Record Keeping - Is it necessary?
Absolutely – have you ever heard the expression that if you are not making progress you are falling behind? How do you think you monitor progress?
Accounting, bean counting, record keeping – all means the same thing.
Every dental practice large or small must maintain an accurate set of records that at a minimum allows them to accurately prepare an income tax return. If you don’t believe me, would you believe the IRS: https://www.irs.gov/businesses/small-businesses-self-employed/why-should-i-keep-records
On the other hand, a dental practice owner with a proper accounting system could not only prepare a tax return but get insight as to:
Collections – would you like to know?
Daily average collections compared to same period in previous years
Collections per hour per provider
Collections per square footage
Cash flow – would you like to know?
Cash needed to fund operations and service debt monthly
Cash rich and cash poor months
When to outfit that remaining operatory
Staffing – would you like to know?
How your staff compensation compares
Are benefits offered competitive
What the true cost of employment is
Return on Investment – would you like to know?
How long before equipment pays for itself
Income Taxes – would you like to know?
Whether your midyear estimates are adequate
Whether to buy equipment this year or next
Internal Controls – would you like to know?
That all collections make it to the bank
Dollars spent are for approved expenditures.
If you think an accounting system that does this has to be expensive – you are wrong. It does not need to be expensive or take a lot of time. Fact – the average dentist in Iowa should be doing his or her own accounting. Fact – the average dentist in Iowa should spend no more than an hour per week doing that accounting. Fact – business owners who do their own accounting are better business leaders. Fact – a good accounting system makes a dental practice more profitable and more valuable in transition.
If you would like more information on how to update or install a quality accounting system in your practice, contact Paul Donnelly CPA at 515-987-8916 or firstname.lastname@example.org.