3 months before opening checklist – part 1: Finance
In previous articles, I’ve covered some of the very first things you’ll do as a new dentist who is planning to open a new practice. These included forming a legal entity and then actually setting one up.
In this article we’re shifting gears and turning to the first of three articles covering some of the more practical steps you’ll need to take approximately three months before opening your practice, and some things you should consider when taking on these tasks. This article will focus on finance related tasks:
It may seem like overkill to hire a bookkeeper (or if you’re doing it yourself, to buy Quickbooks and set up a file) months before you actually open, but a lot of your most important bookkeeping work is done in well before you actually open for business. That’s because you’re going to be making large equipment and fixtures purchases (that should be properly capitalized), and you’re going to be incurring initial expenses (that should be properly categorized into custom expense categories), among other considerations. Not setting up your account properly means that while you may be able to accurately file your taxes, you won’t have accurate financial reporting, which will become necessary as your practice grows.
The temptation for most new dentists is to try to do your own bookkeeping initially, or at a minimum to hold off on hiring a bookkeeper until after you open in order to save money. While the motive to save money early is smart, fight the temptation here and pay for a bookkeeper. I can virtually promise you, you will screw up your Quickbooks file by not setting up expense categories properly. And then when you do end up hiring a bookkeeper, they’ll have to manually backtrack to fix everything you did wrong, and end up charging you nearly as much as if they would have just handled it for you from the beginning. To the extent you can, find a bookkeeper that has experience with dentists, as they’ll know industry norms and can help guide you, and will know a lot of the suppliers already, so they’ll be fewer questions from your bookkeeper each month asking “what was this charge for?”
2. Credit Card Processing:
This is something a lot of dentists forget to do until the week before they’re opening for business. Normally for existing businesses, switching credit card processors just takes a couple of weeks. But for new businesses, particularly where one of the owners has less than ideal credit, it can take a couple of months. Given that not being able to accept credit or debit cards effectively means that the majority of your patients won’t be able to pay you, starting early is a good thing, and you can usually get them to waive any monthly fees until you’re actually ready to start accepting payments anyway.
Dentists generally fall into a pretty good risk category, so you can get pretty cheap rates even as a new business. But to get cheaper rates, in general, you will have to obtain service through an actual credit card processing company rather than your practice’s bank. When you do get quotes, unfortunately, credit card processing is priced so confusingly that it can be hard to compare offers across multiple providers. So, I recommend either using a third party negotiating service, or demanding that any offer be presented in the more transparent interchange plus pricing format.
3. Business Checking Account:
Getting a business checking account is very similar to a personal checking account, it’s quick and easy. That said, you still need to do it early, before you start incurring expenses. Otherwise the temptation will be for you to pay for things out of your personal accounts, which will complicate your taxes and accounting immensely down the road.
You can find still banks with no monthly fees, and you should consider that. But perhaps more important is finding a bank with a banker you can actually get a hold of, and who is competent enough to get things done for you. As a dentist, you won’t need much, but getting a wire sent out without having to go into a branch, a hold placed on a check via a two minute phone call, or getting a phone call from your banker in lieu of an overdraft fee, are, in my opinion, what separates a good bank from a bad one.
These three items are each things are the sort of mundane details that you may overlook entirely when mapping out your new practice. They are, however, very important, and cannot be done last minute. As far as product recommendations go, it’s a good idea to ask around for recommendations from your colleagues. The ADA, and perhaps your state dental society, offers endorsed providers (check out ADA Business Resources) for some products and this is a good place to start. For provider recommendation information in each of these items from me, contact me. In the next article in this series we’ll discuss three operational tasks that you should do three months prior to opening your practice.
Rich McIver is a New Dentist Now guest blogger and the founder of MerchantNegotiators.com, a company that helps businesses obtain cheaper and better credit card processing. He also assists his wife, Dr. Holly McIver at her orthodontic practice, Kingwood Orthodontics. You can follow him on Twitter and Google+.