Over time, practices have built their own systems for keeping track of the services they perform and the products they sell using unique codes in their PIMS practice information management system. To state the obvious, the veterinary industry could really benefit from standardized codes. Benchmarks become extremely onerous, if not impossible, to collect. This is a documented process for classifying revenue, expense, and balance sheet accounts in small animal veterinary practices. Up until recently, practices had to be willing to abandon their own way of coding transactions and make large changes in their PIMS to create the new codes. Implementation of the new codes requires technical PIMS changes, but also social and workflow changes as the entire practice team learns the new coding system.
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We love how it provides a fully featured, affordable bookkeeping solution. In dental accounting, we often see books that are not in good shape. Highly qualified dental bookkeepers are rare. Staff that may have multiple duties and wide practice management skill sets that are not primarily bookkeeping are often put in charge of the books. Expert advice or training is not always obtained.
Very commonly, more than half of the time a CPA spends on a dental tax return is simply fixing bookkeeping errors and figuring out what transactions were posted where, and why.
What if your bookkeeping reports were reorganized into a proven format that has been optimized for dental practices, one that provides better information about your practice, and can be easily understood by any CPA? Out of all the bookkeeping changes that we usually recommend, this may be the most important. What is a Chart of Accounts?
A Chart of Accounts is simply the list of all income, expense, and equity accounts that are needed for business bookkeeping. It also determines the organization and appearance of the financial reports that you generate. Take a look at an example of our Standard Dental Chart of Accounts , then compare that to the last financial report your office generated.
For most of you, the difference will be obvious. What are the key features? Account Numbers. Account Order. The numbering order must follow basic accounting standards.
All accountants know an account that starts with 1 is an Asset, 2 is a liability, and so on. The numbers have a standard system that allows accountants to quickly find items that we need to analyze. Dental Specific Categories and subcategories.
Income and expenses in our standard chart of accounts are categorized strategically into meaningful groups which aid financial analysis. The account names are customized specifically to dental practice accounting. This helps your accountant, but it can be even more helpful for your own understanding of the practice financials.
Balance sheet, income, and expense accounts have a long-standing standard system that all accountants understand. Our chart of accounts customizes that specifically for your dental practice. Reinventing the wheel by making up your own system may be an expensive mistake. A standardized dental chart of accounts can help you and your dental accountant efficiently benchmark your practice to historical data. That data can be your own or regional or national data of your peers. The standard chart of accounts makes your financials better for you and your accountant.
When you generate a report, it will be more meaningful to you. Your financials will actually help you run your business, as they should. When your accountant can understand your bookkeeping, you save money in fees, get the best tax deductions, and get better advice. They can provide useful analysis without wasting brain power and billable time cleaning up and interpreting the financials.
AAHA chart of accounts
Over the years it was revised to reflect the growing complexity of veterinary practice accounting. This move coincided with an effort by the American Veterinary Medical Association AVMA , which tasked its Veterinary Economics Strategy Committee VESC with facilitating the collaboration necessary to improve business knowledge, acumen, benchmarking, and financial success across the profession. Standardized codes enable the profession to develop better measures of veterinary practice financials benchmarks and allow practitioners to organize their finances in line with generally accepted accounting principles. They also provide better, more reliable data about how veterinary practices are doing from an economic standpoint and enable industry leaders to develop initiatives designed to improve the overall financial health of the profession. Is your practice still trying to adapt to generic accounting codes? Use the chart of accounts recommended by industry experts for every revenue center in your practice.
AAHA/VMG Chart of Accounts