Medical Bookkeeper: What Medical Practices Should Look For
Running a medical practice involves financial complexity that many other small businesses don't encounter.
Running a medical practice involves financial complexity that many other small businesses don't encounter.
That makes choosing the right medical bookkeeper important.
The bookkeeping itself still relies on fundamental accounting principles. But medical practices often have multiple revenue sources, substantial payroll costs, medical supplies, equipment, merchant processing, insurance payments, and other expenses that require careful tracking.
The goal isn't simply to keep QuickBooks updated.
It's to create reliable financial information that helps the practice understand how it is performing.
Understanding Medical Practice Revenue
Revenue is one of the first areas that can become complicated.
Depending on the practice, money may come from patients, insurance companies, financing arrangements, or other sources.
The accounting system doesn't necessarily need to duplicate the detailed patient-level information maintained in the practice management or billing system.
Instead, the bookkeeping process should provide an accurate financial picture while maintaining an appropriate separation between accounting records and sensitive patient information.
Payroll Is Often a Major Expense
For many medical practices, payroll is one of the largest costs.
Physicians and owners need to understand more than how much money left the bank account for payroll.
Accounting records may include:
Gross wages
Employer payroll taxes
Employee payroll withholdings
Benefits
Retirement contributions
Bonuses
Contractor costs
Accurate payroll accounting makes it easier to evaluate staffing costs and understand how labor affects profitability.
Medical Supplies and Other Direct Costs
Depending on the type of practice, medical supplies can also represent a significant cost.
A practice should use its chart of accounts to separate meaningful categories without creating so many accounts that the financial statements become difficult to read.
The purpose of categorization isn't to track every possible detail.
It's to provide useful information.
Equipment and Fixed Assets
Medical practices frequently purchase computers, furniture, clinical equipment, and other significant assets.
Those purchases may need to be recorded as fixed assets rather than immediately expensed.
Accurate fixed asset records also help the practice and its tax professional identify purchases that may have tax implications.
Merchant Processing and Deposits
Patient payments and credit card processing can create another accounting challenge.
The amount deposited into the bank may be less than the amount collected because processing fees have already been deducted.
If those deposits aren't recorded correctly, revenue or merchant fees can be misstated.
A medical bookkeeper should understand how the payment process flows into the accounting records.
Why the Balance Sheet Matters
Medical practice owners often focus almost entirely on the profit and loss statement.
The balance sheet deserves just as much attention.
It can reveal:
Old outstanding checks
Incorrect loan balances
Unresolved payroll liabilities
Accounts receivable or payable problems
Fixed assets that are no longer owned
Uncategorized transactions
Other balances that have accumulated over time
Errors on the balance sheet can continue from year to year until someone investigates them.
Financial Reporting Should Help Run the Practice
Good bookkeeping should ultimately help answer business questions.
Is revenue growing?
Are staffing costs sustainable?
Are certain expenses increasing faster than expected?
Is the practice generating enough cash?
Can the practice afford new equipment or another employee?
Accurate financial statements provide the starting point for those conversations.
Choosing a Medical Bookkeeper
When evaluating a medical bookkeeper, look beyond basic data-entry services.
Ask about month-end reconciliations, payroll accounting, balance sheet review, financial reporting, and communication.
You want someone who understands that the end product isn't QuickBooks.
It's reliable financial information.
BookWise Bookkeeping provides ongoing bookkeeping and accounting support for service businesses, including medical and healthcare practices. We help keep the accounting records accurate and provide financial reporting that gives owners a clearer view of their business.
BookWise Bookkeeping
Phone 314-325-2478
info@bookwisestl.com