2 Dental Bookkeeping Mistakes You’re Most Likely Making
When you finally complete what seems to be the never-ending process of dental school and are finally able to open your own dental practice, you may think that the hardest part is already behind you. But that’s not always the case.
Setting up your own dental practice is a huge achievement, and you should certainly pat yourself on the back for it. But it is important that you build the foundation properly so you can have a successful business journey down the line.
Managing your finances is the most crucial step in building the foundation of any business. However, there are two common mistakes a lot of people make while recording their finances.
- Counting All the Inflowing Money as “Income”
A lot of people tend to believe that every last penny you earn should be classified as income. That’s a huge mistake. There are various reasons for your incoming funds to not be categorized as income or profit. Purchase of equipment and supplies, reimbursements to your practice, and even taxes need to be deducted from your earnings before deeming it as profit. If you misplace all your income money as profits, it will falsely inflate your profit percentages, and you’ll end up paying income tax on the money you aren’t even earning.
- Counting All the Outgoing Money as “Expense”
Similarly, not all the money you spend should be categorized as a business expense. If you incorrectly categorize all outgoing cash as a business expense, you will lower your profit totals. This will ultimately affect your tax bill later on. This is why it is vital to learn what accounts for business expenses beforehand and record it accordingly.
While managing a dental practice, it is always better to consult a dental bookkeeper for your finances. At Dental Bookkeeping, we help you create a proper business plan and also provide remote dental bookkeeping services. Give us a visit now.