Many practitioners rely on their accountants' expertise for generating financial statements and preparing tax returns. Yet some psychologists may not take full advantage of the range of accounting services that can help practices thrive. This article touches on economical and money-saving ways that a good accountant can be an asset to your business.
The availability of computers and user-friendly financial software makes it increasingly easy to manage your practice finances yourself. In the long run, however, effective use of an accountant can pay dividends.
A good accountant will do more than simply keep track of receipts and balance the checkbook. In addition to offering professional guidance about how certain items should be classified when creating financial statements, your accountant will analyze and interpret financial data and generate information essential to tax preparation, strategic decision making and financial planning.
You can keep costs manageable by doing the simple bookkeeping and document preparation yourself. Ask your accountant to train you, a member of your staff or a part-time bookkeeper and advise you regarding the best record keeping formats to use. Creating and adhering to an organized record keeping system will reduce the amount of time your accountant will need to spend sorting through financial records and searching for necessary documentation.
Keep good records of all financial transactions, provide your accountant with complete and accurate books and well-organized receipts, and automate as much of your financial data as possible using online banking and financial software.
There's a "bottom line" benefit to using these solid financial practices: they will reduce the amount of time your accountant will bill you for.
As with bookkeeping, available computer technology (secure document, requires login) has made it easier to prepare and file your own tax return with minimal cost. Except in cases where practice finances are extremely straightforward, however, using an accountant to prepare your tax forms may be advantageous for several reasons.
Although it will certainly cost more to use an accountant to prepare your tax statements instead of doing them yourself, those expenses often are recouped as a result of tax savings and deductions that would have gone unrecognized if not for the accountant's expertise in complex tax law and knowledge of rules and exceptions that often change yearly.
In addition, working with an accountant can help minimize costly filing errors. And in the unfortunate event that you get audited, an accountant will be able to advise you regarding the best way to present your case.
Beyond preparing your documents at tax time, your accountant can suggest tax-saving strategies throughout the year. Frequent tax law changes often make the timing of certain expenses and deductions important.
For example, if you are considering donating your old automobile, your accountant might advise you to donate it before the end of the year, so you may be able to take advantage of a larger deduction that will be limited beginning the following year. Other changes related to deductions for office equipment, structural improvements to office space,and the deductibility of sales tax versus state income tax may result in tax benefits that put more money in your pocket if you take advantage of them at the right time.
Talk to your accountant about how current opportunities and impending changes in tax law may influence your business decisions.
Strategic Business Planning
Far from simply being a "bean counter" a good accountant can be a trusted business advisor. Be open and honest with your accountant and make sure he or she is intimately familiar with the business operations of your practice. Knowing your professional and financial goals will allow your accountant to offer concrete suggestions for how to achieve your goals.
A good accountant also can help you create a solid business plan, take full advantage of your practice's strengths, determine the most advantageous business structure (secure document, requires login) for your practice, use your resources more effectively and manage revenues and expenses in a way that improves your bottom line.
If you are thinking about selling your practice, (secure document, requires login) doing estate planning or applying for a business loan, your accountant can assist you in determining the value of your practice.
Your accountant also can help you analyze your business operations, identify problems and suggest possible solutions. Areas to explore with your accountant might include:
- Billing, collections and cash flow
- Staffing and compensation
- Budgeting and financial projections
- Return on investment analyses for new technology or marketing approaches you are considering
- Payer mix and reimbursement rates
- Establishing mechanisms to monitor financial performance
Talk to your accountant about any major financial decisions related to your practice. Whether you are thinking about buying new computer equipment, (secure document, requires login) deciding whether to lease or buy office space, (secure document, requires login) or planning a major business trip that you want to combine with a family vacation, your accountant can help you consider the various options, as well as their financial impact and tax implications. Your accountant also can help you establish internal financial controls and financial risk management strategies to help protect your practice.
Although you should not intermingle your personal and business finances, as a business owner, the two are closely connected. An accountant familiar with your practice is well positioned to offer guidance on personal finance topics such as retirement planning, long-term care insurance, wills and trusts, estate planning, personal asset protection and investment strategy.
As with any practice consultant, choose your accountant wisely. Find a qualified professional whose expertise matches your needs and who offers more than just number crunching.
Using an accountant to your best advantage is one more tool to help you grow and run a successful practice.
Learn more about managing your practice's finances.
By Corporate Relations and Business Strategy Staff