Many dentists dream of running their own practices, only to find that all the paperwork isn't exactly dreamy.

Dentists deal with high insurance costs and extremely complicated taxes. As a result, dental bookkeeping can seem even more complicated than convincing patients to floss. (And we all know that's not easy).

So, how can you deal with the financial side of running your dental practice without losing your mind?

We recommend that you try looking into accounting software for dentists. There are bookkeeping software platforms specifically designed to help dentists keep an eye on their business’s finances.

In the guide below, we will help you learn how to make the most of accounting software. That way, you can focus on tooth extractions, instead of insurance claims.

What Is Accounting Software for Dentists?

Accounting for dentists isn't easy. Luckily, accounting software can help make your life easier.

Accounting software is generally a cloud-based program that helps you with your bookkeeping.

Bookkeeping is the act of keeping records of one's financial affairs. Just like any other business, dental practices have to keep track of their finances.

You must record when you cash clients' checks, receive insurance payouts, pay taxes, and make investments. This helps you understand whether or not your business is profitable. It also determines factors like your tax bracket.

The traditional method for bookkeeping is manual accounting. This is just a fancy way of saying "number crunching", or paying a local bookkeeper to do the number crunching for you. Unfortunately, this method is time-consuming and or costly. It is also subject to plenty of human error.

Accounting software facilitates these processes by automating them. Instead of doing the calculations yourself or paying a bookkeeper to do it, you can utilize software to keep track of all your business's numbers so you don’t have to chase those numbers down yourself. This also helps your business run more efficiently and saves you time.

What Numbers Should You Look For?

This is one of the most common questions that we get about dentist bookkeeping. Luckily, accounting for dentistry isn't fundamentally different from most kinds of accounting.

Just like any other business owner, dentists must reconcile their accounts. They must keep an eye on their balance sheets, cash flow statements, and profit and loss statements.

Below, we have included a short explanation of these components.

Account Reconciliation

Have you ever heard the term "balancing the books"? Account reconciliation is just that.

Every time that you make a business transaction, that transaction should also be recorded in your books.

In the past, it was common for dentists to record everything in a physical book. However, with a proper accounting software, all transactions can be tracked and recorded digitally.

At the end of the month, you can compare the transactions in your digital book with the ones in your bank account. Do the numbers match up? They should.

If for some reason the numbers don't match up, you have to find out what happened to the missing money. Does a patient still owe you for their procedure? Did you miss an electricity payment?

You will only be able to keep track of these important payments if you keep a detailed record of your company's transactions.

Balance Sheets

Have you ever wondered how much your practice is worth? Your balance sheets will show you the overall value of your business.

Balance sheets examine your dental practice's assets and debts. What does your practice own in terms of investments and equity? How much does your practice owe in terms of loans and credits?

These questions help determine how much value your dental practice has at any moment in time.

When you are looking at your balance sheets, keep an eye on the numbers. Liabilities + your equity = assets.

The Cash Flow Statement

In the world of dentistry, cash is king. Many patients pay in a delayed format, using checks and insurance policies that take a while to pay out. Others send in their payment weeks after their appointments.

While these are all valid forms of payment, a business cannot run on promises.

Your dental practice always needs to have a certain amount of cash available. Otherwise, it will be impossible to keep up with all of your expenses, like rent, electricity, and your employees' salaries.

The cash flow statement will show you how much cash your business has available. It will also keep you updated on the amount of cash you need to keep your business running.

The Profit and Loss Statement

Have you ever wondered if your dental practice is actually making money? The profit and loss statement will help you to answer that question.

This statement will directly compare your practice's revenue with its losses. This comparison will give you a final number that will reveal how much money you are actually making (or losing).

However, your profit and loss statement will only be accurate if you keep up with your bookkeeping.

It can be tempting to procrastinate your accounting. Don't.

The more that you put off your bookkeeping, the less accurate your statement will be. And an inaccurate statement can create a lot of confusion and anxiety in the long-run.

In the worst case scenario, you could even get in trouble for fraud.

Simply enter your practice's financial information into the accounting software as the transactions take place.

Then, watch your profit and loss statement. This document can offer valuable insight into your practice's unnecessary expenses. It can also show you which parts of your business generate the most profit.

Schedule a Software Demo Today

Now that you understand the principles of bookkeeping, you should put that information to use!

Try out Uplinq's accounting software for dentists today. You can schedule a free software demo.

This experience will give you a feel for the benefits of accounting software. Hopefully, you will find that Uplinq's program is the best fit for your business needs.

If you are already on board, click here to sign up and start using Uplinq software.

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