Whether you’re a 1099 healthcare professional or running your own practice, juggling paperwork, bills, and payroll probably isn’t the best use of your time.
The catch-22? accurate bookkeeping is non-negotiable—it’s key to keeping your business healthy and thriving.
At Traktion, we help healthcare professionals manage their bookkeeping. It’s what we do every day!
We’ve pulled together our 5 favorite tips for healthcare bookkeeping based on what has consistently worked for our clients.
If you’re handling your own books, these tips will help you avoid costly mistakes and make month-end as well as year-end a bit smoother.
Let’s dive in!
Keep business & personal expenses separate
When you’re just starting out in healthcare, it can be tempting to pay for both business and personal expenses from the same account. But trust us, keeping everything in one place is only going to make your bookkeeping messier. You might accidentally claim a personal purchase as a business expense, which could lead to unwanted IRS scrutiny.
A simple fix? Open a separate bank account for your healthcare practice, and while you’re at it, consider applying for a business credit card. This will keep everything neat and clear for tax season, saving you a ton of hassle.
If you’re still sorting through mixed transactions, take some time at the end of each month to categorize everything properly until your new accounts are set up.
Choose the right bookkeeping software
We’re big fans of QuickBooks because it’s easy to use, especially for healthcare professionals who may not have a background in accounting. QuickBooks Online (QBO) helps you track your income, expenses, and even invoices, so you don’t miss a beat. It’s a solid option if you’re just starting out, whether you’re a 1099 contractor or running a small practice.
If you’re currently using QuickBooks Online Self-Employed (QBO SE), upgrading to a more advanced version of QuickBooks might be worth it as your business grows. QBO SE is great for freelancers and simple tracking, but it lacks some key features like tracking equity and managing accounts payable—tools that become more essential as your practice expands.
When you’re ready to upgrade, think about what your growing practice will need. QuickBooks Online Simple Start is a solid choice for basic bookkeeping. If you need more advanced tools like managing bills or tracking time, QBO Essentials might be the way to go. Investing in the right software early can save you a lot of headaches down the road.
Stay HIPAA compliant
As a healthcare professional, staying HIPAA compliant is critical, especially when handling sensitive patient information. Under HIPAA, you’re required to safeguard any Protected Health Information (PHI), and failure to do so can lead to hefty fines or even jail time.
For instance, in 2021, penalties reached up to $15 million for violations. But even with the best intentions, you might not always realize what could be a violation—like using online accounting software that doesn’t properly protect your patients’ data.
While many healthcare professionals use tools like QuickBooks Online for bookkeeping, it’s important to note that QuickBooks isn’t HIPAA compliant. In fact, most aren’t.
That doesn’t mean you can’t use it for managing your finances, but you’ll want to pair it with a HIPAA-compliant Electronic Health Record (EHR) system like SimplePractice or TherapyNotes. These platforms can securely handle patient payments and PHI while allowing you to transfer financial data to your accounting software.
Here are a few key steps to keep your practice in line with HIPAA regulations:
- Invest in secure software: Don’t skimp on software for accounting, medical recordkeeping, or practice management. Reputable programs may cost more but are worth the investment to keep your patient data—and your license—safe.
- Use strong password protection: Consider password management tools like 1password or Keeper Security to add an extra layer of security to your accounts.
- Avoid public WiFi: Conducting online sessions or processing payments over public networks exposes you to cyberattacks. Always stick to your own secure internet connection.
Pay attention to your bank feed
When it comes to bookkeeping, the saying “Garbage In, Garbage Out” couldn’t be more true, especially with your bank feed. If you’re blindly accepting every transaction that comes through without reviewing it, you’re setting yourself up for trouble. Duplicate entries, incorrect categorizations, and inaccurate financial reports can all result from letting the wrong information slip through.
To keep your books accurate, it’s essential to review your bank feed carefully and make sure each transaction is categorized correctly.
Whether it’s a business expense, income, or something personal you accidentally paid for with your business card, taking the time to accurately categorize it can save you big headaches later.
Yes, it might take a little extra time now, but it’s much easier than trying to untangle messy books down the line.
By staying on top of your bank feed, you’ll ensure your financial reports reflect reality, helping you make smarter decisions for your business.
Get help from a bookkeeper who specializes in healthcare
Last but not least, when it comes time to outsource your bookkeeping work, make sure you go with one who specializes in healthcare.
Hiring a generic or local bookkeeper may seem like an easy option, but when it comes to the healthcare field, you want someone who understands the specific challenges and nuances of your industry.
They’ll know exactly how to manage tricky areas like insurance reimbursements and patient refunds, which can be complicated and lead to bigger issues if not handled correctly.
Those little mistakes can add up, potentially causing inaccurate reports, missed tax deductions, or even compliance problems.
But with a healthcare bookkeeper, you get someone who’s already familiar with all the industry-specific details, saving you time, money, and stress.
In the end, it’s about having fewer errors and more confidence in your financials, knowing they’re in the hands of someone who truly understands your practice.g fewer errors and more confidence in your financials, knowing they’re in the hands of someone who truly understands your practice.
Ready to outsource your healthcare bookkeeping?
If you’re constantly putting off your monthly bookkeeping or wondering where all the money in your practice is going, it might be time to hand off your bookkeeping duties. After all, accurate and transparent numbers are key to the financial health of your business.
That’s where we come in at Traktion! We specialize in healthcare bookkeeping, handling everything from monthly reports to bill pay, accounts receivables, and even financial coaching.
Curious about how we can help? Schedule a quick call with one of our team members by visiting our contact page.
Until next time!