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Daily and monthly aspects of pharmacy accounting and tax preparation and planning can be complex and difficult. Proper pharmacy accounting comes down to making sure your books are current, have integrity, and operate efficiently.
In order to address the many complex areas of pharmacy accounting, it is vital to have a solid foundation to work with. This enables you to take advantage of tax planning opportunities, better manage your business, streamline daily processes, enhance controls, and stay proactive in today’s complex pharmacy industry.
A solid pharmacy accounting foundation begins with making sure your accounting system ties into your tax returns. Often, when a certified public accountant (CPA) prepares a tax return for a pharmacy owner, the CPA makes adjusting entries in his or her copy of the books, but does not update the set of books at the pharmacy. As a result, there are two sets of books. If this is happening at your pharmacy, you must correct it. Your accounting system should be the only set of books available. To make the process more efficient, you need to use technologies that allow your accounting file to be shared simultaneously, without backing up files or sending them to the CPA via flash drive.
Once your tax returns are reconciled to the books, which can be extremely complex, the next step is to start reconciling the balance sheet. This involves going through each and every balance sheet account and reconciling, which can be quite complex depending on the condition of your books. For example, you may be several years behind in bank reconciliations or you may have several dozen outstanding checks that have not cleared your bank account.
How you handle these examples is important. Your accounts payable function may have bills outstanding from 2015, sitting as owed to the vendors, when in fact they are current. The list of potential issues can go on and on, but making sure each account is reconciled is crucial to updating your accounting foundation and bringing integrity to the system.
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Once you have cleaned up the accounts to date and have a solid foundation to start with, the next step is to implement daily and monthly processes so you do not fall behind again. This includes making sure daily point-of-sale reports are entered and the bank account is reconciled to those reports. It also entails streamlining the payable process using technologies that create a timely workflow system and sync directly with the accounting system on a daily basis.
Outsourcing payroll is an option you should consider. Payroll is complex and time consuming. Outsourcing it will allow you to import the payroll entries with a click of a button, saving you time and money.
These daily processes and technologies allow an experienced pharmacy CPA to make the necessary accounting and tax adjustments at the end of each month. You end up with timely financial data that will keep you in control of your pharmacy.
It is important to have a CPA who is experienced in pharmacy accounting. The value their experience in dealing with the special business needs of a pharmacy will pay dividends to you and your pharmacy. Having a CPA and a current accounting system as your solid foundation is paramount to enhancing controls and management, staying proactive and getting ahead.