Should I be doing my own bookkeeping?
Updated: Feb 26, 2021
Can you imagine if your patients did their own cleanings and dental work, or had their spouse do it for them? Anyone can buy some tools and watch a YouTube video, right? Most dentists would be pretty appalled at the thought! Sometimes in an effort to save money, we waste valuable time doing things we're not experienced in that end up costing more money in the end due to costly mistakes or ignorance.
I talk to dentists all the time who do their own books or have their spouse take care of it. Some say they even enjoy it because it allows them to see where their money is going, and others do it because they think it will save them money. Important distinction...seeing which accounts you put your money into is very different from understanding the overall health of your practice! I compare it to reading a book. Just because you’re reading the words doesn’t mean you’re comprehending what the book is saying. Accounting is the language of business, and in each practice the numbers tell a story. It’s important to understand what that story is saying in order to make informed decisions about the future of your practice.
Is it cheaper? Initially yes, but a bookkeeper is likely worth the investment in the long run. Usually, the cost of a bookkeeper is offset by the time you’d be spending on your accounting and the money they can help you save. As a practice owner you should be focusing your time doing the things that bring your practice the most value. If there is something you could be doing with a higher return than doing your own books, then it’s probably time to hire a bookkeeper.
Having a trained accountant do your bookkeeping ensures the following:
⇨ Accounts are accurate
⇨Assets are properly capitalized, depreciated or amortized, and sold
⇨Loan payments are properly accounted for
⇨ Proper deductions are being taken on your taxes
⇨ Accurate financial reports are utilized to make informed decisions about growing your practice
⇨ Cloud-based storage of receipts, invoices, and bank statements are utilized for easy access in the event of an audit
Another challenge dentists face is cash flow planning. Cash flow planning is projecting how much revenue and expenses you’ll have for the year and whether or not you’ll be able to meet those expenses. It is absolutely critical to the survival and longevity of your practice. Just because you have cash in the bank doesn’t mean you will have positive cash flow for the month or the rest of the year. It’s important to know the timing of revenue and expenses in order to avoid overdraft fees, pay your employees on time, and meet your other responsibilities. Accurate cash flow planning takes skill, the right tools, and should be left to the experts.
Being a dentist is hard, and there is so much to juggle, especially as a new practice owner. Focus on what you’ve been trained to do, and leave the rest to a trusted expert. You won’t regret it!