EOFY and Dental Accounting

In July 2015 I took over the accounting at our practice. As you can imagine I delved in deep and set up new systems for efficiency. Here is what I have learnt in the past 12 months.

BANKING

  • Use different accounts for money in and money out. This doesn’t cost more and makes it easier to see and track errors.
  • No petty cash – give the reception a debit or credit card. NO CASH.
  • Pay all accounts online – either direct or with credit cards. Apart from being easier it also leaves an easier to see audit trail.
  • Bank Feeds into MYOB or XERO are an absolute MUST. Saves time (and money) and is more accurate than you or your book-keeper. XERO feeds from Credit Cards may be incorrect.

PATIENT SOFTWARE BANKING – TO THE BANK

  • Bank Summaries each day from your patient software should always line up with your bank deposits. If they regularly do not match then you need to change the way your staff close off your patient banking. Yes we now have ours so they match.
  • Never close off Medicare until it is in your bank!

BOOK-KEEPING – ACCOUNTING

  1. Excel Spreed sheets – you need one for each of the following
    Long service leave – As a minimum do it at the end of each year. MYOB will not give accurate figures. The premise of MYOB’s calculations is incorrect.
    Depreciation schedule/Assets: this can be a third party addition to XERO but not really worth the expense? You need to do this yourself. Your accountant may lump equipment together and this makes it really hard to write off single items. e.g if you buy a chair and an xray unit and etc together.
    Partners distribution: We do this monthly on excel just because it is easier but it is then entered into MYOB so we can see it at any stage; auditing is better via MYOB.
    Other excel sheets: If your book-keeper or accountant uses excel for BAS or wages then they probably don’t know how to use the software you are paying for.
  2. Profit/Loss; Balance Sheet; Depreciation; BAS and GST
    You are an intelligent dentist. You need to get your head around these terms. I bought the “Dummies guide to Accounting”. It helped with some of the basics. I also bought the “Dummies guide to MYOB” and found that I then knew lots more than my accountant and their book-keeper (very annoying!). People don’t necessarily keep up with the software changes so they do things the old long way.
    Profit and Loss – Money in and Money out. This is the most basic concept. Your expenses are listed without GST (the system takes it out for you!).
    Use Subtotals in MYOB and XERO for a better picture.
    You need to add in depreciation to this concept as not everything you buy can be claimed as an expense in the year it was bought. ! IMPORTANT – this means that your “profit” and the money you have in the bank will not necessarily match.
    Balance Sheet – Go to the Balance Sheet to make sure your bank totals match your MYOB or XERO bank totals. The Balance sheet is also where you will find how much GST you OWE at any time. If your accountant has to give you an end of year adjustment to get this correct then you are not using MYOB or XERO correctly.
    Depreciation – Yes this is an odd thing to understand. Spend time on it. You will also then find you should be keeping an asset register etc. Depreciation is really important. It means that you are paying tax on money you have already spent on depreciating items.
    BAS and GST – all your payee accounts in MYOB/XERO should be set so it automatically gives the correct GST rating and correct expense category. If not then you need to spend 1 hour setting this up. It will save many hours later.
    XERO and MYOB give you the BAS information very easily. Do an online lodgement and it will take you 10 minutes to do a BAS statement.
  3. Register for and AusKey and do your BAS online -very easy to do both of these. If you are a MAC user – use Firefox as your browser.
  4. Expense accounts
    The expense accounts are YOUR expense accounts. If the accountant is moving things around  – they are just stuffing you around to justify their fees. Your system should be set up so it is automatically correct.
  5. Income accounts
    Our income accounts match our bank entry categories – so you can chase problems (which we of course never have 🙂 ).
    Our partner totals are also entered, in addition, so you can match the patient software totals with the bank totals.
  6. Journal entries
    This is fun. Learn how to do them.
  7. MYOB vs XERO
    XERO is better for bank feeds, much much better. MYOB has better reports and easier to find information. MYOB has better year to year comparison (especially if you leave the previous year open)
  8. DO NOT use Spend Money or Receive Money in MYOB or XERO unless absolutely necessary. These are not helpful for reporting etc.
  9. Difference between an Accountant and a Book-keeper
    An accountant is what you need for “higher” level information. e.g. setting up trusts; tax fraud etc. A book-keeper is the one who needs to know how to set your systems in place for easy entry and monitoring. They wont necessarily think about easier ways of doing things, and why should they if they are being paid by the hour.
  10. Borrowing your watch to tell you the time
    Consultants are defined as people who “borrow your watch to tell you the time”. We have MYOB set to show accurately our OASIS totals, monthly and yearly. If you need an accountant to audit the obvious then your systems might be better set up.

Glenda Farmer is not an accountant and hasn’t even done a book-keeping course but is happy to come out to your practice and help you understand and set up good systems that work for you. (Melb Metro area – unless you want to fly me somewhere!)