Your dental practice needs stable financial management to survive and thrive, including proper bookkeeping techniques that keep your practice afloat. Unfortunately, nothing impairs a growing dental practice quicker than inadequate bookkeeping.

In dental school, you learned the craft of keeping smiles healthy and beautiful. Although this might be hard to admit, some dentists lack confidence in their accounting skills. But, this is nothing to be ashamed of—bookkeeping is a challenging (but essential) duty. Still, accurate financial records allow dental practice owners to understand the financial health of their practice.

Even if you feel self-assured in your bookkeeping skills, continue reading to discover five pitfalls to avoid expensive slipups.

Pitfall #1: Recording Transactions in Out-of-Date Accounts

A common and costly blunder is accidentally entering transactions from a previous period, resulting in balance adjustments that don’t match your bank balance or financial reports. If the error goes unnoticed,  all future cash figures, tax documents, and reports will be incorrect. Consequently, this misrepresentation of your finances can affect your finances and potentially lead to punitive actions from the IRS.

We get it. You probably don’t look forward to your periodic appointment with “the books.” However, dental practice owners should close the books at least every month as a strategy for keeping up-to-date financial records.

Pitfall #2: Relying on Manual Bookkeeping Methods

Paper ledgers and journals were great accounting tools of the past. Even if you’re comfortable with manual accounting, this antiquated bookkeeping practice can weaken your financial activity. Paper bookkeeping requires copious amounts of time to complete tasks and is also subject to errors (which can sometimes take hours to find). Generally, paper ledgers and journals are less secure and subject to irreparable damage (either by accident or even by a disgruntled team member).

All in all, manual accounting methods cannot match the technological advantages of software like QuickBooks®. Contemporary accounting software streamlines and organizes your expenditures, income, and overall savings. Plus, who doesn’t love the convenience of generating astute financial reports with the click of a button?

Pitfall #3: Throwing Away Receipts

When running a business, every cent counts. In today’s mobile world, half of the business expenses are generated on the go, which can pose a challenge when collecting receipts. Although it’s easy to disregard receipts, they are invaluable slips of paper that you can submit to claim tax deductions for your practice.

The wisest dental practice owners keep track of their receipts. With plenty of expense-tracking apps on the market that sync with your bank account and accounting software, there’s no excuse for losing track of your spending.

Pitfall #4: Commingling Funds

Sometimes, business owners develop the habit of approaching personal expenses as business expenses (and vice versa). Nevertheless, treating your dental business’ petty cash and credit cards as an extension of your wallet can lead to serious financial risks for you and your business. A “buy now, figure it out later” mentality muddies your overall financial picture. Not to mention, it can also contribute additional hours of monthly bookkeeping.

Practice discipline and keep bank accounts, credit cards, and transactions separate for your business and personal life.

Pitfall #5: Doing It All Yourself

Odds are, you didn’t attend dental school to keep yourself up at night thinking about bookkeeping, tax preparation, and other aspects of financial management. Instead of brushing up on your bookkeeping, consider outsourcing a virtual administrator.

At Dental Practice Enhancement, our virtual team members can help you save time and money while keeping your records safe. Learn more about our services by calling (833) DPE – FOR – U or messaging us online.

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