Many private practice owners only really worry about their accounting at tax time, and it can be a time of stress.
However, it doesn’t have to be.
If you manage your books and apply accounting practices throughout the year, not only will it make tax time easier, but it can also help you build a more successful practice.
Accounting is More than Tax Prep
Accounting isn’t just about taxes. It can help you better monitor and measure the financial health of your business and your cash flow, and ensure you stay in compliance.
Accurate bookkeeping makes tax time significantly easier and less stressful. You will have up-to-date information so you can forecast your tax obligations and make real-time decisions.
For example, when you want to make a purchase or invest in a new initiative, up-to-date books will show you your current financial situation to help you determine if it’s the right time to move forward.
Routine bookkeeping also helps you manage the money coming in and going out, so you always know where you stand. Since 82% of businesses fail because of cash flow problems, you need timely and accurate numbers so you can pinpoint problems before they turn into bigger issues.
Bookkeeping doesn’t have to be complex. You can use helpful tools, like QuickBooks, to keep your books up-to-date. At Leichter Accounting Services, we can help you with setup, training, and ongoing maintenance to make it easy.
Every business needs a plan and budgeting lies that plan out for you. With a solid budget, you can forecast future revenue and expenses and judge how you’re doing throughout the year.
As an essential accounting tool, a budget provides the baseline for measurement to ensure you are meeting your goals. Comparing your results each month against your budget provides a dose of reality. It gives you an objective view of how well you are meeting your spending goals.
If you want some help in creating a budget, give us a call and we can help get you started the right way.
Tax planning requires year-round attention. Since most practices have to file quarterly taxes, it is more than just a once-a-year thing. Not only do you have to make sure you have an accurate accounting of your revenue and expenses, but you also need to optimize your savings.
Managing your expenses and keeping adequate records are essential to proving you are eligible for deductions and credits at tax time. This also helps you time out expenses throughout the year, so you don’t get caught short when you do have to pay your taxes.
How your business is structured plays a significant role in taxes, reporting, and liability. You have to make sure your practice is structured as the right entity.
Are you operating as a sole proprietor, a partnership, corporation, or limited liability company (LLC)?
Each entity is taxed differently and has different requirements to maintain its status. The right legal business structure can help your practice:
- Run smoothly
- Reduce your tax burden
- Protect your assets
Your accounting contains valuable information about your business. The reporting shows you how you are doing against your key performance indicators (KPIs) and tells you the full story of your business.
This is crucial as you make decisions about the future of your business. By looking at the numbers over time, you can see what direction your practice is going and whether you need to make changes to keep on track.
Financial reporting also lets you identify any areas of your business that require attention.
For example, your accounts receivable have a significant impact on your cash flow. You want to make sure enough money is coming in each month to pay the bills and provide the profitability you want. Monthly reporting can help you track A/R and surface when collections are slow or there are problems with insurance reimbursements.
Accounting is also important if you ever need to apply for a business loan or need significant credit from vendors. Lenders will want to see your financial statements and your business plan. Some vendors will want to verify your ability to pay your bills on time as part of determining your creditworthiness.
Making each of these and similar business decisions require a strong, year-round accounting system.
Need Help Building a Year-Round Accounting System?
Tracking and understanding financials in your mental health practice is essential to creating a sustainable business. You need a year-round approach to bookkeeping and accounting to manage your practice efficiently.
Leichter Accounting Services is here to help. We specialize in bookkeeping, accounting, and tax service for small businesses with friendly, professional support.
You can depend on us to help you set up and manage your accounting so you can be confident about the financial side of your business.
With Leichter Accounting Services, you get an experienced CPA that will help you grow your practice profitably.
Call (443) 934-9220 today or book an appointment online with Leichter Accounting Services to discuss your needs.