It’s probably fair to say that when you launched your allied health business, whether a physiotherapy clinic, massage therapy business or chiropractic practice, you likely weren’t trained in the bookkeeping side of things.
You’re undoubtedly skilled at what you do, and your patients or clients sit squarely in your focus. However, business life demands that you pay attention to the nuts and bolts of maintaining—or growing—a successful health business.
This means coming to grips with some basic bookkeeping skills.
Let’s run through some of the most elemental and staple bookkeeping skills and procedures you should be comfortable with.
Outsourcing your bookkeeping?
As your business grows, so too does your need for bookkeeping and accounting. It’s up to you whether you outsource your bookkeeping to a dedicated professional or learn the basics yourself.
The choices involved in tackling your bookkeeping are clear:
- You can rely on the services of a good bookkeeper or accountant to complete bookkeeping tasks on your behalf.
- You can go it alone and completely undertake your own bookkeeping.
- You can do both – couple the advice from a dedicated bookkeeper with accounting software to do most of it yourself.
Option 3 is often the best route. As basic bookkeeping is relatively easy, with good practice management and accounting software, you can feasibly do the basics yourself.
To cover your shortcomings and gain good bookkeeping workflow advice and assurance (especially around tax time), you can then back this up with sessions with a bookkeeper or accountant.
Here, we lay out how to do your own basic small business bookkeeping, including various methods and responsibilities you’ll encounter and how to go about handling them with relative ease.
The point of allied health bookkeeping
Before we unpack methods and tasks involved, we ponder the question: what’s the actual point of bookkeeping? By undertaking basic bookkeeping duties, you’ll benefit from:
- Accurate financial records from which you can deduce your profitability and cash flow.
- Meeting your compliance responsibilities with the ATO, including lodging tax returns and claiming deductions on business expenses.
- Reliable financial records and information to inform business decisions and forecasts.
You’ll also be well informed of your outgoings and incomings, including overdue invoices and expenses, and will therefore be able to budget with a much higher degree of accuracy.
Use accounting software over spreadsheets
To a degree, using a program like Excel to do ‘spreadsheet accounting’ for your allied health business is still technically a viable option. But with automated and accessible accounting software like Reckon available, those archaic methods have been rightfully replaced.
For example, if you use a POS set-up to take patient payments, you can link this with your chosen accounting app. This means you can immediately import sales records and get a live view of your clinic’s cash flow.
When you link your cloud accounting software with a practice management solution like Better Clinics, you can simplify your bank reconciliation, easily track GST and automatically group and push your sales into your chart of accounts.
Relying on dedicated cloud accounting software is undoubtedly the easiest way to do bookkeeping.
Your main bookkeeping duties
To perform your own bookkeeping, you’ll first need to understand the core concept of bookkeeping. The principal bookkeeping duties for a small business owner are recording and reconciling.
To do your own bookkeeping you’ll need to record everything. This was traditionally performed using physical logbooks, which originally gave rise to the term ‘bookkeeping’.
These days, software such as cloud accounting apps, POS solutions and invoicing apps are a more broadly accepted method.
You’ll need to scrupulously record:
- expenses and purchases
- and receipts.
Not only is accurate recording necessary to understand your incomings and outgoings, you’ll also need easy access to accurate records when claiming tax deductions from the ATO.
Once you have a set of accurate records, you’ll need to reconcile them.
Reconciliation, or bank reconciliation, is the act of cross checking your sales or expense records against your bank statements.
By reconciling you can understand if there’s any errors in your records, which can then be identified and rectified as rapidly as possible.
You can choose any schedule you like to undertake reconciliation – many small businesses reconcile every day. Others do so weekly, fortnightly, or monthly. At the very least reconciliation needs to take place before the submission of a tax return.
Choosing to reconcile more regularly also helps you identify issues immediately.
While you can choose to perform reconciliation manually, you’re much better served using accounting software to import bank records, which essentially automates the process of reconciliation.
Other bookkeeping duties for health clinics
In addition to recording and bank reconciliation, regular bookkeeping duties you’ll be tasked with also include:
- Accounts receivable: Accounts receivable duties involve both the reporting upon, and chasing of, late invoice payments.
- Accounts payable: Accounts payable duties involve ensuring you pay your own outstanding invoices on time.
- Payroll: Your regular payroll duties involve making sure you pay your staff accurately and on time, according to relevant awards and employee agreements.
Extra bookkeeping tips!
Here’s a few handy tips to keep in mind when tending to your health clinic’s books.
- Create a specific time for bookkeeping each week to ensure you keep on top of it.
- Keep business transactions in a separate business bank account to keep finances clean and separate.
- Create a thorough receipt storage system for compliance and tax returns.
- Use cloud accounting software for all possible bookkeeping functions.
- For the sake of automation and accuracy, connect your accounting software with as many solutions as possible including practice management software and POS systems.
- Get a professional bookkeeper to help, especially around EOFY tasks and workflow advice.