Full Transcript for 7 Essential Accounting Metrics to Track for Practice Owners

00:02:28.599 and I can, and I feel like, you know, some people with 31 00:02:28.639 --> 00:02:30.400 their quick books might be the same way. Oh you know, shoot, 32 00:02:30.400 --> 00:02:34.319 I have an appointment with my my accountant, I better make sure my my 33 00:02:34.400 --> 00:02:36.280 quick books are up to date as much as I can be well. And 34 00:02:36.280 --> 00:02:39.479 first off, quickbook is it's a great tool for a business owner, right, 35 00:02:39.520 --> 00:02:44.680 it's a great tool for a dentist or specialist. I mean it's a 36 00:02:44.719 --> 00:02:49.800 beautiful tool and necessary and some sort of accounting. Is that's where the good 37 00:02:49.800 --> 00:02:53.879 stuff stops and the challenges start though? Yes, yeah, And they're just 38 00:02:53.919 --> 00:02:59.719 We've talked to many that you know, they have their office hours where they're 39 00:02:59.719 --> 00:03:04.759 seeing their patients, and then their employees go home, locks up the office. 40 00:03:04.800 --> 00:03:08.759 And here the dentist goes back to the office and tries to okay, 41 00:03:08.800 --> 00:03:13.280 I've got to update quick books, will or even take it home. Yeah, 42 00:03:13.360 --> 00:03:15.879 and try and do it on a home hours too. Absolutely, and 43 00:03:15.879 --> 00:03:17.840 they're at their desk at home. Two of the common things all here. 44 00:03:17.879 --> 00:03:22.919 I'll hear a spouse go, I'd love to get my you know, my 45 00:03:23.000 --> 00:03:25.840 husband or wife back there up till ten am on QuickBooks trying to figure out 46 00:03:27.000 --> 00:03:30.360 or it's beautiful in dentistry how you can work four days a week and make 47 00:03:30.360 --> 00:03:34.159 good money. But then on that off day and they're in their office doing 48 00:03:34.159 --> 00:03:37.400 the business side or trying to do quick books trying to do yeah, exactly, 49 00:03:38.039 --> 00:03:40.639 spending way too much time on that when an accountant, I mean, 50 00:03:40.680 --> 00:03:46.240 I don't want to someone with that specialty. There's a reason why in every 51 00:03:46.360 --> 00:03:50.439 there's all these different fields out in the world in general, is because there's 52 00:03:50.479 --> 00:03:55.599 someone better than you, yep, in their particular field. I don't try 53 00:03:55.639 --> 00:04:00.520 to fix my own cavity. You don't tie the string to the to the 54 00:04:00.560 --> 00:04:04.560 doorknob anymore. And just oh, I hate teeth. I have not pulled 55 00:04:04.599 --> 00:04:08.840 a single one of my kids. You don't hate teeth, don't like blood. 56 00:04:09.840 --> 00:04:15.479 Whatever. So so, Kevin, let me ask you, what are 57 00:04:15.520 --> 00:04:20.519 all the things that is expected of being kept in someone's quick books? Yeah, 58 00:04:20.639 --> 00:04:30.439 and so I'll preface this by things that we see lacking in practice owners 59 00:04:30.680 --> 00:04:35.079 when something that are just not kept track of or word when they come through 60 00:04:35.079 --> 00:04:38.920 the vetting process. You know, we take a look at their books, 61 00:04:39.000 --> 00:04:43.120 you know, just given an overview of what we see is wrong. And 62 00:04:43.360 --> 00:04:48.920 many times you know it's it's the things like the bank and credit card transactions 63 00:04:48.959 --> 00:04:56.920 and reconciliations are not completely put in and it all all of these that I'll 64 00:04:56.959 --> 00:05:02.199 be talking about go to creating a profit and loss and a balance sheet which 65 00:05:02.800 --> 00:05:08.959 shows you the health of your financial health and your practice and also should probably 66 00:05:08.959 --> 00:05:12.639 tie to your taxes and should tie your taxes. So this would be the 67 00:05:12.720 --> 00:05:15.680 equivalent of you have a patient in a chair, but you have another patient's 68 00:05:15.240 --> 00:05:17.560 X rays up and you're trying to do dentistry. I mean, I mean 69 00:05:17.600 --> 00:05:20.519 to sum that up, that's a good analysis. Yeah, thanks Pal, 70 00:05:24.399 --> 00:05:30.720 work is done. Yeah, you can't prepare correct tax returns off of bad 71 00:05:30.800 --> 00:05:32.319 financials, right, I mean, what do you say, like maybe the 72 00:05:32.319 --> 00:05:35.279 bank and the credit card transaction stuff? Is that almost you know? I 73 00:05:35.360 --> 00:05:39.120 remember when I was a kid, my grandmother every time she spent anything would 74 00:05:39.120 --> 00:05:42.800 open up her check book and write it exactly what she spent and where it 75 00:05:42.959 --> 00:05:45.160 was. So is that kind of along the lines of that, Like some 76 00:05:45.439 --> 00:05:51.040 timetime sometimes people just aren't tracking their spending. Yeah, and and get behind 77 00:05:51.079 --> 00:05:55.600 Okay, I don't want to do it, you know, like Casey was 78 00:05:55.639 --> 00:05:58.800 saying, on their day off, you know, maybe a Friday, Well 79 00:05:58.839 --> 00:06:01.120 they've they've got something plain for this Friday, so push it off, and 80 00:06:01.199 --> 00:06:06.120 all that just builds up and you get you get behind your your financials. 81 00:06:06.120 --> 00:06:12.000 Your quick books doesn't get updated and and a lot of times they I mean, 82 00:06:12.040 --> 00:06:15.480 this isn't a dig on them, but they don't know how to efficiently 83 00:06:15.680 --> 00:06:18.680 get that information in. And that's okay, that's not what they went to 84 00:06:18.959 --> 00:06:24.199 school for for sure. For sure. So you know, with us on 85 00:06:24.240 --> 00:06:29.399 a monthly basis, we pull that in electronically, we do all the expense 86 00:06:29.560 --> 00:06:32.120 categorizations. Okay, so, uh, I mean that I get what that 87 00:06:32.240 --> 00:06:35.879 is. But what are some examples of some categories that I practicing or may 88 00:06:36.040 --> 00:06:42.439 wanted to implement. You know, there's a lot of non deductibles, a 89 00:06:42.480 -->

00:06:46.319 lot of you know, what expenses are deductible? What what expenses aren't deductible. 90 00:06:46.360 --> 00:06:50.439 There's some that are only partially deductible. Uh. You know, when 91 00:06:50.439 --> 00:06:59.319 you purchase equipment that is a capital expenditure. That's not just an A P 92 00:06:59.439 --> 00:07:06.279 and L expins. How about a no pair or a nanny Unfortunately, that 93 00:07:06.439 --> 00:07:13.040 is not business tax deductible. So you know, with the putting here your 94 00:07:13.079 --> 00:07:16.079 bank and your credit card credit card transactions in there, you're doing your category 95 00:07:16.120 --> 00:07:20.160 expenses and you're putting things in different categories. One of the things I'm kind 96 00:07:20.160 --> 00:07:25.360 of seeing right off the top that that maybe a secondary bonus to all. 97 00:07:25.399 --> 00:07:29.399 This is looking at how much am I spending in each category? Am I 98 00:07:29.399 --> 00:07:32.160 spending too much on this particular field? And I can carry that personally with 99 00:07:32.199 --> 00:07:35.920 my home finances. I have a category for groceries versus you know, fast 100 00:07:35.959 --> 00:07:39.879 food yep, you know versus you know, bind snacks and the gas station, 101 00:07:40.000 --> 00:07:44.959 being like maybe I shouldn't buy McDonald's for sure. For for our clients, 102 00:07:45.199 --> 00:07:48.000 you know, when they come in for their annual meeting and with their 103 00:07:48.279 --> 00:07:56.959 monthly emails, we have many tracking metrics of expenses, of overhead of this 104 00:07:57.040 --> 00:08:01.000 is where you're at year to date or on a monthly basis, tracking those 105 00:08:01.399 --> 00:08:05.759 percentages. Okay, you're a little bit high here on a trend, what 106 00:08:05.800 --> 00:08:11.120 can we do to lower that? Or you're in good shape here because we 107 00:08:11.120 --> 00:08:13.000 don't we're not going to say the actual numbers, but we do we do 108 00:08:13.160 --> 00:08:16.199 have milestones or you know, rough areas we'd like for people to be. 109 00:08:16.360 --> 00:08:20.000 Yeah, yeah, exactly. Well, and you guys are getting in this 110 00:08:20.079 --> 00:08:24.439 in good detail. But from from from my view, the complaints or challenges 111 00:08:24.839 --> 00:08:28.759 that I'll hear is again the time it takes and then they spend that time 112 00:08:28.800 --> 00:08:31.600 and they and they put in that you know, sweat equity, whatever you 113 00:08:31.600 --> 00:08:37.799 want to call it. And then they are behind, they're inaccurate, they're 114 00:08:37.799 --> 00:08:41.919 not right, they don't really tell you anything. It's actually a red flag 115 00:08:41.960 --> 00:08:46.840 because like you said, they don't tie to taxes like then they're making decisions 116 00:08:46.840 --> 00:08:50.039 based on the inaccurated. It's like pulling a thread on a sweater and it 117 00:08:50.120 --> 00:08:52.039 just keeps going and going and going, and it all goes back to these 118 00:08:52.080 --> 00:08:54.720 quick books need to be done. Well. Now, hopefully our listeners out 119 00:08:54.759 --> 00:08:58.720 there are going, well, I got it's we're covered. A lot of 120 00:08:58.720 --> 00:09:01.639 people that think they're covered. When we look at it, what do you 121 00:09:01.679 --> 00:09:09.960 see, Kevin errors? And again they don't know what's what goes where? 122 00:09:09.480 --> 00:09:13.960 You know, putting in a transaction? Where does that go? Okay? 123 00:09:15.600 --> 00:09:20.000 I think it'll it'll go here and when it shouldn't. Okay, let's say 124 00:09:20.399 --> 00:09:24.399 that's all right. Let's say you know they're they're putting in the categories and 125 00:09:24.440 --> 00:09:26.960 things like that. Now they may not know everything one hundred percent. Is 126 00:09:28.000 --> 00:09:33.320 there a generic category of branding that might be, hey, you know, 127 00:09:33.320 --> 00:09:35.120 when I turn this into my CPA or whatever the case may be, I 128 00:09:35.200 --> 00:09:39.080 really need help with this. Lookd at or is it just every time. 129 00:09:39.639 --> 00:09:41.720 I know we do every time look at everything. But let's just say, 130 00:09:43.159 --> 00:09:46.879 Johnny CPA down the street. When we look at practice owners quick books, 131 00:09:46.919 --> 00:09:54.720 financials, we see a lot of errors, and what we want to see 132 00:09:54.240 --> 00:10:01.960 is for them to leave the business side to us. We go in, 133 00:10:01.600 --> 00:10:09.200 we make those adjustments. A lot of our clients don't even touch quick books. 134 00:10:09.879 --> 00:10:15.600 We take care of all of the transactions, all the updates. That's 135 00:10:15.639 --> 00:10:18.960 not the norm. Like we we kind of go above and beyond, right 136 00:10:18.200 --> 00:10:22.799 right, Yeah, yeah, very seldom do you see that in the accounting 137 00:10:22.840 --> 00:10:28.120 industry. During the onboarding process, pretty much with all of our practice owners, 138 00:10:28.960 --> 00:10:31.320 one of the things I do is is I go back to the beginning 139 00:10:31.320 --> 00:10:35.519 of the year and do a cleanup of their quick books, and many times, 140 00:10:35.799 --> 00:10:41.639 you know, they'll be those mistakes on categorizations of Okay, this shouldn't 141 00:10:41.679 --> 00:10:43.679 go there, this should go here, and I'll take care of that for 142 00:10:45.039 --> 00:10:48.279 all of our new clients that come on, and they really appreciate that. 143 00:10:48.279 --> 00:10:50.159 I'm a said Kevin, here's a question. If you look at one hundred 144 00:10:50.639 --> 00:10:56.039 QuickBooks and financials and taxes, how many are Let's say you look at it 145 00:10:56.080 --> 00:11:00.600 and go good, these are these are fairly clean. We move on to 146 00:11:00.639 --> 00:11:05.600 some more tax strategies and look to reduce tax liability versus you look at them

147 00:11:05.600 --> 00:11:07.600 out of one hundred and you're like, yikes, then you cleaned up in 148 00:11:07.840 --> 00:11:13.039 some regard. I never want to say absolute, so I'll just say ninety 149 00:11:13.240 --> 00:11:18.080 nine need some sort of cleanup out of those hundreds. Okay. And you 150 00:11:18.080 --> 00:11:22.159 know one of the things that Casey and I had touched upon, and you 151 00:11:22.200 --> 00:11:28.399 know obviously previous podcast episodes, how hard is it to try and calculate, 152 00:11:28.480 --> 00:11:31.639 like, maybe how much your overhead is if your quick books are not cleaned 153 00:11:31.679 --> 00:11:35.879 up or up to date, or have it just wrong information. Yeah, 154 00:11:35.919 --> 00:11:39.039 it's impossible. It's impossible. It would be like your grandma if she missed 155 00:11:39.039 --> 00:11:43.240 a comma or a decimal point. It's close, yeah, but it's actually 156 00:11:43.240 --> 00:11:46.799 completely wrong by a lot, right, Yeah, And that's why I got 157 00:11:46.799 --> 00:11:56.480 nothing once you died. Just memories, memories, sweet sweet memories. That's 158 00:11:56.639 --> 00:12:01.120 right, Kevin. With all the things you're talking about, these are you 159 00:12:01.200 --> 00:12:05.000 know, just these are just some of the basic things that we want people 160 00:12:05.039 --> 00:12:07.519 to cover or to do in their quick books. There's a lot more to 161 00:12:07.639 --> 00:12:13.639 it, if if if our practice owner's out there and is not doing most 162 00:12:13.679 --> 00:12:16.080 of these are hardly any of these. What's the first step for them if 163 00:12:16.120 --> 00:12:20.000 they're if they are not working with us currently, You know, they can 164 00:12:20.000 --> 00:12:22.879 always give us a call and we can see if you know, they're the 165 00:12:22.960 --> 00:12:28.279 right fit to work with us. But what's something that the average a practice 166 00:12:28.279 --> 00:12:31.679 owner can do today to get on the right steps? Just start doing it? 167 00:12:31.840 --> 00:12:35.639 Yeah, maybe have a conversation with their CPA. Have a have a 168 00:12:35.679 --> 00:12:43.080 conversation with their CPA. Uh, ultimately it needs done now. Proactive CPA 169 00:12:43.120 --> 00:12:46.399 would have came to you in the first place and said, hey, we've 170 00:12:46.440 --> 00:12:48.559 got we've got some stuff to work on here. Yeah. A lot of 171 00:12:48.600 --> 00:12:56.759 times practice owners they hire a an accounting firm or a tax preparer that you 172 00:12:56.799 --> 00:13:03.919 know they get with January February. Here's here's my quick books file, here's 173 00:13:03.000 --> 00:13:07.240 my bank statements. You ever had anybody come in which just a box full 174 00:13:07.240 --> 00:13:13.080 of receipts for you? We have not, thankfully, No, we we 175 00:13:13.120 --> 00:13:18.240 do get Actually, thankfully, with technology, we're able to get access to 176 00:13:18.919 --> 00:13:24.480 the electronic versions of things, so we we pull that in. Now. 177 00:13:26.320 --> 00:13:31.240 Some of it is just as messy as bringing a box of receipts. It's 178 00:13:31.759 --> 00:13:37.440 actually that in some cases that might be even more beneficial than having no receipts 179 00:13:37.480 --> 00:13:41.960 at all. Right, you know, Kevin, anything else you'd like to 180 00:13:41.960 --> 00:13:45.919 follow up with today. I appreciate you coming in. You're always a blast 181 00:13:45.919 --> 00:13:52.039 to have and to hold. Yeah, I mean, just like you said, 182 00:13:52.559 --> 00:13:56.720 contact us. Like you know, what's interesting is we actually do a 183 00:13:56.759 --> 00:14:01.399 free tax assessment. We do, don't we? Yeah, So give us 184 00:14:01.399 --> 00:14:03.320 a call. I mean it's we'll take a look at your stuff and we'll 185 00:14:03.320 --> 00:14:07.840 give you some baseline things that could be improved, or maybe turn around and 186 00:14:07.840 --> 00:14:11.639 say you're killing it. You're doing an awesome job. Yeah, and you 187 00:14:11.679 --> 00:14:16.279 know, best case scenario. We partner together and we take care. We 188 00:14:16.360 --> 00:14:22.039 take all of the quick books, work off of our practice owners plates. 189 00:14:22.200 --> 00:14:24.840 All right, go to four quadrantsadvisor dot com. You can call the phone 190 00:14:24.879 --> 00:14:28.600 number on the website or fill out a form and we'll reach out to you. 191 00:14:28.679 --> 00:14:33.240 Also, click while you're there, click on the button says events and 192 00:14:33.320 --> 00:14:35.559 check out where we're going to be next. In about one week, we're 193 00:14:35.600 --> 00:14:39.600 going to be in Denver and Boulder. Now, sad fact for all you 194 00:14:39.879 --> 00:14:45.120 Denver folks who have not registered yet, Denver, in fact, has sold 195 00:14:45.120 --> 00:14:48.399 out. We have no more seats out that the bourbon tasting in Denver, 196 00:14:48.159 --> 00:14:52.360 but we do have a few handful of seats left for our brunch and ce 197 00:14:52.559 --> 00:14:58.600 course happening in Boulder on Friday, so check that out, make sure you're 198 00:14:58.600 --> 00:15:01.120 registered before that one goes too. After that, we're going to be in 199 00:15:01.879 --> 00:15:07.320 several other places, including Saint Louis, Boston. We're going to be in 200 00:15:07.360 --> 00:15:11.200 Atlanta and a town outside of Atlanta called Milton, which I believe we have 201 00:15:11.240 --> 00:15:16.200 a new practice owner that lives there. Now we'd already said we're going to 202 00:15:16.240 --> 00:15:18.399 go there, and now we've got someone there. Yes, it's pretty interesting, 203 00:15:18.399 --> 00:15:22.519 it's pretty fun. Small small world, Kevin. Once again, baseball 204 00:15:22.519 --> 00:15:24.960 towns. That's right, a baseball game, Yeah, Kevin. I want 205 00:15:24.960 --> 00:15:28.320 to thank you once again for being here. Casey, thank you so much 206 00:15:28.320 --> 00:15:33.120 for being here, and well we'll see you all later. Thanks. That's 207 00:15:33.159 --> 00:15:35.159 all the time we have today. Thank you to our guests for their insight 208 00:15:35.320 --> 00:15:39.840 and for sharing some really great information, and thank you to you the listener 209 00:15:39.879 --> 00:15:43.600 for tuning in. The Millionaire Dennis podcast is brought to you by four QUADRANTCE 210 00:15:43.639 --> 00:15:46.960 Advisory to see if they might be a good fit for you and your practice. 211 00:15:46.120 --> 00:15:50.039 Going over to four Quadrantsadvisory dot com and see why year after year they 212 00:15:50.039 --> 00:15:54.480 retain over ninety five percent of their clients. Thank you again for joining us, 213 00:15:54.480 --> 00:15:54.600 and we'll see you next time.