As a medical professional, your primary focus is on providing exceptional patient care. However, to ensure the financial health of your practice, it's essential to pay attention to the business side of medicine, particularly during the critical fourth quarter.

We're sharing our best accounting tips to help you wrap up the fiscal year successfully by ensuring that your fiscal health aligns with your clinical expertise. Keep reading to find out how.

What is my fiscal year?

A fiscal year refers to a period of not more than 12 months used for financial reporting and taxation purposes.

Generally speaking, self-employed individuals (including medical professionals who are self-employed) will have a fiscal year that aligns with the calendar year. This also applies for sole proprietorships, professional corporations that are members of a partnership, and partnerships in which at least one member is an individual, professional corporation, or another affected partnership. In these cases, the first quarter (Q1) is January-March, while Q2 is April-June, Q3 July-September, and Q4 October-December.

In some cases, you may elect to change your fiscal year. If your fiscal year doesn't align with the calendar year, your fourth quarter may not begin in the fall but rather at a different time of year. You can read more here about how to change your fiscal reporting period, depending on your circumstances.

Accounting basics for a year-end review

The fourth quarter of your fiscal period provides a good opportunity for you to review your year's finances and make adjustments to secure a successful future.

Before we dive into specific tips, it's helpful to understand the fundamental components of a year-end financial review. There are three areas where you should focus your attention. The first is on your income and expenses, analyzing them to gauge your practice's profitability. In order to have a clear and accurate picture of your finances, you'll need to have recorded all of your transactions accurately.

Year-end is also the ideal time to implement favourable tax strategies. This can help to maximize your deductions and credits and minimize your tax liability, saving you from paying more in taxes than required.

Finally, review your balance sheet to assess your practice's overall financial health. Are your assets and liabilities in order? Are there outstanding debates or accounts receivable that need attention? Now is the time to focus on tidying this up and ensuring that it's all in order.

Accounting Tips for a Successful Fourth Quarter

Now that you understand the basics of a year-end review, let's dive into tips that can help you navigate the fourth quarter with confidence. This is the ideal time to consider your overall financial health and make adjustments or plans to support your continued growth and success.

During the fourth quarter, it's essential to conduct a thorough review of your accounts receivable. You'll want to make sure you identify any overdue payments and follow up with patents or insurers to make timely collections.

You should also scrutinize your practice's expenses. Are there any discretionary ones that could be reduced or eliminated? Fourth quarter is the ideal time to look for areas where cost-saving measures can be implemented.

If you plan to invest in new equipment or make a significant purchase, consider whether it makes sense to do so before year-end. You might be able to benefit from depreciation or expensing rules. Assess the depreciation of your practice's existing assets and ensure you're capturing all allowable depreciation deductions. This can significantly lower your tax liability.

Some other areas to evaluate include your practice's employee benefits and charitable contributions. You may be considering year-end bonuses or contributions to retirement plans, which can provide tax advantages while boosting employee morale. If you make regular charitable contributions, ensure they're accurately documented so that you receive the necessary acknowledgments for tax purposes.

Finally, reconcile your financial records to make sure that bank statements match your accounting system, and identify and rectify any discrepancies.

Invest in professional support

In addition to year-end accounting considerations, you'll also want to ensure you're on track for investment and growth opportunities, retirement planning, and practice management effectiveness. Managing your practice's accounting can be complex, particularly in the healthcare industry. If you're feeling overwhelmed by the financial challenges and regulations you're facing, it might be time to seek out professional accounting support.

Expert accountants are well-versed in the intricacies of healthcare accounting, from medical billing and insurance reimbursements to tax regulations specific to medical professionals. Furthermore, they understand that your time is valuable. Outsourcing your accounting needs to a professional accountant allows you to focus on patient care and practice growth while feeling confident that your financial matters are being expertly handled.

Accountants are also adept at providing strategic financial guidance that can help you make informed decisions about practice expansion and investment opportunities. Furthermore, they'll employ tax strategies to optimize your financial position, identifying deductions, credits, and incentives that can reduce your overall tax liability.

Finish strong this fourth quarter

The fourth quarter is a critical time for medical professionals. If you're struggling to manage your finances as adeptly as you manage your patients' healthcare needs, now's the time to get the support of a professional accountant who specializes in healthcare accounting. This small investment can make all the difference.

Ensure your practice finishes the fiscal year strong and prepares for a successful year ahead. Follow these tips to end the year on a high note, but don't hesitate to let a dedicated professional handle your financial well being, allowing you to enjoy both the business and the practice of medicine. Remember, your commitment to both patient care and your financial health is key to shaping your success in the medical field.