Accounting plays a crucial role in the world of businesses. Accounting for medical practices is as vital as the rest of the private-owned companies. Most healthcare providers opt to hire proficient licensed accountants to deal with their account needs as they have so many things to juggle in their everyday tasks.
Medical practices accounting and bookkeeping require a comprehensive and in-depth understanding of the healthcare services for it to be efficient and accurate. Today, we list down some of the essential tips in maintaining your books. So, you can get the benefits and all the advantages that come along with it.
Keeping your books healthy
Running a medical practice is a massive workload to carry, and so, when you add accounting to that, it makes things more daunting and a headache, especially during tax time. With that said, here are a few tips and tricks that you can learn to help you out lessen the burden.
- Maintain a well-detailed record
One of the essential steps a medical practice needs to observe to keep a clean book is to maintain a well-detailed record. It is more than just bank statements, but keeping track of the payables and receivables, from and to which account the money came from and going.
By doing that, it would be easier for you to find the information faster when needed. You should also have a dedicated folder where you can store the receipts, both physical and digital. With this kind of practice, you will have smoother and more efficient transactions and transitions along the way.
- Take out taxes immediately
Keeping your books clean also means to take out taxes immediately at the point of sale or during generations of payroll. Although you might get tempted to delay the process most of the time, for whatever purposes it may be, errors are going to happen. So, you do it right there and then.
When you pay your taxes immediately, your medical practice will be free from getting a large lump sum of the tax bill at the end of the calendar year, which may come in high-cost and hard to trace. Upfront payment of taxes will also save your medical practice from incurring any penalty due to the delays.
It would be advisable to acquire the service of a certified tax professional, who has years of experience in accounting works, so your medical practice will be saved from all the hassle and stress, not to mention the time and money cost for doing things wrong. Besides, highly experienced tax professional knows the ins and outs of the laws governing taxes.
- Keep track on your cash flow
Produce a cash flow statement or schedule statements for your medical practice’s profits and losses. Keeping track of these relevant factors is highly effective in checking and evaluating the general financial aspect of your health practice.
You should validate the daily records and resolve discrepancies immediately. With tracking your cash flow and keeping statements for the profit and loss of your medical practice, it will also give you an idea of how you can move money around and invest further.
- Record receipts and invoices
It is significant to make money for your medical practice. Thus, recording receipts and keeping track of invoices are of utmost importance. However, the task can be daunting when done manually. That is why there are medical software tools available for your medical practice to make things easier, faster, and more efficient.
The healthcare industry is also adopting digitalization in their transactions. Hence, it would also be appropriate for you to follow the trend. By doing so, you are also making it easier for your medical practice to log receipts for expenses and record cash expenses, at the same time.
- Determining invoices from receipts
Frequently, these two get mixed-up that can cause unclean accounting and bookkeeping records. Therefore, it is a must that your medical practice should be able to distinguish invoices from receipts. So, how is an invoice different from a receipt?
- What are the invoices?
Invoices are bills that a medical practice sends out to patients after providing or rendering services requested. It is typically the same as our electricity or water bills.
An invoice details each service and product provided to every patient during their visit to the medical practice. It reminds them of the money they owed.
One of the best things about keeping track of invoices is that it helps speed up the cash flow. Thus, maintaining financial records, and most of all, you get the payment from the services you offered.
- What are the receipts?
Receipts are proof of transactions that occurred. Once the patient paid their invoice, your medical practice should provide a receipt in return.
- Utilize licensed online medical application tools and software
With the advancement in technology, all transactions are now online. The healthcare system is also adopting the use of online medical application software for faster, more accurate, and more efficient process flow of transactions in the industry.
Through online applications, it would be easier for your medical practice to keep a record of your patient’s information. Thus, it would be easier for you to pull it up when needed and bill them accordingly.
- Don’t mix business accounts with personal
Many of the reasons of financial constraints in the business is mixing it with personal accounts. Some owners use personal funds to run a business, which is not a good practice.
Correct accounting can, therefore, provide higher profits to medical practices as more revenues come. That is also the reason why you need to employ or hire an efficient bookkeeper who has years of experience and can highly focus on the accounting aspect and overall finances of your medical practice.
The role of an accountant includes daily keeping all records, billing entries, and the management of stocks and inventories, among many others. The success of the medical practice mainly depends on the efficiency of the accountant they hired. That is how essential accounting is in medical practices and other businesses.
Why medical practices need to keep books
Medical practices need to keep books because they are required to do so by law. The IRS requires medical practices to keep books, so that they can properly report income and expenses on tax returns. Without keeping books, you cannot accurately report your income or expenses.
The IRS requires medical practices to keep books because the IRS wants to ensure that all businesses are reporting their income correctly. The IRS wants to make sure that everyone pays their fair share of taxes and does not try to cheat the government out of money.
Medical practices need to keep books because it is necessary for financial planning purposes. If you do not have accurate accounting records, it will be difficult for you to plan for future expenses such as equipment purchases, hiring new staff members and paying for advertising campaigns. You will also have difficulty calculating how much revenue your practice is bringing in each month or year so that you know whether or not you are meeting your revenue goals and making enough money from patient visits per month or year.
Conclusion
Accounting for medical practices is not as difficult as it may first seem. By keeping good records and understanding the basic concepts of bookkeeping, you can maintain your books with relative ease. Remember to keep track of all income and expenses, and be sure to categorize them appropriately. With a little effort, you can keep your medical practice’s finances in good order.
The most important thing to remember when accounting for medical practices is to keep accurate records. This means tracking all income and expenses, and categorizing them appropriately. Keep in mind that some expenses, such as office supplies, may be tax-deductible; be sure to keep track of these so you can claim them on your taxes.
Another important aspect of accounting for medical practices is to maintain a budget. This will help you keep track of your spending and ensure that you are not overspending. Be sure to include all income and expenses in your budget, and review it regularly to make sure you are on track.
Finally, be sure to consult with a qualified accountant or financial advisor if you have any questions about accounting for medical practices. They can provide you with valuable insights and advice that can help you keep your books in order.
FAQs
- How do I maintain my books?
You should maintain your books by keeping accurate and up-to-date records of all your financial transactions. This will include recording income and expenses, as well as tracking invoices and payments. Keeping good records will help you to measure the financial performance of your practice and make informed business decisions.
- What records do I need to keep?
You should keep records of all income and expenses, as well as invoices and payments. This will help you to track the financial performance of your practice and make informed business decisions.
- How often should I update my records?
You should update your records regularly, at least on a monthly basis. This will help you to track the financial performance of your practice and make informed business decisions.
- What if I don’t have time to update my records regularly?
If you don’t have time to update your records regularly, you can hire someone to do it for you. This will help you to track the financial performance of your practice and make informed business decisions.
- How can I get help with accounting for my medical practice?
If you need help with accounting for your medical practice, you can contact a professional accountant or bookkeeper.