The Impact of Proactive Accounting on Independent Pharmacies
While most accountants can manage basic bookkeeping and provide you with standard monthly accounting, working with a pharmacy-specific accountant provides you with insight that can help your pharmacy perform at its best. In this video, Bonnie Bond of Sykes & Company, P.A. discusses why it’s important to work with a pharmacy accountant that understands pharmacy operations and KPIs specific to pharmacies. Benefits include:
• Proactive accounting on a monthly basis;
• Pharmacy advisory services that translate into growth opportunities; and
• Industry performance metrics.
Find out what to look for in a pharmacy accountant and how they should be working with you on your behalf.
If you prefer to read this content, the video transcript is below.
Why is it important for a pharmacy owner to work with an accountant who has pharmacy specific experience?
There are a lot of great CPAs out there all over the country. We would never say anything different than that. Unfortunately, many of us in our profession are historians. The end result of your tax return or your financial statements may be great, it’s just gonna be, when do you get them?
The most important thing is to have accurate, up-to-date, real-time information, and that’s the key. That’s the thing what a lot of local CPAs or accountants lack in that industry to help pharmacists. It’s a re-creation of data. You may have a situation where you’re set up right now where you’re taking a box of receipts to your local CPA and they’re re-creating that information a month or two out after the fact. Or you give them your bank statement from that month, they’re key in that information weeks later, and months down the road, you finally get a financial statement. That’s not what we’re looking for.
You need a CPA that can provide that information to you quickly. Proactively, that’s the word. You need your monthly numbers. You don’t need them quarterly or at the end of the year at tax time. You need them at the end of each month as quickly as possible. To do that and to be proactive, you need your bank accounts reconciled daily or at least by the end of the week. You need all of your notes and loans tied in at the end of each month. You need to be on a perpetual inventory system in where you can provide your accountant or CPA a report that shows them exactly what your inventory balance was at the end of the month so they can tie that in to the financial statements because we all know that that drives the gross profit. Your accounts receivable third-party. You need a reconciliation service that can also provide you with a month-end report of those receivables that are outstanding. Those numbers can be tied in as well.
What we’re shooting for is an accurate picture of how the pharmacy is performing and where it stands. We need that information monthly to consult with that CPA and accountant to know how everything is working and how the pharmacy is operating to be able to make good, sound business decisions.
How often should you hear from your accountant or CPA?
With this proactive information that you’re hopefully getting, you should be hearing from them at a minimum on a monthly basis to go over those numbers, to consult about the numbers that you’re seeing. That’s what’s super important about this. You definitely shouldn’t be with a CPA or an advisor that’s calling you during tax time once a year to let you know that you need to write a check for a certain amount of money and you have this big surprise that you had no idea was coming.
This is a year-long process. It’s a process that, again, should be with monthly meetings to discuss the numbers, the trends. It should all roll into a tax plan.Here in our firm, we start working with our clients towards the last quarter of the year with tax planning; we’re heavy with that. We’re really looking at exactly how things have operated in the pharmacy on a personal level, what your income looks like. We’re tying all that information in. We’re making estimates for the remainder of the year so that we can really truly see how things are gonna fall when we do your tax return, both your corporate return and your personal return.
At that point, then, we can start having discussions and make some decisions on some things that could mitigate that tax for you moving into the end of the year. There shouldn’t be any surprises when we do tax return. That’s just gonna be a by-product of the year. Again, a yearly process.
By the end of the year, you’re gonna know what your tax looks like, what you can do to mitigate it, some different options like retirement plans, maybe some conservation easements, maybe there’s some equipment that needs to be purchased to bring that tax down. And then extensions really aren’t necessary unless you have a specific reason, a certain year that personally you need one. Or maybe you did an easement and that information isn’t out yet. But as far as, if you have a proactive CPA or accountant that’s working with you throughout the year, again, that tax return is really just a by-product of all the consulting that’s gone on during the year. You know what it’s gonna look like, and it’s just completed and done on time.