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How to Create a Bookkeeping Process You’ll Stick Too

Tag: Bookkeeping

How to Create a Bookkeeping Process You’ll Stick Too

by Alicia Bishop

Did you tell yourself you’d ‘do your own books’ and now you’re staring down the barrel of a ton of bookkeeping you need to do? I know bookkeeping can feel like a never-ending chore for some private practices, and it’s a strenuous task without help. 

But, learning how to stay on top of the work with a regular bookkeeping process will ultimately benefit you and your practice (and did I mention it will save you money on your accountant too?!). 

That’s why I wanted to make things a little easier and share four ways that will have you streamlining your bookkeeping processes; making it easier and cheaper to file your taxes and manage your books! (Maybe you’ll start getting excited for your taxes too? Or is that a little too far…?) 

#1 Starting the New Year Fresh

Although it may seem tedious, taking the time to catch up and organize your books is the first step. It’s far easier to maintain your bookkeeping throughout the year than it is to do it all at once in a stressed panic close to tax season. 

So, use this time to investigate what it is you need from your business. Getting your books up-to-date, reviewing your common expenses, and exploring what you need from your practice is the best way to ensure that your time spent bookkeeping is as structured and beneficial to your company as possible. 

Not only is being up-to-date for the new year empowering, but it also guarantees less time spent in the future on this time-consuming bookkeeping task.

#2 Hold Yourself Accountable 

Using your calendar or schedule database, set a recurring reminder to complete your bookkeeping. You wouldn’t cancel on a client, would you? So don’t cancel on your regular bookkeeping date! 

The key to a successful bookkeeping process is consistency. So setting aside time every week, you are sure to stay on top of your books. 

If these tasks are treated like client appointments or personnel meetings, not only have they been worked into your schedule, but you also have put yourself in the mindset to complete them. Although it’s not the most exciting part of the job, it is necessary to ensure your practice is doing the most for itself and its clients. 

#3 Allocate a Space

Do you have a dedicated space where you can keep receipts, invoices or any other digital or physical paperwork you’ll need for bookkeeping? If you just answered no, I’ve just given you a great excuse to go buy some stationery (you’re welcome!) 

By organizing your records now, pulling a specific receipt or invoice in the future will only take seconds, making the process more efficient for your clients and your company. Logging information that is filed together neatly is a breeze, and you should hold on to all invoices, bank statements, and business expense receipts for this very reason. 

Note: this applies to both digital and physical paperwork! Get a handy filing system in the cloud and you’ll be able to access it from anywhere to get your bookkeeping done. From your practice, or the comfort of your couch. 

#4 Use Spreadsheets

If you don’t want to mess with bookkeeping software like QuickBooks Online quite yet, or you just love a good ole excel spreadsheet, this is a great alternative! You can still record all of your income, expenses, insurance income/claims/reimbursements as needed, and even create auto-calculating formulas.

Or, if you want a spreadsheet, but don’t want take the time to create it or create auto-calculating formulas, I have the perfect solution for you, and it’s made exclusively for therapists!! It’s called The Bookkeeping Cure™ and you should definitely check it out and get started using it right away!!

#5 Out with the Old

Nowadays software is on your side, so don’t shy away from bookkeeping software which can be a great complement to your spreadsheets and EHR/EMR software.

If bookkeeping isn’t your thing, it’s probably not going to be something you’ll ever enjoy, but at least this way it might stop filling you with dread! If you want to ditch your bookkeeping responsibilities instead, click here to learn about our services & apply to work with us! We can help you with all your private practice bookkeeping and tax needs.

How to Manage Cash Flow

by Alicia Bishop

If you’ve heard us say it once, you’re probably going to hear us say it a million times…Cash. Is. King. Sufficient cash flow in your business accounts is imperative. Running a business without managing your cash flow is a sure-fire way to set you on course for disaster. Why?

With a healthy cash flow, you’re able to meet all monthly business expenses, pay yourself, your contractors, or your employees on-time, and ensure that should the income you receive decrease, you are still able to continue your daily business operations until your revenue increases again.

There are two basic concepts to keep in mind regarding cash flow:

Accounts payable: what you owe your vendors (the companies or people you pay for something)

Accounts receivable: what your clients or insurance companies owe you

To help ensure your accounts align and your cash flow is kept in the positive, we’ve put together 5 tips to help re-align your thinking from a profit-based one to that of effective cash-flow:

  1. Utilize a cash flow worksheet to help forecast, analyze and prepare you in various business scenarios. SCORE has a great, free 12-month template to get you started.
  2. Maintain a cash reserves/rainy day fund: Every business owner understands the peaks and valleys of owning your own business. It is nearly inevitable that at some point, you may see a dip in income due to many factors; a pandemic, unsuspected personal leave, a lot more cancellations in one month than usual. By having a ‘Rainy Day Fund’ or ‘Business Reserves’ with extra cash in it will help ensure during that during those times of less income, you’ll still be able to maintain business operations as usual without stressing about how bills will be paid!
  3. Set money aside for taxes: If you own your own private practice, your private practice is generating revenue, and your practice is profitable, chances are you’re going to owe taxes on that income earned. But unlike that W-2 job you worked or are still working, your business income doesn’t have taxes remitted from it. So as a business owner, you’re now responsible for omitting those taxes from your income and remitting them to the IRS or State. That said, the last thing you want to have happen is, you owe money for quarterly taxes and/or file your annual taxes, and BOOM, you owe quite a bit in taxes but have no tax savings set aside to pay those taxes owed. Where does the money come from?! Avoid this undue stress and set money aside for taxes so you’re prepared if you end up owing!
  4. Collect and follow-up on Accounts Receivables. Keep track of outstanding invoices and follow-up on payment as required. If you accept insurance, diligently follow up on unprocessed or denied claims. If possible, reduce the number of ‘slow’ or ‘past-due’ paying clients. Or better yet, as part of your business operations, require payment methods be kept on file and charge at the time of session. By reducing terms and offering quick payment options, including credit cards on file that are automatically charged, you ensure the cash is continuing to flow in your practice.
  5. Focus on cash flow management, not profit. Don’t get us wrong, generating revenue is absolutely critical to the health of your business. But you also need to understand at which point your business becomes profitable, also known as the “breakeven” point. Monitoring the ins and outs of your businesses financial reports let’s you keep a general pulse on the business itself, and you’ll feel confident in the decisions you need to make – either to increase revenue or decrease expenses accordingly.

Therapeutic Bookkeeping is a virtual accounting firm working exclusively with therapists all across the United States providing bookkeeping and accounting services! If you’re a private practice owner and need support with your bookkeeping, taxes, and finances, we’d love to help!

 

A non-boring bookkeeping newsletter?! Is that even possible?! Of course it is with a little TBK attitude added!

Are you a therapist needing all the bookkeeping resources and tips you can get for your practice, that don’t make you want to fall asleep?! We’ve got you covered! Subscribe to our non-boring newsletter, and we’ll send you all of our best bookkeeping resources for you and your private practice, without spamming your inbox!

Psst…. if you have any bookkeeping resources or topics you’d just love for your private practice… shoot us an e-mail and we’ll add it to the list!