A dental clinic or medical practice is a small business with an unusual revenue structure, and the parts that make it unusual are exactly the parts generic bookkeeping flattens.
1. Associate and hygienist splits
Production is billed by the practice and shared with the provider who performed it. Record production gross and the split as its own expense line. Netting it makes per-provider profitability unanswerable and understates the size of the practice to any lender looking at it.
2. Lab and supply costs belong to the procedure
Lab fees track directly to production, which makes them cost of sales rather than overhead. Coded as general supplies, they disappear into a category that also holds gloves and printer paper, and gross margin becomes meaningless.
3. Insurance receivables age differently
Patient balances and insurer balances behave nothing alike, and an aged receivable report that blends them tells you very little. Split them. The insurer side is a process problem with a predictable rhythm; the patient side is a collections problem.
4. Equipment is financed, and the payment is not the expense
A chair, a scanner or a CBCT unit is usually leased or financed. The monthly payment is part principal, part interest, and coding the whole thing as an expense overstates costs and understates the asset. Amortisation and interest are separate, and both belong on the statements.
5. The professional corporation
Most practices operate through one. The shareholder loan account, salary-versus-dividend decisions and any associated holding company all need the books to be correct before those choices can be modelled, and they are the choices that move a practitioner's tax position most.
What year end needs that a generic file does not
The five things above decide what the books look like in March. A clinic operating through a professional corporation has a corporate return of its own to support, and the file that supports it well is assembled through the year rather than reconstructed for it.
- The corporation files in its own right, so the year end package is a full set of corporate statements rather than a summary of the practitioner's income. The shareholder loan account is the line that gets asked about, because it moves every time something personal goes through the practice account.
- Associates paid as contractors need their payments totalled and reported, and whether somebody is a contractor or an employee is a question settled during the year rather than at the deadline. Getting it wrong is expensive in both directions.
- Lab work straddles the cutoff. A case sent in the last week of the year comes back invoiced in the next one, and the cost belongs with the procedure rather than with the month the bill arrived. Accruing it is the difference between a margin that means something and one that swings on posting dates.
- Financed equipment needs the depreciation schedule and the loan amortisation kept side by side. The payment is not the expense, and at year end the interest, the principal and the capital cost allowance are three separate figures that come from two schedules nobody maintains by accident.
None of it is difficult in the month it happens. All of it is slow in March, and the slow version is the one billed by the hour by whoever is preparing the return.