Accounting Articles > Medical Accounting:

Medical practice accounting

Medical practice accounting is a specialty unto itself. The biggest difference between accounting for this profession, and any of the others is accounts receivable. The problem comes in valuation.

You’re seeing patients and billing their insurance carriers. Can anyone on the planet tell us what you are actually going to collect from the carriers? Is there an accurate number for accounts receivable? How much will you actually write off as a bad debt expense?

The easiest way to handle this is to not handle it at all. If you do not have an inventory, your inventory is immaterial. Or if you have only supplies on hand, then your financial statements and income tax returns can be done on a cash basis, rather than an accrual basis. If you are on a cash basis, then we don’t count your accounts receivable as income, nor do we expense your accounts payable. This is only true if your gross revenues are under $5,000,000 annually.

If your accountant has set you up as an accrual basis taxpayer, we can probably do a basis change to cash. If the accountant is making the mistake of including your accounts receivable on the tax return, while you are a cash basis taxpayer, we can fix that as well.

The Internal Revenue Service loves to audit higher income individuals. How much money can they get from someone who’s on unemployment? Physicians are therefore consistently a target. Be careful with the accountant that you choose.

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Accounting Articles > Medical Accounting:

Medical practice accounting

Medical practice accounting is a specialty unto itself. The biggest difference between accounting for this profession, and any of the others is accounts receivable. The problem comes in valuation.

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