Dental accounting has its own unique set of challenges. Both dental accountants and dental bookkeepers are susceptible to making mistakes that can cost the practice greatly. Perhaps they are fiscally fluent, but have become complacent and set in their ways. Perhaps they are new and plodding through uncharted territory. If you do your own financials or if you have either a dental accounting service or dental bookkeeping service, be sure to keep an eye out for these common accounting mistakes.
1. Combine Personal and Professional Finances
Even if you’re not a small business owner doing your own books on your own dime, it’s still possible that there are personal finances getting mixed in with your business expenses. No, this doesn’t mean someone is cooking the books, it’s often a simple case of misunderstanding how to categorize expenses. A reputable dental accounting service, dental bookkeeping service, or a CPA service can help you differentiate accurately between personal and business expenses. Never assume you have the correct information yourself.
2. Thinking All Income is Actual Income
Not every dollar that comes in is actually income. Money comes in for a variety of reasons: loans, transfers, and other fiscal moves can look like income on the surface, but in reality, they’re not real income. Including these elements in your expected income will lead to unexpected discrepancies. Being sure to identify what is actually income versus what is just money movement will benefit you in the long run.
3. Overuse of the “Miscellaneous” Category
In order to maintain accuracy, any dental accounting service will tell you that it’s important to have all of your expenses appropriately categorized. Often, an inexperienced dental bookkeeper or dental accountant will overuse the miscellaneous category. While a useful and important catch-all, it’s important to categorize all expenses specifically where they belong in order to create useful analysis.
4. Using Spreadsheets Instead of Software
Many money people are well versed in spreadsheets, and it becomes tempting for them to just use spreadsheets in their dental accounting. Spreadsheets have their function, but if they’re the only thing you’re using, you’re bound to run into difficulties. Using specialized software such as Quickbooks for smaller practices and more advanced software for larger practices is much more efficient. These software’s will also take some basic steps towards providing you and your dental bookkeeping service and dental accounting service with basic analysis and insights that you can use towards running your practice more efficiently.
5. Recording Transactions in the Wrong Period
We all feel like the days, weeks, and months run together sometimes. However, this is a strictly human thing–the months never run together in financials. It is always important to keep things organized, and making sure you perform monthly closing is an important way to keep things in order. Make sure all of September’s accounting activities are entered and reconciled for the month of September and that nothing bleeds into the surrounding months.