As a chiropractor, you may be able to handle some of the day-to-day tasks associated with running your business, such as: Creating invoices or tracking taxes. However, if you are still running a small business yourself, accountants can do these things much more efficiently.
While this isn’t necessary for larger companies, there’s no reason owners can’t take on this responsibility themselves.
Chiropractors who have more clients should hire an accounting firm to track their finances. This can be a tedious task best left in the hands of professionals.
What is accounting for chiropractors?
Accounting is the process of recording and summarizing financial information to ensure that a business is in good financial health and complies with accounting rules. Accountants have a good understanding of bookkeeping, preparing tax returns and verifying the accuracy of financial statements.
The small business owner may not have formal accounting training, but has the basic accounting skills needed to run the business.
This can make it difficult for some entrepreneurs to figure out how to spend money and manage finances if they don’t have someone to help them who is more knowledgeable about financial concepts and practices.
Accounting for chiropractors in 7 steps
We will walk you through each step to understand the basic accounting process to properly manage your finances.
Find the right accounting software
It’s a tool that can help you keep track of your business finances. Studies show that businesses that use accounting software are generally more profitable and have more cash flow. It also helps reduce the time spent on accounting tasks by 34%.
We examined the options available to chiropractors and discovered some strategies that might help.
Record entries as soon as it happens
A record is a list of information that you enter into your computer. A journal is another name for a record. Every time you do something on your computer, a record of that activity is created and stored in your computer’s memory.
The accounting program keeps track of the invoices you send and the payments you receive from customers. It also calculates your profit and creates financial statements based on your inputs. Record each transaction as it is completed to ensure accurate records.
Track cost of goods sold (COGS) to keep the business running smoothly
COS is a metric used to measure the total cost of inventory sold, including the original cost plus any additional costs (like shipping and handling) involved in the sale.
By understanding the true costs associated with a company’s operations, this information can provide a more accurate picture of its financial performance.
When you add products and services to the accounting system, your main costs are calculated based on the invoices you create.
A chart of accounts helps you keep track of your finances
A chart of accounts is an important tool for tracking financial activities within a business. This document shows how much money has been spent on salaries, rent and other expenses, as well as what revenue the company has generated.
The chart of accounts in a chiropractic business would show how much money the sale made, what costs were incurred in getting clients, how much was spent on rent and wages, what assets (such as ovens and machines) were acquired from the company, as well as the only money left.
Later, the company may have to return some of that money to shareholders (called equity) or keep all of it (called retained earnings).
Automate your accounting process to save more time
Accounting process automation can save time by automating cumbersome tasks, such as reconciling accounts, issuing invoices, and paying payroll.
By automating the accounting process, companies can reduce their workload by up to 50%. One such software tool is invoice processing software, which helps streamline the receipt and payment of invoices. This program cuts the time it takes to manually process these documents in half.
Hire an accountant
Accountants can help you manage your business finances by setting up automated processes that will automatically collect and distribute funds. This eliminates the risk of fines or penalties, which can be costly in the long run.
An accountant can help you keep your business finances accurate and organized, making it easier for you to manage them. It’s a good idea to have one on staff if you don’t have the time or inclination to do this yourself.
Best accounting agencies for chiropractors
In order to choose the best accounting firm for your needs, you should consider looking into some of these good options.
1-800 Accounting Agency
1-800Accountant is a New York-based accounting agency specializing in small businesses. The company offers affordable services starting at $0 to $375/month.
Accotax Accounting Agency
Accotax is a London-based accounting agency that works internationally with small businesses, partnerships, and other business types.
Its pricing is perfect for startups and self-employed individuals, as it ranges from $265 to $600/month on average. It has a 4.9-star rating on Google My Business, a 4.7-star rating on Facebook, and a 4.9-star rating on Trust Index.
Best 5 accounting tips for chiropractors
1-Use accrual-based accounting to record transactions
2-Understand basic tax requirements
3-Keep your business bills
4-Reconcile your transactions
5-Create a business bank account
Use accrual accounting to track business transactions
Accrual accounting is an accounting method that recognizes income and expenses when they actually occur, as opposed to when the money is transacted. This way, companies can more accurately monitor their financial performance over time.
Accounting using accrual-based principles helps companies understand their financial position over time, giving them a more accurate picture of how much money they are likely to spend in the future.
This allows for more efficient budgeting and planning, knowing that unexpected costs can arise sooner than expected.
The auditing process ensures that a company’s financial statements are accurate and follow generally accepted accounting principles (GAAP). This helps investors evaluate the company against other companies in the same industry.
Learn the basics of taxation
Businesses often need to file forms such as 1120S and 990T to report income and expenses. It is important to consider any credits or deductions that could reduce the amount of tax you owe, as these returns can be complex.
Taxpayers can deduct various expenses from their taxes, such as mortgage interest payments, charitable donations, and medical bills.
Credits are financial benefits generally given to individuals with the aim of encouraging them to spend money in a particular area. Common credits that people can take include child care allowance for earned income and student loan interest deductions.
It is important to list all sources of taxable income on your tax return, as you could be subject to the IRS subsequently audited fines.
Each state has its own tax laws and filing deadlines, so check before April 17. Also, keep in mind the special tax rules that apply in your state.
Keep your corporate accounts
Managing business finances can be a difficult task, but it’s important to have a system in place. For example, you can set up an online payment system that allows you to pay your bills quickly and easily. Melio is a prime example of such a system.
These reminders can help you avoid missing payments, and automating payments can save you time and money in the long run.
Reconcile your transactions
Reconciliation helps you ensure that all financial data in your accounting system is accurate and up to date. It also lets you identify any discrepancies or errors, so someone can fix them quickly before they become a problem later. To settle a debt, gather all relevant documents, including bank statements, bills, and receipts.
Next, enter each transaction into the online banking function; it downloads transactions from your bank account. Compare related paper documents such as invoices and receipts if anything is incorrect.
Create a business bank account
As an entrepreneur, it is essential to open a business account with the bank. A separate account helps you track your income and expenses and ensures that you pay your taxes correctly.
The company’s insurance policy protects it from any financial liability in the event of a problem. Before opening a business bank account, consider the necessary steps:
- Decide what type of business you want your business to be (sole proprietorship, partnership, or corporation).
- Research different banks to find the one that best suits your needs by gathering all the required documentation (articles of incorporation or DBA forms, proof of identity, etc.).
- Make an initial deposit on new accounts, so they can be activated immediately.
Setting up a dedicated small business banking solution is quick and easy, and will help ensure that all funds associated with the business are tracked efficiently and avoid potential legal issues down the line.
How often should I review my financial books and records to keep them accurate and current?
It is important to regularly review financial books and records so that you remain accurate and up-to-date.
Monthly reviews include financial statements, balance sheets, cash flow statements, and all other finance-related documents.
It is also important to ensure that all transactions are properly recorded so that they are accurately reflected in reports such as profit and loss accounts or accounts receivable and payable.
If your business is changing rapidly, you may need more frequent reviews to make sure everything is in order.
For example, if there are large fluctuations in performance from month to month (such as seasonality), it can be helpful to conduct weekly assessments to more accurately monitor changes over time.