If you’re a dentist and running your own practice, then accounting is probably one of those tasks that fall to the bottom of your list. But understanding the basics of dental accounting is essential for ensuring financial health!
Practicing dentistry provides many rewards, including treating patients to help them achieve healthier smiles – but it also requires careful attention to finances in order to stay afloat. Our guide to dental accounting will provide useful information about sustainable practices and processes that will keep your books in check, and take the stress of balancing your books off your shoulders.
What is Dental Accounting?
Dental accounting is the process of tracking and recording financial transactions related to a dental practice. This includes income generated from services such as cleanings, fillings, and other treatments and expenses associated with running the office. Dental accounting tasks include budgeting for supplies, maintaining proper records of patient services, filing insurance claims accurately, properly allocating resources for employee salaries, and more.
In addition to helping dental practices stay organized and efficient, having a good handle on accounting can help prevent the risk of legal or financial problems down the road. For example, failing to file insurance claims properly can lead to delays in payment or denied claims – both of which can take a significant toll on cash flow. Without proper care, these issues can quickly snowball into larger, more difficult-to-solve problems.
The Best Practices for Dental Accounting
To ensure a healthy and successful practice, it’s important to keep up with the basics of dental accounting. Here are some of the best practices for handling your dental accounting needs.
Delegate as Much as Possible
Providing care to your dental patients is a full-time job, so finding ways to outsource or delegate accounting tasks can be beneficial. As a dentist, you should focus on providing quality care while delegating the paperwork and financial tracking to someone who specializes in dental accounting. A professional bookkeeper or accountant familiar with dentistry can help ensure that all transactions are accurately recorded and reported.
Consider Your Billing Structure Carefully
Determining a billing structure is important for dental practices and can greatly impact their business strategy and accounting procedures. There are multiple billing options available for them to choose from. For instance, some practices opt for the traditional route of being a participating provider. This means that as a dentist, you participate in a dental benefit plan, and typically, you collect payments from both insurance companies and patients. The focus is often on the quantity of patients rather than the quality of care. This is because dentists agree to accept the lower prices set by insurance companies for their services in exchange for receiving consistent payments and an increase in patient volume through insurance referrals.
Another option for dentists is to adopt a fee-for-service model, where they set their service prices and collect full payment from patients before providing the service. Patients can still submit a claim for reimbursement to their insurance company. This approach usually involves prioritizing quality over quantity. You’ll likely have fewer patients, but your profit margins for each one should increase.
Invest in Cloud-Based Software
Keeping up with dental accounts can be overwhelming for many practices. But there are now software solutions available that make accounting simpler and more efficient. Cloud-based programs like PracticeMojo enable dentists to track expenses, generate reports quickly, manage electronic payments, create invoices and billing statements, and much more. The cloud-based platform also ensures that data is secure and accessible from anywhere.
By investing in cloud-based software, dentists can make running their practice easier and more efficient – giving them more time to focus on providing quality care.
Optimize the Structure of Your Legal Entity
The legal entity that you choose for your dental practice will determine the way in which you’ll handle taxes, payroll, and other financial matters. Consider consulting with an experienced accountant to evaluate different business structures and determine which one best suits your needs. For example, a sole proprietorship involves fewer administrative tasks than a corporation or partnership but carries more risk should something go wrong.
Common Dental Accounting Mistakes
You went to school for dentistry, not accounting, so it’s understandable that you may make a few mistakes along the way. Some common dental accounting slips that can happen when you try to handle your accounting needs on your own.
Not Completing a Financial Analysis
Before you make any changes to your practice, it’s important to first analyze your current financial situation. This will help you identify areas where cost savings could be made and determine which services are most profitable. When you hire a team of professionals like Quantum, we make sure to complete a financial analysis for you, so you know exactly where your practice stands.
Choosing a General Accounting Advisor Instead of a Dental Accounting One
Accounting is a complex field, and it’s important to hire someone who specializes in dental accounting. A general accountant may not be familiar with the nuances of running a dental practice, which can lead to inaccurate reports and financial losses. At Quantum, we specialize in dental accounting so you can rest assured that your books are kept up-to-date and accurate.
Failing to Separate Personal and Business Accounts
It’s important to keep your personal and business accounts separate. Doing so will ensure that you keep a clear record of all transactions made, which is essential when it comes to filing taxes and other financial records. Quantum offers separate accounting packages for both individuals and practices so you can stay organized and compliant.
Dental Accounting with Our Quantum Team
As you can see, having an accountant that specializes in dental accounting is an essential part of achieving financial success for dentists. Quantum Dental Accounting is here to help you manage your finances and ensure the best outcomes. Our experienced team has built a stellar reputation for helping countless dental practices with their financial strategies and success. With our customer-focused approach and dedication to finding solutions that work for your unique business, you can trust that we will be there to support you throughout every step of the way. Contact our team at Quantum Dental Accounting for more information on how we can assist you in managing your finances.