01 Jun Avoid These 5 Common Dental Accounting Mistakes!
There’s no getting around the fact that dental accounting often comes along with a number of challenges. Some practice managers who are tasked with the finer points of accounting believe they’ve hit a stride and can end up stuck in their ways, while others flounder through the process in hopes that they’ll eventually find their way. The thing is, both parties are susceptible to making costly mistakes, some of which can end up costing a great deal of both time and money.
Think your accounting process is where it needs to be? There’s a chance you may be misleading yourself. Here are 5 common dental accounting mistakes, all of which you should strive to avoid.
1. Combining Business and Personal Finances
This is a common mistake that people tend to make without even realizing it. While it’s likely that the vast majority of you or your practice manager’s personal finances are not entering into your accounting scenario, there may be things that you think are business expenses, yet really aren’t. Meals and expenses, entertainment and other categories are tricky to balance, as some are business expenses, and some simply aren’t. For best results, consult a professional CPA to learn what you can identify as expenses and what you cannot.
2. Thinking All Incoming Money is Actual Income
Incoming money is certainly something to be excited about, but only when it’s actually income—not always the case, unfortunately. Things like loans, bank transfers and other financial elements that can all look like income are actually far from it, and if you’re figuring these numbers into what you believe you’re bringing in each month, you may end up doing yourself a huge disservice. Take care in identifying what is actually income and what is not—you’ll thank yourself in the end.
3. Overusing the “Miscellaneous” Category
If you think that marking expenses as “miscellaneous” is part of the accounting process, well…you’re right. The problems begin when people overuse the miscellaneous category, however, which is extremely common practice. Things like bank charges, subscriptions etc. may seem like miscellaneous expenses, but in the vast majority of circumstances, these expenses will actually have a more well-defined home. Avoid lumping everything into the “misc.” category whenever possible.
4. Using Spreadsheets Instead of Accounting Software
Many people think they can get by with simple spreadsheets to handle dental accounting, and that may seem to be the case at first. Once your practice begins to expand, however, the notion that spreadsheets are enough to get the job done quickly becomes false. Accounting software like Quickbooks is essential for keeping things in order, and the sooner you start using it, the less likely it is that you’ll encounter snags along the way.
5. Recording Transactions in the Wrong Period
The days and months may seem to flow into each other for you, but that’s not how it works for your practice’s financials. “Closing the books” is a practice that needs to occur on a monthly basis in order to ensure that numbers line up properly and that you don’t record transactions during the wrong time period. Otherwise, you’ll have very little to work off of in terms of benchmarks.
So don’t worry about making all the right dental accounting decisions—focus instead on not making the wrong decisions.