How to make 2021 tax time, for your dental practice, less stressful!
Whether you plan on filing your tax returns in April or October, you want it to be a smooth and efficient process. There is nothing worse than scrambling for information at the last minute for your CPA. So how can you do it differently? Here are a few things you can start on now:
Plan ahead with your CPA. Don't wait until the end of the year to meet with your CPA. Many dentists go over the finances with the CPA in June and in September. This will help insure that there are no surprise taxes that are owed. Especially this year with the different grants and PPP loans you might have taken. It can be considered income that you may owe taxes on. You can also have a plan to reduce your liability. Waiting until the end of the year, the dentist and the CPA can only do the best with what has already happened. Being proactive allows planning for a better outcome.
Have accurate and up to date books. You should be going over your financial reports monthly with your bookkeeper for several reasons. Not only will it help the dentist with:
knowing the difference between profit and cash flow
Monitoring key areas of profitability
Setting up internal controls
reconciling the books with the PMS
It will also help with finding these common mistakes:
misclassifying personal vs business expenses
transactions in the wrong period
double posting of transactions
making sure other income such as grants or equipment sales are not in revenue
Working with a dental specific bookkeeper will give the dentist tools that make troubleshooting easier. The books should have a Chart of Accounts (COA) that is specific for your profession. Misclassifications will stand out more and are less likely to happen. Your bookkeeper can also help with a better systems for receipts. Statements from the bank are not considered receipts, so it important to find a receipt collection process that is easy to stick to.
Finally, having books that are accurate and up to date will save your CPA time, which should save you time billed. These are all easy steps that your bookkeeper and CPA can help you with to ensure a less stressful tax time.