Tuesday, November 22, 2011

Are Quarterly Prepared Dental Financial Statements Worth the Cost?

My accountant recommends doing quarterly financial statements.  I agreed to this for the first 2 quarters so far but what I have received from them is not too much different than what Quickbooks will generate for me.  They do calculate the assets and liabilities which I can't do accurately with depreciation, but actually expenses/income report are not that much different than what I can generate with the push of a button.

They said it would make doing my tax return take more time (and money obviously) if I don't do quarterly financials.

So, should I keep paying about $500 a quarter to do financials or not?

1. Do you "need" the balance sheets every quarter? When they're prepared how do you use them?
2. Can't you record the depreciation quarterly in QuickBooks? (The answer is yes.)
3. How much more would it cost to prep the tax return without the quarterly financial statements? $2,000 more?  I doubt it

25 years ago before practices had access to software like QuickBooks and Quicken we were doing monthly or quarterly financial statements because this was the ONLY was the practices could see their Profit & Losses. Even then, what we learned was many wouldn't even read them. They would wait for our mid-year and year-end meetings for us to review them with the client and explain them.

Once practices had access to QuickBooks and the like, the "need" for us to prepare CPA financial statements decreased drastically and we were the ones that went to the clients & said "Do you really want to pay us for these when you can generate the same information yourself?" Many agreed and that's why the majority of our clients don't want or need us to prepare CPA financial statements. Just about the only time we do it now is when a bank requires it.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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