PRACTICE
MANAGEMENT
ASK THE EXPERT
WHAT KIND OF ACCOUNTING SERVICES DO I
NEED?
QUESTION
I am beginning the pro-
cess of hiring an accountant.
What kinds of services do
accountants provide, and
which of those does a typi-
cal dental practice really
need?
ANSWER
Accountants provide two
types of services: quantitative
and qualitative. Quantitative
services include traditional
services such as basic bookkeep-
ing; billing; receivables and col-
lections; paying bills; paying
payroll; maintaining the check-
book, which includes bank ac-
count reconciliation; and tax
and financial statement
preparation.
Depending upon the size and
competence of your staff, your
accountant could be responsible
for doing everything, for super-
vising your staff or for some
combination thereof. In my ex-
perience, most dental offices
with one or two practitioners do
not have sufficient staff avail-
able to do more than billing, re-
ceivables and collections. In
fact, these functions are almost
always done in-house and
should be supervised by the
dentist. Bill paying and prepa-
ration of payroll are usually
Copyright 1998-2001 American Dental Association. All rights reserved.
done by a combination of staff
members and the dentist.
Computers have greatly simpli-
fied these tasks. However,
quantitative services are very
detail-oriented and therefore
time-consuming. This can raise
your accounting fees dramati-
cally.
I often advise my dentist
clients to switch to an outside
payroll service to prepare their
payroll and payroll taxes. Until
recently, these services were
neither cost-effective nor capa-
ble of serving smaller business-
es. This has changed. Compe-
tition and the improvements in
computers have brought the
prices down to a point where
most accountants cannot pro-
vide this service economically.
Also, an outside service can
more easily deal with the com-
plexity of reporting require-
ments and the new electronic
payment and filing require-
ments.
Your accountant uses the
basic bookkeeping data to gen-
erate the necessary reports and
prepare the appropriate tax re-
turns for your dental practice,
whether you are operating as a
sole practitioner or in a partner-
ship, a limited liability company
or a professional corporation.
Qualitative services include
such things as analysis of your
financial results and manage-
ment consulting. By performing
these services, your accountant
acts much like the controller of
a large corporation. In effect,
this means that your account-
ant becomes your business man-
agerthe person you rely on to
make business decisions, con-
trol the operations of your den-
tal practice and maximize your
earnings and minimize your
taxes.
At the very least, your ac-
countant should be reviewing
your financial results with you
on an annual basis. You also
should expect quarterly interim
reports. These reports, which
indicate your income and ex-
penses on a comparative basis
with the previous year, are an
important tool for analyzing
your practice. Your accountant
should be familiar with the op-
erations of a dental practice and
be able to discuss and compare
your results with industry
norms, both nationally and
regionally.
Before the end of the year,
you should be meeting with
your accountant to do tax plan-
ning. While your accountant
cannot eliminate your taxes, it
is possible to maximize deduc-
tions with tax planning strate-
gies. You should know how
much you will have to pay and
when payments will be due.
There is nothing worse than re-
JADA, Vol. 130, May 1999 711
PRACTICE MANAGEMENT
ceiving your completed tax re-
turn showing a large balance
due. Thats usually enough to
spur you to look for a new
accountant.
Other consulting services for
which you should look to your
accountant include estate and
succession planning, expansion
into multiple locations, taking
in a new partner and merging
practices.
As mentioned earlier, it is
necessary for the dentist to su-
pervise the staff in billing, re-
ceivables and collections. It is
important for staff members to
know that someone is watching
over them. It is a sad fact that
most thefts are perpetrated by
the trusted staff member who
has been with you for many
712 JADA, Vol. 130, May 1999
Copyright 1998-2001 American Dental Association. All rights reserved.
years. One service offered by
some firms is an accounts re-
ceivable audit. Unannounced,
the firm shows up and does an
audit, specifically looking for
fraud. While it isnt necessary to
do this frequently, its certainly
recommended every few years,
unless the dentist is handling
all receipts and deposits himself
or herself.
Many questions arise during
the course of the year that you
should turn over to your ac-
countant for suggestions and
advice. The most common ques-
tions I receive relate to staff and
payrollwhen to give raises
and bonuses and how much
they should be, for example, or
how to set comparable salaries
for hygienists, chairside assis-
tants and front desk staff.
Your accountant should be
much more than a tax preparer.
He or she should be your advis-
er and should be available to
you whenever you have ques-
tions pertaining to your prac-
tice, be they about expansion,
taking in a new partner, selling
your practice or handling day-
to-day dealings with your staff
and your patients. These are
the services that give value to
your accounting fees.
Marla Yoss, partner, Citrin
Cooperman & Company, LLP,
529 Fifth Ave., New York, N.Y.
10017. Address reprint requests
to Ms. Yoss.