At Books & Benchmarks, we understand that some optometry practice owners prefer to manage their financials independently. However, for us to provide the best service, it’s important to work together closely. When practices share insights and details about bank transactions and upcoming activities, we can ensure that the financials are handled accurately and effectively.
There are many instances where practice owners decided to handle their financial and legal organization on their own because they were busy or wanted to save money. While this is understandable, it often leads to higher costs and more challenges down the road.
Here are a few common scenarios we encounter:
- A business owner may correctly separate their assets by holding real estate in a distinct LLC, but some financial statements might not consistently reflect the correct entity ownership.
- Occasionally, a business might directly cover expenses that belong to a separate entity, such as paying a mortgage for a real estate holding.
- Financial documents, especially those that detail the breakdown of assets purchased with loans, may not always be readily available.
- Not all assets or properties held by an entity are proactively communicated to the bookkeeping and CPA team.
In these situations, a business owner may rush to complete their tax return, which can lead to increased costs for tax preparation. It may even raise the risk of an audit or additional legal fees to correct any issues, such as improperly titled assets.
Measure Twice, Cut Once
There’s a concept in construction and engineering that before you start “doing,” you should be extra sure you have the right plan. Re-doing things can be expensive and time-consuming, and sometimes, a redo isn’t even an option.
The same is true in managing your business. Here are some key ideas to consider throughout the life of your practice:
- Consider entity structure. The least ideal situation is to leave a practice unincorporated. It’s worth getting a CPA’s advice on whether to be an LLC or an S corp, especially as the practice grows or adds new locations or real estate (which should always be kept separate from the main practice).
- Review asset titles. When you buy things (e.g., equipment or real estate), pay attention to the title. Once the wrong entity’s name is on the loan or asset title, it’s hard (and sometimes costly) to set it right.
- Be mindful of the paper trail. Make sure the right entity is paying for things. To put it simply, household expenses should be paid out of household accounts, not by practice credit cards.
If your practice owns real estate, make sure the real estate bills are paid from its accounts. The practice checking account shouldn’t be used to pay the mortgage or the building insurance. And if you have multiple locations within a single practice entity, consider using separate bank accounts and credit cards to separate each location’s expenses.
- Consult your team before acting. Even if you don’t, please inform them. In general, before you make a significant financial decision, it’s worth letting your team know what you’re thinking before you do it in case there are action steps you haven’t considered.
Even more important than seeking advice is informing all stakeholders of any decisions. For example, if you purchase a new IPL with a loan, it’s essential to let your bookkeeper know. While the payments will eventually appear in the bank feed, having the loan statement helps our bookkeepers properly account for it and ensure everything is recorded accurately. Open communication ensures we can provide the best financial management support.
Experts Need Experts, Too
Your expertise is in caring for eyes, while ours is in preparing tax returns and financial statements. By leaning on experts in these areas, you can focus on what you do best while we handle the rest.
Just as you rely on patients to share what’s happening with their eyes so you can provide the best care, your business team relies on you to share your plans and keep them updated on how your practice is evolving.
If you’re looking for a partner to help you follow the best practices in optometry bookkeeping and maybe even simplify the process, reach out to us! We specialize in automating your financial tracking and providing insightful reporting to support your decision-making as an owner.
