When you tell people you’re an accountant, everyone immediately wants some tax advice, including your doctor or dentist. And let’s face it — they may ask for the advice even while you’re in the middle of an appointment!
Rather than offering up financial advice on the fly, consider viewing these practitioners as potential clients. Health care is a growing industry, and medical or dental practices are a core part of that sector. And while many doctors and dentists may seek out someone to help with their accounting, they may not know that they also need a technology advisor or business strategist. As such, providing value-added services to these businesses can be a valuable part of your accounting practice.
Of course, medical and dental practices have unique needs compared to other types of businesses. Each country and jurisdiction will have its own regulations for licensing, regulation and taxation. This means you’ll need to study up on your local guidelines when advising your medical and dental clients.
Nevertheless, there are some common considerations that apply to most health care businesses, regardless of where they’re located. Here are some general areas to focus on when helping doctors or dentists get their practices up and running.
Incorporating the practice
Medical and dental practices are high-liability businesses. This means the first item on your agenda should be to help your clients incorporate their practices. Incorporation limits the liability of a corporation’s shareholders, so those shareholders are not responsible for debts or, in the case of a lawsuit, the liabilities.
Incorporation steps vary from jurisdiction to jurisdiction, but some things are fairly universal. These include:
- Filing articles of incorporation with a state or federal office detailing where the business is located, how shares are allocated, and similar considerations
- Selecting a unique business name
- Creating corporate bylaws such as when to hold annual shareholder meetings
Incorporation has fees associated with registration and with annual filings, although incorporated businesses tend to file taxes at a lower rate than individuals.
Your next agenda item will likely be related to purchasing equipment. Modern medical and dental practices rely on the latest technology, so purchasing equipment will be the largest startup cost for these businesses.
It’s important to remember that your medical and dental clients are not like your clients in other sectors. Unlike in other industries, it’s not always advisable for health care practices to buy second-hand equipment. Instead, it’s better to advise your medical or dental clients to abide by these best practices:
- All equipment must be up-to-date with current safety standards
- Only purchase equipment from qualified suppliers
- Use a lawyer to process the purchase and ensure the equipment complies with medical and employment standards
- Employees must be adequately trained to use all equipment, particularly for equipment that touches patients directly, such as X-rays
- Have equipment inspected regularly to ensure it is working properly, and to stay on top of any need for replacement
Your clients will likely take out loans to buy their equipment. The tax laws in most jurisdictions will account for the capital costs and depreciation factors associated with large equipment purchases. However, you’ll want to research your jurisdiction’s tax rules regarding equipment purchases so you can give your clients more specific advice.
Hiring, managing and paying staff
Doctors and dentists, particularly those just starting their careers, may not be accustomed to seeing themselves as employers. Part of your role as a business consultant is to help them get in the habit of viewing their practice from an owner or manager’s perspective.
Hiring, managing, and paying (though hopefully not dismissing!) staff will soon become part of your clients’ professional lives. As their accountant, you can play a key role in this learning curve. Start by providing advice on the general employment rules in your jurisdiction, touching on matters such as safety, minimum wage, overtime, annual vacation and statutory holidays.
In most cases, your state or provincial government will offer an easy-to-use webpage telling employers what they should know about employing people.
Make sure your clients know that it’s best to account for these government standards, as well as the practice’s rules for working hours and expectations for salary review, in a signed agreement between the employee and the practice.
Reviewing tax guidelines
Specific tax rules for medical and dental practices will vary by jurisdiction. However, there are definitely some bookkeeping and accounting best practices that you should discuss with all of your medical and dental clients. These include:
- Accounting for all expenses
- Reconciling accounts at least once per week. As their practices grow, they may need to do this a few times per week.
- Keeping detailed records on all business transactions, employee salaries, and equipment purchases
- Organizing everything by month and clearly labeling all receipts
Implementing business management tools
As a final step, advise your medical or dental clients to start thinking about business management tools. As an accounting professional, you’re already familiar with the benefits of integrating your business apps with your accounting software — so why not pass this valuable insight along to your clients?
For practices using QuickBooks, Method:CRM is a great solution. Method’s contact management features allow front desk staff to track key patient details, from communication history to upcoming appointments. Meanwhile, Method’s QuickBooks integration ensures that billing, invoice, and payment information is always up-to-date, no matter which program you view it in.
There’s no doubt that medical and dental practices are complex businesses. But with these guidelines in mind, you can help your clients run their businesses effectively — which means they can focus on providing the best patient care possible.