Doctors today are busy. There is tremendous pressure being put on all aspects of Canada’s public healthcare system, and family physicians running their own practices are definitely feeling the squeeze.
Between your patients, your staff, and your own obligations outside of work, we know you have a lot to juggle. Streamlining your finances and improving how you manage your practice can take finances off your list of worries. Here are 7 tips for physicians to help keep your practice running smoothly.
1. Set goals and create a budget.
With today’s rate of inflation, it’s particularly important to ensure that you have clear goals about how you want to use your available resources. Setting a budget for your practice can help you avoid the urge to splurge and keep you on track to meet your longer-term objectives.
2. Use best practices.
Although it can be tempting to mix personal and business accounts, it’s recommended that these be kept separate. This makes year-end accounting simpler, including making sure you don’t miss out on any available tax deductions. It also looks more professional to prospective investors and lets you check in on your practice’s finances throughout the year.
You’ll also want to ensure you’re taking note of equipment depreciation. Capital assets lose value over time, so the most accurate way to account for them is by deducting a portion of their value over a set period of time in accordance with their expected lifespan.
If your practice operates out of more than one location, tracking your finances separately at each site will allow you to compare profitability and performance easily.
3. Modernize your practice.
If you haven’t already, it’s time to switch to paperless. This option is both less expensive and more environmentally-friendly. You won’t be on the hook for paper, printer, and ink expenses and you’ll reduce your carbon footprint. Paperless office management also facilitates record-keeping and tracking.
Cloud-based accounting software is easy to use and offers a high level of security. You should also make sure you’re using an electronic medical record system that integrates with your accounting software. This will make it simple to track revenue and manage billing.
4. Keep your personal finances in order.
Even though you’ll want your personal finances to be kept separate from your practice’s, it’s still important to ensure that they’re in order. Only about half of Canadians have a will. Make or update your will so that your estate will be handled according to your wishes. You’ll also avoid paying additional taxes and administration expenses upon your death.
Although pension options may be newly available to physicians, doctors have typically had to plan for their own retirement savings. Set up automatic contributions to your investments so that you don’t miss valuable tax benefits.
5. Track your professional expenses.
A lot of your expenses as a self-employed medical professional are tax-deductible. Keep track of your spending on things like membership dues, salaries, rental expenses, education-related expenses, insurance premiums, or anything else related to setting up and maintaining your practice. You’ll thank yourself when it comes time to file your taxes.
6. Consider hiring a financial expert.
There’s a lot to consider when you’re running your own medical practice. Physicians can benefit from the services of a professional bookkeeper or chartered professional accountant (CPA), especially one with specific expertise in this area.
An objective professional can help you keep track of your performance throughout the year (instead of only providing a snapshot at year-end). They’ll help you identify areas for improvement and keep your books up-to-date so you’ll always maintain clear visibility on your finances.
Financial professionals also improve risk-management and can offer practical advice to safeguard the financial health and longevity of your medical practice.
7. Do what you do best.
In addition to the practical benefits of having a bookkeeper or CPA on your team, you’ll also free up valuable time to focus on your own areas of expertise.
Running a medical practice is time-consuming and demanding. Keep it running smoothly by making sure each individual is able to focus on the areas where they can contribute the most. CPAs are financial experts who not only provide accurate accounting and advice, but also typically manage these tasks in a fraction of the time it might take someone without their extensive knowledge. This means you’ll have more time available for your patients, your staff, or even for leisure.
If you’re a busy family physician, following these recommendations and seeking the advice of a CPA can give you the peace of mind of knowing your financial accounts are in order so that you can focus on doing what you love: being a doctor.