Accounting Firms in Massachusetts: Top Dental Bookkeeping Mistakes
Accounting Firms in Massachusetts
Accounting Firms in Massachusetts | Bookkeeping is a simple task when done properly. However, some bookkeeping mistakes can be costly for your dental practice. A dental practice requires certain industry knowledge for accountants and bookkeepers.
Let us discuss a few major bookkeeping mistakes that could be costing your dental practice thousands.
You Do Not Separate Personal and Dental Practice Bookkeeping
A common business and bookkeeping error is to keep combined records of personal and dental practice. Many small businesses work as a sole proprietorship and their income pass through.
Separating bookkeeping records for personal and business records will help you in tax compliance as well. That’s what many Accounting Firms in Massachusetts Also, it is important to keep an eye on the key performance indicators of your business.
You can evaluate the business KPIs only if you have the relevant data. Thus, it is important to keep the personal and business bookkeeping records separately.
Failing to Keep Proper Records – Income and Expenses
Often dental practices are found guilty of this mistake. Bookkeeping records need to be backed by proof. It means you must always keep receipts for expenses and invoices for income generated. Fortunately, Accounting Firms in Massachusetts offer bookkeeping.
Keeping expense receipts is also an important requirement for tax compliance. You cannot claim tax deductions without expense records. These expense records can be in the form of digital or printed receipts.
Skipping records of income or expense means you are costing the business heavily. For instance, if you purchase a few stationary items weekly without getting a cash receipt, it will cost you a few bucks. If you continue the practice, it will cost your business a few hundred dollars yearly and so on.
You Are Not Up-to-Date with the Accounting Standards
Bookkeeping sets the foundation of accounting records. It is always best to rely on Accounting Firms in Massachusetts for bookkeeping. Your financial statements draw data from the bookkeeping records. If you are not up-to-date with the accounting standards, you cannot keep the account books clean.
It will lead you to wrong accounting and tax practices. That can result in heavy tax penalties and fines for your dental practice. It also means you’ll miss out on some of the available tax credits and deductions.
For example, the IRS had allowed several temporary tax provisions such as increased depreciation deductions for the last two years. You need to stay abreast of the accounting and taxation laws to avoid hefty business losses.
You Do Not Communicate Effectively
A major mistake made by many businesses is to think of the bookkeeping task as the recording of journal entries only. It is commonly considered a number-crunching job. However, if you do not communicate effectively with other employees, your account books will never be clean.
It is important to extract valuable information from other departments as well. Your bookkeeping records will help the top management formulate an effective financial strategy. Thus, wrong input bookkeeping information would lead to miscalculated financial plans.
You Do Not Segregate Accounts
This one is basic stuff for Accounting Firms in Massachusetts. However, it is often neglected in dental accounting practices. One of the common errors found in the bookkeeping records of dental practices is not to segregate the charts of account.
It means your bookkeeping records do not have a separate account for business transactions. A chart of accounts assigns each income and expense category a separate account. It keeps the books in order.
Misunderstanding the Difference Between Revenue and Profit
Continuing with our point above, when businesses do not segregate accounts, they cannot differentiate between key financial concepts. Many dental practices consider business sales as profits.
Treating revenue and profits in the same account books is a costly bookkeeping mistake. It does not only cost your business heavily; it puts a business at solvency risk.
A similar problem occurs when dentists consider the cash available as net profit. Both figures are different and should be treated as such. Cash is as important for your dental practice as profit.
Treating cash, revenue, and profits confusingly is one of the biggest bookkeeping errors that could be costing your business thousands. Rely on Accounting Firms in Massachusetts to avoid bookkeeping mistakes.
You Do Not Seek Professional Help
Bookkeeping seems a simple task. However, it requires skills and time devotion to achieve effective results. Many dentists try to do it themselves.
In many ways, you’ll need Accounting Firms in Massachusetts to help to set your bookkeeping system in order. It will save you time and money in the long run. Seeking professional help means you can save through proper record-keeping, business efficiency, and tax savings.