Posted on 08-09-2010
Should You Use A Dental CPA? by Rick Willeford, MBA, CPA, CFP, PFS
You already know that a good CPA should be your principal advisor on anything financial within your practice. But did you know that there are “dental” CPAs who focus on your unique needs? In fact, the original association for Dental CPAs is the Academy of Dental CPAs (ADCPA), and they have a directory at www.ADCPA.org. The members of this national association have focused on working with dentists for an average of 20 years. They work with at least 50 dentists and typically several hundred! And many of them ONLY work with dentists.
First of all, just what is a CPA? CPA stands for Certified Public Accountant. Like dentists, they are licensed and regulated by the state. They have continuing-education requirements and disciplinary review boards. The problem is, most CPAs are “generalists”. They may have a few dental clients, but they spend most of their time working with different businesses like a jewelry store, mattress manufacturing plant, the local city water works, etc. There is no time to keep up with Dental Economics, other specialty newsletters, knowing the local management consultants, and being familiar with the latest technology, etc.
Of course, some of you may ask, "Why not just buy a program like QuickBooks and do it myself?" Fair question. But there is a huge distinction between bookkeeping, accounting, analysis, and planning. Bookkeeping consists of those basic functions necessary to pay bills, make bank deposits, and gather transactional data. Computer software programs are tools that facilitate these basic functions.
Accounting, on the other hand, involves organizing and presenting that data in a useful, correct format. Software can generate "financial statements," but unless you or your staff has some accounting background, you may be subject to the "GI-GO" problem — "garbage in-garbage out"! Any decent CPA can create proper financial statements, but they are designed to prepare income tax returns. Important, but not a lot of help to analyze and manage your practice.
A skilled Dental CPA will design specialized reports that they can use just as you use a patient's radiographs for evaluation, diagnosis, and treatment planning. The CPA analyzes such questions as: How is the financial health of your practice? What can you do now to minimize taxes next April? Is the office using "best practices" based on the CPA's knowledge of other successful offices? Is the dentist working smart — or just working hard — to generate revenue? Is the production appropriate for the number of personnel? Is it time to add another dentist? Are you using the latest technology to maximum advantage?
So, just how do you choose a CPA? This decision is just as difficult as that of a patient choosing a personal dentist after moving to a new city. After all, on paper all dentists seem alike: they do extractions, fillings, root canals, and annual exams. However, they differ significantly due to experience levels, amount of specialized knowledge, standard of care, quality of lab and materials — not to mention basic competence. If your spouse needs a 6-unit bridge or some implants, would you let an inexperienced dentist do it, or would you send your spouse to someone with a little more experience? The same is true with other professions: You wouldn't turn to a new CPA to set up your practice or keep you ahead of the IRS anymore than you would hire a new law school graduate to defend you on death row. Experience counts!
When interviewing CPAs, begin by asking them what dental magazines they read regularly and what dental newsletters they follow. Which dental conferences do they attend? Also ask if they are familiar with any practice-management consultants (they should be able to name several) and what financial resources and computer systems do they utilize. As you can imagine, your father's "general" CPA or your golf buddy who is the CPA for the power company usually is familiar with these details.
A good CPA should also communicate well and explain financial details clearly to you and your staff without using overly technical jargon. A CPA also should strive to educate you and help you reach a level where you can make informed decisions about your practice's finances. You should not have to educate your CPA about the latest article you've read or conference you've attended. Above all, you should be comfortable with your CPA and have confidence that he or she will stay on top of dental business and tax issues, as well as your particular situation. A CPA’s professional advice and wisdom should extend beyond just the numbers. As Albert Einstein once said, "Not everything you can count, counts; and not everything that counts can be counted!"