The first step of starting your urology practice accounting should be determining whether you will use cash accounting or accrual accounting. The next step is usually choosing software to manage all your accounting processes, and Sage Intacct may be an excellent option for your practice as it offers HIPAA compliant security features and options for customizable entries.
Understanding The Basics: Cash or Accrual Accounting
The primary difference between cash and accrual accounting is determining when sales or purchases are recorded in your accounts. Using comprehensive accounting software may increase accuracy when performing these tasks. For example, Sage Intacct software can be implemented and set to automate essential operations like accounts payable and invoicing. Our knowledgeable urology practice accountants here at Fusion CPA have experience with implementing Sage Intacct for urology practices and are ready to assist with these items.
Cash & Accrual Accounting Considerations
If you are opting for cash accounting, you will recognize revenue and expenses only at the time money exchanges hands. For example, when a patient directly pays, when an insurance company pays, or when you pay for equipment and material. For this option, Sage Intacct may help with keeping cash accounting accurate as it provides one system to help keep your data organized.
If your urology practice tax planning is based on accrual accounting, you may recognize revenue when it is earned and expenses when they are billed, even though they are not paid. Let's look at more pros and cons of both methods to get a better idea of what our urology practice financial advisers may recommend for your business.
Cash-Based Accounting: Pros & Cons
Utilizing cash basis accounting recognizes revenue when money exchanges hands; this method should not use accounts payable or accounts receivable.
It may be more straightforward to use cash accounting because it may be easier to identify when a transaction has happened because the money either goes in the bank or goes out of the bank. There should be no need to keep track of payables or receivables. The cash method might also be beneficial because a simple glance at your bank balance may illustrate the resources your business has at its disposal. However, since you do not record transactions until you receive the funds, your urology practice usually will not be taxed until the money is actually in the bank.
Cash accounting may not be the best option for the medical field since the medical field usually operates from a trusted service payment practice: you give your service, but you don't get paid from the insurance company or the patient for some time.
Accrual Basis Accounting: Pros & Cons
With this method, revenues are recorded when they are earned. You would record income once your visit with the patient is complete. You wouldn't wait for them or the insurance company to pay you.
The positive side of using this method is that you may get real-time insight into your income and expenses and possibly plan for long-term investments. Sage Intacct may also assist in this area of planning. It can be more effective than using spreadsheet-based forecasting and should give you more time to work with your team to analyze numbers.
The downside of accrual structuring may be that you do not have cash flow awareness. Your urology practice can seem profitable, however; in reality, your bank account may not reflect this. For this reason, our team of Sage Intacct urology practice CPAs recommends partnering with an expert to monitor cash flow carefully. Failure to do so may have devastating financial consequences.
Choosing The Best Accounting Software For Your Practice
When it comes to choosing accounting software, you may want to ask the following questions:
Does it offer customized features for my practice?
Will this software help me get a clear picture of my finances?
Does it help minimize errors, and save time?
The software you implement can affect productivity, customer service, and more. Here at Fusion CPA, we understand that choosing the best software may be overwhelming as there are hundreds of options. So, we offer CFO business advisory services for urology practices to help ease the process and provide expert-level recommendations for your specific industry. Our goal is to partner with you to help your business become an industry leader. As we mentioned, Sage Intacct is a great option for your practice because it offers a secured system based on HIPAA requirements, customizable features, and automated assistance. We are here to answer any questions regarding software implementation or best practices for your urology practice tax planning and accounting. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
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