It’s fairly common for a dentist in private practice to have at more than one location, often one big location and one small one. Although this is perfectly normal, handling the financials can be confusing. Sometimes the two practices are separate entities with separate bank accounts, sometimes they’re the same entity, and sometimes they’re financials are handled separately, but come together under a “home base” account. Doing the bookkeeping for each is very different.
For practices that are treated as the same entity, it’s difficult to see how well each practice is doing. The larger practice often compensates for the lack of production in the smaller practice. If this is the case, you can appear to be doing fairly well in both locations when in fact the smaller practice is draining profits from the larger practice. Of course, this isn’t always the case, but it can be hard to be sure if both practices are treated as a single entity.
Treating the practices separately allows financials to be easily understood and analyzed. It allows you to make more objective decisions about your finances, knowing exactly how each practice is doing individually.
Having a “home base” account for multiple locations is optional, but it can be very helpful. The “home base” entity is what would pay for the more general expenses such as marketing, taxes, coaches, and even payroll. With this type of structure, you may be able to increase vendor discounts by purchasing in bulk or reaching high volume and then dividing between practices. With handling payroll at this level, you can also save on payroll service fees and not have to produce multiple W2s at year end for employees that float between your locations.
The more you can separate your practices on a financial level, the clearer your financial picture will be allowing you to make better decisions.