decisions.
But although dental bookkeeping and dental accounting may both be vital aspects of a successful practice, it’s important to recognize that they are two unique tasks involving very different responsibilities, despite many people using the two terms interchangeably.
If you’re a dental office manager or practitioner wondering whether you should work with a company providing dental office bookkeeping, hire a dental accountant, or work with both, here’s what makes the two roles different:
Dental bookkeeping and what it involves:
It’s impossible to accurately track your dental practice’s business transactions without some form of bookkeeping process.
Below are some of the tasks associated with dental bookkeeping:
- Bank account reconciliations on a regular basis
- Invoice payments to vendors
- Scanning receipts
- Reviewing employee timesheets
- Tracking inventory
- Providing an accountant with relevant tax forms
Dental accounting and what it involves:
Information collected by bookkeeping processes is used by an accountant to gain valuable insights into the financial health of a business.
Below are some of the tasks associated with dental accounting:
- Analysis of expenses and revenue to identify ways of boosting profits
- Reviews of financial statements, both monthly and annual
- Preparation of financial statements, both monthly and year-end
- Carrying out audits
- Preparing, reviewing and filing tax returns
If you work with a specialist dental accountant, they will also give you business advice based upon your financial records and their intimate knowledge of the dental industry.
Should you outsource your bookkeeping and accounting needs?
With the importance of both roles in relation to running a successful dental practice, ignoring any of the tasks associated with them isn’t recommended, but if you don’t have the funds for an in-house hire, or simply wish to try and save some money, outsourcing is an affordable and convenient alternative. In fact, for many dentists and dental practitioners, outsourcing their bookkeeping and accounting requirements is their first choice due to its flexibility and affordability.
If you’re in a position whereby you can’t decide whether to outsource to a dental bookkeeper, a dental accountant, or both, answering the following 4 questions could help you make an informed decision that’s right for the needs of your practice:
- Currently, how much of your time is being spent on tasks associated with bookkeeping and accounting? Could that time be put to better use trying to grow your practice?
- Are you often frustrated by how much time you’re having to spend on bookkeeping and accounting tasks, when you would rather be running your practice and dealing with patients.
- Since you opened your dental practice, have you made any significant errors that lost you money? If yes, how much has this money cost you in terms of fines, late fees, hourly work and lost revenue?
- Would it be a lot easier, and a lot less time consuming and stressful if you outsourced all bookkeeping and accounting tasks to professionals with industry experience.
Answering these questions honestly should give you a much clearer idea of whether now is the right time to outsource bookkeeping for dentists and your accounting requirements.
Ultimately, if you’re spending a lot of time trying to manage your financial records, and are sometimes (if not all the time) failing with costly consequences, outsourcing either a bookkeeper, an accountant, or both, would be a wise decision. Whether you hire both services might depend on your budget, but having both experts at your disposal, will almost certainly give you and your dental practice, a competitive edge.