by Deana Jordan,
CPA with Dentalcpas.com, an affiliate of Naden Lean, LLC
I'VE LEARNED A LOT FROM CLIENTS
when they have come on
board with us for bookkeeping assistance and guidance. My aim is to give
QuickBooks users tips on what they should be doing to not only help them
manage and organize their practice finances but also help your advisers as
well, especially in regard to practice decisions.
1. The beginning
Before we begin talking about QuickBooks, let's review some
basic bookkeeping tips that will help you begin your journey.
- Keep your personal and practice checking accounts
- Do not comingle funds.
- Keep track of your receipts to support your expenses.
- Use a separate credit card for practice transactions.
2. Version selection-remote access
One of the first ways to be more organized and efficient is to
choose the version of QuickBooks that best suits your needs. We
recommend QuickBooks online versus the desktop version. Here
are just some of the benefits.
Using remote access is a better solution than using the
QuickBooks Accountant's Copy method, for several reasons.
First, the CPA avoids the need to have the client's edition of
QuickBooks running. Second, the CPA and client do not have to
send the Accountant's Copy files back and forth. Third, remote
access provides full access to the client's data in real time.
- QuickBooks Online provides the user with convenient
- You, your bookkeeper or your accountant can log in to
your QuickBooks from any web browser at any time from
- There is no software data to manage-no upgrades or
- No backups required and your data is stored on Intuit
3. Chart of accounts
Customize your chart of accounts, however, start with a
standard dental chart of accounts. QuickBooks will generate a
chart of accounts based on the type of business entered at the
time of the initial setup. In your case, it would be for dental
practices. It will also automatically generate various assets,
liability, revenue and expense accounts. You should review the
chart of accounts and customize it to better suit your specific
practice and the reports you prefer to see.
For example, for our dental clients we have direct expenses
separated into a parent account called "direct expenses" and
have sub-accounts which include assistant and hygiene wages,
their payroll taxes, supplies, lab and any other expenses that are
directly related to dental procedures. This allows us to use the
reports and look at direct expenses as a total or as a percentage
of collections to easily compare against the industry benchmarks.
You can also have separate accounts for the types of patient
payments received, such as patient, insurance, credit card, care
4. Data input
One of the challenges of setting up and maintaining your
QuickBooks file (especially after you've been in practice for a
while) is keeping the information organized. Over time there is a
tendency to add accounts, rename accounts and generally create
a mess in your chart of accounts. This becomes a problem when
your balance sheet and your profit-and-loss statements become
difficult to read. The balance sheet shows your practice's financial
position at a single moment in time and also shows a lifetime of
results. Wouldn't you want that to be accurate?
When key punching any type of transaction, you should enter
as much detail as possible. This will save you time later on if there
is a question on what expense category it belongs in or during an
audit. Identifying and correcting coding errors in your practice
can significantly affect your income. You might be surprised how
simple awareness can impact your practice's bottom line. If you
are unsure of where to put an expense, you can use the account
"ask my accountant" feature. This will alert the CPA that there
are issues that need to be dealt with before any analysis can be
done. For most companies, a significant number of transactions
recur regularly, and QuickBooks accommodates this by enabling
you to memorize recurring transactions.
For example, suppose a company makes the same monthly
rent payment. QuickBooks can memorize the transaction and
automatically enter them for you at regularly scheduled times.
This feature can help you reduce mistakes, save time and
5. Bank feeds
A newer option for QuickBooks is the ability to download
the transactions right from the bank or credit-card company.
This has become a huge timesaver. Once the transaction has been
coded it will be memorized for future transaction download.
There are two downloading options:
As long as the bank where you have your checking account
and the issuing bank of your credit card offers the download of
information into QuickBooks, this capability should exist. In
most cases there are no extra fees for this service, but be sure
- Downloading by most-recent transaction. This is a great
option for a practice that needs to download their activity
on a daily or weekly basis or any time before the statement
- Downloading by statement. The second way to download
banking (and especially credit-card transactions) is by
statement if the information is not time sensitive.
6. Lock down
A common issue we see with our clients is entering or
editing a transaction in prior periods. Whether intentionally or
unintentionally, changing prior-period data can cause a huge
mess with the books. Known to have driven many accountants
crazy over the years, posting into prior periods can actually be
controlled by using the closing date feature within QuickBooks.
QuickBooks allows you to set up a unique username and
password for each user's preferences to prohibit them from
changing items once past the closing date. You can lock down
the prior-period date as the year progresses. Keep your password
simple and easy to remember. I recommend writing it down and
of course not forgetting where you wrote it down.
Another way to organize information in QuickBooks is
through the use of memorized reports. This will save you the
trouble of having to recreate the reports every time you want
to look at them. This will make it easy for you to access these
reports quickly. In many cases, the process of preparing and
printing dozens of reports is too time-consuming. QuickBooks
provides a feature called Process Multiple Reports, which enables
users to group together dozens of reports and print them in a
Another new feature allows users to attach a PDF file directly
related to the transaction. This is helpful to the accountant,
especially for purchases of fixed assets. The proper maintenance
of fixed assets is important for several reasons.
A common thought is that
managing source documentation is a bit obsolete because bank
feeds provide the information needed to enter transactions into
accounting software. Beyond the legal reason that you need to
prove your accounting records with source documentation, the
problem is that the bank feeds don't have all the data you need.
So again, while bank feeds are great, source documentation is
also necessary to the process of reconciling transactions.
- It is used to track the depreciable basis of an asset.
- The accountant needs it for proper personal-property-tax
reporting if applicable in your state.
9. Cash reconciliation
One of the most important things we tell clients is to
reconcile their cash on a monthly and timely basis. Business
analysts report that poor cash management is the most
frequent stumbling block for entrepreneurs. There is so much
more validity to the statements if the cash is correct. Cash
management is a term that refers to the collection, concentration
and disbursement of cash. Cash management is particularly
important for new and growing businesses. profit growth does
not necessarily mean more cash on hand. profit is the amount
of money you expect to make over a given period of time, while
cash is what you must have on hand to keep your business
running. Over time, a company's profits are of little value if they
are not accompanied by positive net cash fl ow. You can't spend
profit. You can only spend cash.
Here are three cash-management tips:
10. Dentist-CPA connection
Know when, where and how your cash needs will occur.
- Know the best sources for meeting additional cash needs.
- Be prepared to meet those needs whey they occur by keeping
good relationships with bankers and other creditors.
The top reason dentists leave CPA firms is lack of
communication. Be upfront with your CPA and ask for help if
needed. Accounting firms that are quick to recognize the new
level of sophistication in clients will offer to teach them the basic
accounting concepts they need to know.
The CPAs realize that by enhancing communication
(speaking the same language, which is often sometimes hard
to do), the bond could grow stronger. As the dental practice
grows and becomes more complex, its accounting and reporting
should follow. Dentists have learned that it is one thing to enter
a few checks and deposits into a simple accounting system, but
quite another to manage that data so appropriate reports can be
Some dentists may feel insecure about the financial part
of the practice. However, by teaching them the basics of the
accounting software, they can conquer that insecurity and make
better decisions on a daily basis. These daily decisions will impact
current and long-term results. Cash is the lifeblood of a practice.
Managing it efficiently is essential for success.