When you run a dental practice, it is essential to keep your financials in order. If you don’t know what money is coming in or out, or what tax obligations or other financial obligations you have, you cannot make educated financial decisions and you can run into financial difficulties, despite having a busy practice that could otherwise be successful. Patients and family always come first.
Dental practice owners in particular need to keep good records to stay on top of their financial health, since small businesses often do not have much flexibility or financial leeway to cope with any issues arising from poor accounting habits. Whether dentists have small or large dentistry practices, are no exception, and need to maintain good record keeping.
A monthly bookkeeping checklist keeps your business financially healthy, as you have accurate financial information easily available. Errors are found and corrected, and inefficiencies are improved, so your business works optimally.
A monthly bookkeeping checklist makes sure you don’t forget anything, and mistakes don’t get made. It keeps you organized and makes the process easier since you don’t have to think about what you need to do. Having strong systems in place are beneficial for any organization. It makes processes easier as the company grows and financials become more complicated. It also makes it easier to delegate and split up jobs, and spot areas to improve or simplify.
Set time aside to regularly go through your bookkeeping. Set a regular routine as an appointment, so it gets reviewed in a timely manner. Collect and organize all documents, receipts, and invoices. Don’t forget the critical step of assessing your cash position, to determine how much cash you need for regular activities on a monthly basis, and ensure that amount is available.
Regardless of how frequently you pay employees, make sure this is on your list. Don’t forget to include a checklist item for payroll reports, so you can stay on top of all aspects of payroll financial information, including details on paid time off amounts taken as opposed to owing, to avoid a surprise if an employee hasn’t taken any time off in a few years.
Reviewing and Paying Invoices
To avoid fines from past due invoices and other issues, paying vendor invoices on time is critical. This seems obvious, but without a checklist, this can be easily forgotten. Equally important, is reviewing each vendor invoice for any errors. It may seem time-consuming, but it is worth it to avoid paying overcharged or duplicate invoices. Your process may include doing this as you open invoices, but checking again monthly is helpful.
Send Client Invoices
Send invoices at least monthly, to keep incoming cash flow smooth. Record when you send a client invoice, for tracking and record-keeping purposes. Sending invoices monthly is the bare minimum, while a weekly pace may be even better. Pay close attention to overdue invoices and kindly remind your clients to pay them in case they have forgotten.
You should also prepare and review an open client deposit report for accurate tracking of all incoming cash, such as new payments, credits, refunds, and deleted transactions.
Accounts Payable Reports
Creating and reviewing accounts payable reports, including an open vendor deposit report, to show any vendor deposits that need to be applied to vendors’ invoices are also useful for tracking outgoing cash.
Reconcile Accounts and Credit Card Statements
Reconciling your business bank accounts regularly lets you spot any inconsistencies or concerns before they can get bigger. You will need to review bank statements, statements for your business credit card accounts, lines of credit, and any other third-party statements. This process ensures any errors, whether yours or the other party’s, are corrected, for accurate financial statements.
Calculate Sales Tax
Depending on your location and business, you may need to calculate and pay sales tax or other taxes to the government. Paying your taxes correctly and on time is very important as interest is high on outstanding amounts.
Prepare Financial Statements, Including Profit and Loss Statement
The final step is to prepare your financial reports. This may include an income statement, cash-flow statement, and other monthly financial statements. These are critical, as they let you track your performance, find areas to cut costs or increase income, or determine efficiencies and improvements. They also are useful for your accountant when filing taxes and required if you are audited. Pay attention to detail and be as thorough as possible. Store records securely, whether they are printed or digital.
A profit vs. loss statement and monthly balance sheet are particularly important to show an overview of how the company is doing. Your income statement shows your profit or loss over a period of time, while your balance sheet shows your financial position at a specific point in time. You can compare these to your goals, to identify areas of improvement.
Simplify With Professional Support
Hiring a professional bookkeeper or bookkeeping services can help simplify and speed up daily and monthly bookkeeping duties. An accounting software solution designed for dental firms saves you administrative time that you would prefer to spend helping your clients. Dental Tax Accounting and Financial Solutions continuously find ways to improve the profitability of your dental practice; our bookkeeping for dentist’s services is one of the effective ways that we do this.