Bookkeeping housekeeping - Summer edition
The main purpose of your bookkeeper is to track your financial activity. Your WHOLE business picture, not just one side of it. Otherwise, the financial reports for your therapy practice are going to be incomplete. The thing is, your accounting team only knows what you show and inform them.
So, for a quick summer edition of bookkeeping housekeeping, I have one task for you:
Ensure your bookkeeper is tracking all your accounts.
Some of the most commonly overlooked accounts are:
Paypal (Business account)
Savings accounts
Recently opened accounts
If you’re DIYing your bookkeeping, you’re not “immune” to this mistake. Sometimes being the one doing it all keeps you in the technical tasks and makes the “quality control” stage a bit more challenging. If that’s you, it’s time to check your records and verify that you’re capturing the activity from all your accounts.
Where can you check?
If you're using accounting software that provides financial reports, whether you or your bookkeeper are managing the tracking, you can begin your evaluation at the same place: your Balance Sheet. Your Balance Sheet should have all of your accounts listed.
The following descriptions apply to a typical solo or group therapy practice, for which Accounts Receivable is not recorded in the accounting records, but it’s being tracked in the EHR.
Under Assets you’ll see your bank accounts, or any other accounts that operate like a bank.
Under Liabilities you’ll see your credit cards, loans, and lines of credit.
Under Equity, you should see the money you put into the business from your personal accounts, and the money you pay yourself as Draws.
Don’t see an account listed? It could mean that the account is not being tracked.
What you should do and expect next
This is fixable, so don’t beat yourself up. This is why these mid-year assessments are so important. The most important step is to communicate this to your bookkeeper as soon as possible, providing as much detail and information as possible.
Here are some of the points you want to communicate:
What account was opened and when
Type of account
Purpose of account
Your summary of how you’ve been using that account. This will help your bookkeeper determine to what extent the work of catching up your books is going to be.
You will be asked to provide statements for those accounts, potentially connect that account to your accounting software and pull transactions retroactively, and provide more details on specific transactions.
Checking what’s being tracked periodically can help avoid incomplete reports, potential clean up or catch up fees, and builds the muscle of communication between you and your accounting team.
DIY’ing your bookkeeping and need help catching up numbers from accounts not being tracked? Go HERE to learn more about my one-time projects and ongoing services specifically built for therapists in private practice like yours!