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Like all businesses, those in the medical sector need to keep on top of their finances. Whether you’re a doctor, nurse, or partner of a small private GP practice, it’s essential to ensure your financial management is effective to keep things running as smoothly and efficiently as possible when it comes to your practice accounts.
But, as specialist medical accountants for medical professionals, we understand that the healthcare sector faces unique financial challenges. That’s why we’ve put together this short guide to medical practice accounting, to provide practical guidance and invaluable insight to help you stay on track.
What makes medical practice accounting different?
When you set up a private medical practice, or join one as a GP partner, you’ll probably be aware that there’s one thing your medical training didn’t teach you – how to own and run a business. As a healthcare professional, you might feel unprepared and overwhelmed at the prospect of managing your accounting, tax affairs, and VAT returns – and it’s completely natural to feel that way.
Moreover, the way billing works in private healthcare adds complexity compared to other industries. Because multiple parties are involved in paying for private healthcare (such as you, your patient, and their insurer), there are several moving parts, increasing the risk of errors.
Mistakes can be made, patients may forget to pay, treatments might cost more than anticipated, and insurance companies can reject claims. That’s why having a robust, effective system for tracking and organising your financial records is absolutely essential.
What do your annual accounts need to include?
As a business owner, you have a legal responsibility to report your accounts to HMRC at the end of the financial year. Your accounts are a collection of all your annual financial data, and structuring them properly, in a way that makes sense and is easy to interpret, is important to get right from the start.
Here’s what you need to include:
Balance sheet – an overall breakdown of your financial position at year-end (including liabilities and any partners’ funds or capital accounts)
Profit and loss statement (P&L) – categorise and account for all income and expenses (both NHS and non-NHS). This will provide insight into your net income and how you compare to previous years, helping to determine profit share
Distribution of net income – clearly outlining how profits are divided among partners
Additional notes – a detailed breakdown of significant items, such as expensive equipment purchases or surgery refurbishments, providing context for your balance sheet. If unsure, discuss with your specialist medical accountant
Partner sign-off – where there is more than one partner, shared accountability is crucial. All partners should co-sign the accounts
Making things run smoothly
Compiling your medical practice accounts may seem straightforward, but many factors must be considered. Reporting regularly, staying organised, and meeting deadlines alongside clinical duties can be challenging.
To ease this burden, consider leveraging cloud-based accounting software tailored to the unique needs of healthcare professionals. These tools help automate, record, and track key financial data – from patient billing to equipment upgrades.
A good practice management system can further support practice managers by automating patient appointments, liaising with patients and insurers, recording treatment plans and prescriptions, and logging additional details.
Consider who will oversee the accounts. Will one key partner take primary responsibility? If so, investing in financial education through sessions with your medical accountants can ensure best practice. Alternatively, delegating bookkeeping and manual tasks to your administrative team can share the workload.
Get the expert advice and support you need – today
A well-organised set of medical practice accounts is invaluable for building a successful business. It provides a clear understanding of your financial position, enabling you to plan for the future, adjust operations, benchmark performance against competitors, and make informed investment decisions regarding new hires or major expenditures.
Specialist medical accountants bring deep understanding and expertise in medical accountancy, offering proactive guidance tailored to your practice’s specific needs. They assist with tax returns, VAT returns, and compliance, ensuring you navigate the unique financial challenges faced by health professionals seamlessly.
Sometimes, it is more cost-effective and efficient to engage professionals. After all, you entered the healthcare sector to focus on health and patient care, not money management – that’s where expert accountants come in.
If you’re interested in seeking help with your medical practice accounts, get in touch with the team at Harries Watkins Jones today.
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