Five things I wish I knew when I owned my own veterinary hospital!!
Veterinarians go to vet school to learn veterinary medicine not bookkeeping. Bookkeeping however is an integral part of owning any business. Many veterinarians or spouses of veterinarians take on this role upon themselves often teaching themselves how to do this, as it was in my case. I spent countless hours performing my bookkeeping duties every month when it should have only taken a fraction of the time. My hope it to help others save time and frustration in these tasks.
Keep separation between business and personal expenses.
The most common mistake made by small business owners is not having clear separation between business and personal expenses. Keeping these expenses separate is imperative to having accurate bookkeeping. It may be tempting to claim personal expenses as business to help lessen your tax burden, but this skews the numbers for the business, such that it is difficult to determine how profitable the business actually is. This is especially important when it comes time to sell the business. The easiest way to do this is to have separate bank and credit card accounts for both personal and business use. If a purchase is made from the incorrect account a journal entry should be made to credit owner draw or owner equity/contribution. If you are uncertain if the expense should be personal or business check with your accountant. If you are audited, you want to make sure the expenses are categorized appropriately.
Automate the inputting of data whenever possible rather than manually entering transactions.
You should link any of your bank accounts with your bookkeeping software when possible, as well as importing your credit card transactions directly into your bookkeeping software. This will save time, energy and reduce frustration. Transactions can be reviewed and edited before and after they go into the bookkeeping software. You will also save a lot of time if you automate as much as possible within your regular bookkeeping practice. For example, if you have a repetitive monthly bill (like rent) you can enter it so that it automatically enters a check for rent every month on the day you select.
Reconcile all accounts monthly.
Reconciling all your accounts monthly will help to make sure you have an up to date view of how your business is performing and help catch any errors early. Having all the information in one place allows you the ability to run various reports that can in turn gives you a much clearer view of your overall business health.
Keep all the receipts for expenses.
You will have a much happier accountant at tax time if you keep all your receipts. Tracking receipts does not have to be tedious or time consuming. There are many apps such as receipt bank or hubdoc that allow you to take a photo of your receipt which sends it to a folder. Later you can categorize it in your bookkeeping software where you need. Documents can also be attached to invoices or bills within the software for later reference if you need to see more detail from the document in the future. In addition to making it easier for your accountant, if you are ever audited this will help tremendously.
Use a veterinary specific chart of accounts and account numbers.
Using a business specific chart of accounts and account numbers help accountants to be more accurate when it is time to prepare taxes. In order to use numbers in your bookkeeping software you often need to go into the preferences to turn on the sue of numbers. A chart of accounts can be downloaded and imported into your software. This also helps in seeing how your business is performing when comparing to industry standards by using benchmarks for the veterinary industry. You can make more informed decisions for improving your business if you can see separate areas income and expenses and compare month to month and year to year. Being able to see where your income is coming from and what expenses your money is going towards gives you a quick and accurate picture of your business health and profitability.