Many doctors with busy private practices, especially those who also have an NHS practice, sometimes allow the management of their finances and their practice to take a back seat and, inevitably, mistakes occur as a result.
Susan Hutter gives her advice on how to avoid some of the most common business howlers that trip practices up.
Getting in an accounting year’s mix-up
Whether consultants or GPs trade as a limited company, a partnership or sole trader, practice accounts have to be prepared on what is known as ‘the accruals’ basis as opposed to a ‘cash’ basis.
What this means is that the practice accounts have to show all revenue for work done by the practice in the financial year whether or not received.
Often one could be owed at least four weeks’ fees at any one point in time and as long as the debt is collectable, it does need to be included. If not, income should reflect the revenue earned and if a bad debt occurs, it should be shown separately under practice expenses.
Similarly, as far as expenses are concerned, if they have been incurred by the practice year-end, whether or not they are paid after the year-end, they still have to be included in the practice accounts.
Confusion about this causes issues when the practice accountant attempts to prepare the year-end accounts.LOGIN OR REGISTER TO READ MORE……………