Latest / The Millionaire Dentist™ / 7 Essential Accounting Metrics to Track for Practice Owners

Transcript

7 Essential Accounting Metrics to Track for Practice Owners · The Millionaire Dentist™

• 0:03
  Hello, everyone, Welcome to the Millionaire Dentist Podcast, brought to you by
• 0:07
  four Quadn's Advisory. On this podcast, we break down the world of dentistry,
• 0:12
  finances and business practices to help you become the millionaire dentists you deserve to
• 0:16
  be. Please be advised we do speak with an honest tongue and may not
• 0:20
  be safe for work. Hello and welcome. This is Casey Hires back at
• 0:26
  the Millionaire Dentnist podcast and studio with co host Jared Bridgeman. Casey, good
• 0:30
  afternoon. How are you oh doing great? Good? I'm I'm liking your
• 0:34
  whole jive today feels very positive. Well, we have a special guest here.
• 0:38
  I mean we get real excited when we get somebody else in studio with
• 0:41
  this. It's a real smart fella too. Yeah. All those letters,
• 0:45
  all right, what do you got there? NBA CPA? I do what
• 0:49
  else you got? BA? Badass? BA? Kevin Roten, Ladies and
• 0:54
  gentlemen, thanks for joining us. Thank you. Kevin. You sent me
• 0:58
  an idea that you wanted to come in and record with us today, and
• 1:03
  I was like, I do need someone else smart besides myself to be on
• 1:06
  the podcast. Casey so I loved your headline for this idea. You wouldn't
• 1:15
  want your CPA operating the drill? Why are you operating QuickBooks? Exactly?
• 1:19
  And I had thought of this actually probably with talking I'll throw a little bone
• 1:23
  to Casey, just us talking about what we see with practice owners that come
• 1:30
  through our vetting process, and they they spend a lot of time trying to
• 1:38
  hunt and peck and figure out what they need to do within QuickBooks. And
• 1:42
  from my understanding, QuickBooks has a has a learning curve to it. Yes,
• 1:47
  it does. It's hard to not just like step in know what you're
• 1:49
  doing exactly. Yeah, it's it's definitely an accountants software, so nerdy.
• 1:59
  Yes, if you want to go, there is. But you know,
• 2:01
  we're just kind of talking about I know Casey has talked times about you don't
• 2:07
  want me poking around in your mouth with a drill or or any of their
• 2:13
  Hell, you can barely flya US I do twice a year, right before
• 2:20
  your appointment, right before my right or eating popcorn. Well, and I
• 2:23
  and I can, and I feel like, you know, some people with
• 2:28
  their quick books might be the same way. Oh you know, shoot,
• 2:30
  I have an appointment with my my accountant, I better make sure my my
• 2:34
  quick books are up to date as much as I can be well. And
• 2:36
  first off, quickbook is it's a great tool for a business owner, right,
• 2:39
  it's a great tool for a dentist or specialist. I mean it's a
• 2:44
  beautiful tool and necessary and some sort of accounting. Is that's where the good
• 2:49
  stuff stops and the challenges start though? Yes, yeah, And they're just
• 2:53
  We've talked to many that you know, they have their office hours where they're
• 2:59
  seeing their patients, and then their employees go home, locks up the office.
• 3:04
  And here the dentist goes back to the office and tries to okay,
• 3:08
  I've got to update quick books, will or even take it home. Yeah,
• 3:13
  and try and do it on a home hours too. Absolutely, and
• 3:15
  they're at their desk at home. Two of the common things all here.
• 3:17
  I'll hear a spouse go, I'd love to get my you know, my
• 3:23
  husband or wife back there up till ten am on QuickBooks trying to figure out
• 3:27
  or it's beautiful in dentistry how you can work four days a week and make
• 3:30
  good money. But then on that off day and they're in their office doing
• 3:34
  the business side or trying to do quick books trying to do yeah, exactly,
• 3:38
  spending way too much time on that when an accountant, I mean,
• 3:40
  I don't want to someone with that specialty. There's a reason why in every
• 3:46
  there's all these different fields out in the world in general, is because there's
• 3:50
  someone better than you, yep, in their particular field. I don't try
• 3:55
  to fix my own cavity. You don't tie the string to the to the
• 4:00
  doorknob anymore. And just oh, I hate teeth. I have not pulled
• 4:04
  a single one of my kids. You don't hate teeth, don't like blood.
• 4:09
  Whatever. So so, Kevin, let me ask you, what are
• 4:15
  all the things that is expected of being kept in someone's quick books? Yeah,
• 4:20
  and so I'll preface this by things that we see lacking in practice owners
• 4:30
  when something that are just not kept track of or word when they come through
• 4:35
  the vetting process. You know, we take a look at their books,
• 4:39
  you know, just given an overview of what we see is wrong. And
• 4:43
  many times you know it's it's the things like the bank and credit card transactions
• 4:48
  and reconciliations are not completely put in and it all all of these that I'll
• 4:56
  be talking about go to creating a profit and loss and a balance sheet which
• 5:02
  shows you the health of your financial health and your practice and also should probably
• 5:08
  tie to your taxes and should tie your taxes. So this would be the
• 5:12
  equivalent of you have a patient in a chair, but you have another patient's
• 5:15
  X rays up and you're trying to do dentistry. I mean, I mean
• 5:17
  to sum that up, that's a good analysis. Yeah, thanks Pal,
• 5:24
  work is done. Yeah, you can't prepare correct tax returns off of bad
• 5:30
  financials, right, I mean, what do you say, like maybe the
• 5:32
  bank and the credit card transaction stuff? Is that almost you know? I
• 5:35
  remember when I was a kid, my grandmother every time she spent anything would
• 5:39
  open up her check book and write it exactly what she spent and where it
• 5:42
  was. So is that kind of along the lines of that, Like some
• 5:45
  timetime sometimes people just aren't tracking their spending. Yeah, and and get behind
• 5:51
  Okay, I don't want to do it, you know, like Casey was
• 5:55
  saying, on their day off, you know, maybe a Friday, Well
• 5:58
  they've they've got something plain for this Friday, so push it off, and
• 6:01
  all that just builds up and you get you get behind your your financials.
• 6:06
  Your quick books doesn't get updated and and a lot of times they I mean,
• 6:12
  this isn't a dig on them, but they don't know how to efficiently
• 6:15
  get that information in. And that's okay, that's not what they went to
• 6:18
  school for for sure. For sure. So you know, with us on
• 6:24
  a monthly basis, we pull that in electronically, we do all the expense
• 6:29
  categorizations. Okay, so, uh, I mean that I get what that
• 6:32
  is. But what are some examples of some categories that I practicing or may
• 6:36
  wanted to implement. You know, there's a lot of non deductibles, a
• 6:42
  lot of you know, what expenses are deductible? What what expenses aren't deductible.
• 6:46
  There's some that are only partially deductible. Uh. You know, when
• 6:50
  you purchase equipment that is a capital expenditure. That's not just an A P
• 6:59
  and L expins. How about a no pair or a nanny Unfortunately, that
• 7:06
  is not business tax deductible. So you know, with the putting here your
• 7:13
  bank and your credit card credit card transactions in there, you're doing your category
• 7:16
  expenses and you're putting things in different categories. One of the things I'm kind
• 7:20
  of seeing right off the top that that maybe a secondary bonus to all.
• 7:25
  This is looking at how much am I spending in each category? Am I
• 7:29
  spending too much on this particular field? And I can carry that personally with
• 7:32
  my home finances. I have a category for groceries versus you know, fast
• 7:35
  food yep, you know versus you know, bind snacks and the gas station,
• 7:40
  being like maybe I shouldn't buy McDonald's for sure. For for our clients,
• 7:45
  you know, when they come in for their annual meeting and with their
• 7:48
  monthly emails, we have many tracking metrics of expenses, of overhead of this
• 7:57
  is where you're at year to date or on a monthly basis, tracking those
• 8:01
  percentages. Okay, you're a little bit high here on a trend, what
• 8:05
  can we do to lower that? Or you're in good shape here because we
• 8:11
  don't we're not going to say the actual numbers, but we do we do
• 8:13
  have milestones or you know, rough areas we'd like for people to be.
• 8:16
  Yeah, yeah, exactly. Well, and you guys are getting in this
• 8:20
  in good detail. But from from from my view, the complaints or challenges
• 8:24
  that I'll hear is again the time it takes and then they spend that time
• 8:28
  and they and they put in that you know, sweat equity, whatever you
• 8:31
  want to call it. And then they are behind, they're inaccurate, they're
• 8:37
  not right, they don't really tell you anything. It's actually a red flag
• 8:41
  because like you said, they don't tie to taxes like then they're making decisions
• 8:46
  based on the inaccurated. It's like pulling a thread on a sweater and it
• 8:50
  just keeps going and going and going, and it all goes back to these
• 8:52
  quick books need to be done. Well. Now, hopefully our listeners out
• 8:54
  there are going, well, I got it's we're covered. A lot of
• 8:58
  people that think they're covered. When we look at it, what do you
• 9:01
  see, Kevin errors? And again they don't know what's what goes where?
• 9:09
  You know, putting in a transaction? Where does that go? Okay?
• 9:15
  I think it'll it'll go here and when it shouldn't. Okay, let's say
• 9:20
  that's all right. Let's say you know they're they're putting in the categories and
• 9:24
  things like that. Now they may not know everything one hundred percent. Is
• 9:28
  there a generic category of branding that might be, hey, you know,
• 9:33
  when I turn this into my CPA or whatever the case may be, I
• 9:35
  really need help with this. Lookd at or is it just every time.
• 9:39
  I know we do every time look at everything. But let's just say,
• 9:43
  Johnny CPA down the street. When we look at practice owners quick books,
• 9:46
  financials, we see a lot of errors, and what we want to see
• 9:54
  is for them to leave the business side to us. We go in,
• 10:01
  we make those adjustments. A lot of our clients don't even touch quick books.
• 10:09
  We take care of all of the transactions, all the updates. That's
• 10:15
  not the norm. Like we we kind of go above and beyond, right
• 10:18
  right, Yeah, yeah, very seldom do you see that in the accounting
• 10:22
  industry. During the onboarding process, pretty much with all of our practice owners,
• 10:28
  one of the things I do is is I go back to the beginning
• 10:31
  of the year and do a cleanup of their quick books, and many times,
• 10:35
  you know, they'll be those mistakes on categorizations of Okay, this shouldn't
• 10:41
  go there, this should go here, and I'll take care of that for
• 10:45
  all of our new clients that come on, and they really appreciate that.
• 10:48
  I'm a said Kevin, here's a question. If you look at one hundred
• 10:50
  QuickBooks and financials and taxes, how many are Let's say you look at it
• 10:56
  and go good, these are these are fairly clean. We move on to
• 11:00
  some more tax strategies and look to reduce tax liability versus you look at them
• 11:05
  out of one hundred and you're like, yikes, then you cleaned up in
• 11:07
  some regard. I never want to say absolute, so I'll just say ninety
• 11:13
  nine need some sort of cleanup out of those hundreds. Okay. And you
• 11:18
  know one of the things that Casey and I had touched upon, and you
• 11:22
  know obviously previous podcast episodes, how hard is it to try and calculate,
• 11:28
  like, maybe how much your overhead is if your quick books are not cleaned
• 11:31
  up or up to date, or have it just wrong information. Yeah,
• 11:35
  it's impossible. It's impossible. It would be like your grandma if she missed
• 11:39
  a comma or a decimal point. It's close, yeah, but it's actually
• 11:43
  completely wrong by a lot, right, Yeah, And that's why I got
• 11:46
  nothing once you died. Just memories, memories, sweet sweet memories. That's
• 11:56
  right, Kevin. With all the things you're talking about, these are you
• 12:01
  know, just these are just some of the basic things that we want people
• 12:05
  to cover or to do in their quick books. There's a lot more to
• 12:07
  it, if if if our practice owner's out there and is not doing most
• 12:13
  of these are hardly any of these. What's the first step for them if
• 12:16
  they're if they are not working with us currently, You know, they can
• 12:20
  always give us a call and we can see if you know, they're the
• 12:22
  right fit to work with us. But what's something that the average a practice
• 12:28
  owner can do today to get on the right steps? Just start doing it?
• 12:31
  Yeah, maybe have a conversation with their CPA. Have a have a
• 12:35
  conversation with their CPA. Uh, ultimately it needs done now. Proactive CPA
• 12:43
  would have came to you in the first place and said, hey, we've
• 12:46
  got we've got some stuff to work on here. Yeah. A lot of
• 12:48
  times practice owners they hire a an accounting firm or a tax preparer that you
• 12:56
  know they get with January February. Here's here's my quick books file, here's
• 13:03
  my bank statements. You ever had anybody come in which just a box full
• 13:07
  of receipts for you? We have not, thankfully, No, we we
• 13:13
  do get Actually, thankfully, with technology, we're able to get access to
• 13:18
  the electronic versions of things, so we we pull that in. Now.
• 13:26
  Some of it is just as messy as bringing a box of receipts. It's
• 13:31
  actually that in some cases that might be even more beneficial than having no receipts
• 13:37
  at all. Right, you know, Kevin, anything else you'd like to
• 13:41
  follow up with today. I appreciate you coming in. You're always a blast
• 13:45
  to have and to hold. Yeah, I mean, just like you said,
• 13:52
  contact us. Like you know, what's interesting is we actually do a
• 13:56
  free tax assessment. We do, don't we? Yeah, So give us
• 14:01
  a call. I mean it's we'll take a look at your stuff and we'll
• 14:03
  give you some baseline things that could be improved, or maybe turn around and
• 14:07
  say you're killing it. You're doing an awesome job. Yeah, and you
• 14:11
  know, best case scenario. We partner together and we take care. We
• 14:16
  take all of the quick books, work off of our practice owners plates.
• 14:22
  All right, go to four quadrantsadvisor dot com. You can call the phone
• 14:24
  number on the website or fill out a form and we'll reach out to you.
• 14:28
  Also, click while you're there, click on the button says events and
• 14:33
  check out where we're going to be next. In about one week, we're
• 14:35
  going to be in Denver and Boulder. Now, sad fact for all you
• 14:39
  Denver folks who have not registered yet, Denver, in fact, has sold
• 14:45
  out. We have no more seats out that the bourbon tasting in Denver,
• 14:48
  but we do have a few handful of seats left for our brunch and ce
• 14:52
  course happening in Boulder on Friday, so check that out, make sure you're
• 14:58
  registered before that one goes too. After that, we're going to be in
• 15:01
  several other places, including Saint Louis, Boston. We're going to be in
• 15:07
  Atlanta and a town outside of Atlanta called Milton, which I believe we have
• 15:11
  a new practice owner that lives there. Now we'd already said we're going to
• 15:16
  go there, and now we've got someone there. Yes, it's pretty interesting,
• 15:18
  it's pretty fun. Small small world, Kevin. Once again, baseball
• 15:22
  towns. That's right, a baseball game, Yeah, Kevin. I want
• 15:24
  to thank you once again for being here. Casey, thank you so much
• 15:28
  for being here, and well we'll see you all later. Thanks. That's
• 15:33
  all the time we have today. Thank you to our guests for their insight
• 15:35
  and for sharing some really great information, and thank you to you the listener
• 15:39
  for tuning in. The Millionaire Dennis podcast is brought to you by four QUADRANTCE
• 15:43
  Advisory to see if they might be a good fit for you and your practice.
• 15:46
  Going over to four Quadrantsadvisory dot com and see why year after year they
• 15:50
  retain over ninety five percent of their clients. Thank you again for joining us,
• 15:54
  and we'll see you next time.