A firm specialising in medical accounts will:
Prepare accounts in a standard format ensuring that income and expenses are not netted off. If expenses are set against the income source rather than being shown separately, the true expense of running the practice will be understated. If these accounts are then used by the Review Board this will reduce the pay award.
Compare your practice knowledgeably with other practices, both locally and at a national level.
Be aware of what the accounts should look like and which expenses claims can be made to minimise Revenue enquiries.
Understand what claims should be made and what income is expected and notify you if there are unexpected or missing figures.
Keep abreast of material changes in NHS funding and warn you in advance of how these might affect your practice.
Have systems to ensure an agreed timetable with you to turnaround the accounts (and if charging on a time basis, not charge you for general learning time) whilst waiting long enough to finalise accounts to ensure all income is correctly included.
Understand the complications of VAT and dispensing practices.
Have at least one other person fully up to date with medical accounts so you are not dependant on a single point of contact.
Help you to prepare meaningful budgets and make calculations for available drawings.
Be able to help out on a temporary basis with the finance side of the practice if there is a gap between practice managers.
Errors frequently made by non-specialist accountants include:
Netting off income and expenses.
Miscalculating debtors (amounts due for work done but not received), resulting in the risk of Revenue enquiries and income being allocated to the wrong partners (if there is a partner change from year to year). This also runs the risk of moving income into a higher tax bracket.
Incorrect tax treatment of pension contributions paid or due to be paid, resulting in the wrong tax relief being applied.
Incorrect completion of pension certificates, resulting in adverse affect on final pension payments.
Allocating profits incorrectly, particularly regarding employer pension contributions, this can affect the balances due to or from partners. This often causes problems where one partner has left the NHS pension scheme.
Miscalculating National Insurance contributions where there is a mix of self-employment and employment.
Including income to which PAYE has been applied in the accounts, resulting in the income being taxed twice.
Failing to show capital accounts and current accounts separately so that property ownership is confused.
Neglecting to pre-share items of income that the partners draw as a prior share of profits (so partners’ current accounts become incorrect).
Not understanding pension rules for locums – and incorporating their business without considering the cost of pension lost.
Specialist medical accountants will also be able to provide access to other experts specialising in the medical profession, such as solicitors, valuers and advisers on VAT, capital allowances and independent financial planning, either in-house or through their own network of professional contacts.