Pharmacy accounting services are an excellent tool for a pharmacy owner to leverage. Pharmacists aren’t taught key business skills as a norm, so often when they open their own pharmacy, they don’t have the knowledge to run their businesses optimally.
So how can pharmacy accounting services help you as a pharmacy owner?
Benefits of Pharmacy Accounting Services
Pharmacy accounting services help you by handling the financial side of your business, so you can spend more time providing the services you are uniquely qualified for. They reduce your administration time, and eliminate the risk of wasted money due to any errors you may unintentionally make, while you do what you do best.
Tax Planning and Tax Returns
A professional can effectively increase your income, by reducing the amount of taxes you are paying. While many tax accounting services will file your tax returns for you and ensure no errors, they are limited by the records you give them and what has already been done. This limits how effective they can be in reducing taxes.
Most pharmacy owners think they are receiving tax planning, but in reality they are only receiving tax filing and overpaying money in taxes every year without even knowing.
To receive the maximum amount of tax deductions and credits you are eligible for, an accounting service that includes more proactive tax planning will have a bigger impact. Strategies can be implemented throughout the year, preferably the earlier the better, when there is time to take advantage of these tax-saving opportunities.
More money kept from taxes provides you with more opportunity to reinvest in the growth of your business to achieve your goals.
Bookkeeping Services
The books for all businesses, especially pharmacies, need to be completely accurate, up to date, and detailed.
Decisions are only as good as the information they are based on, so employing bookkeeping services to accurately track revenue, accounts payable and receivable records, payroll, and ensure other records are accurate, cross referenced, and reviewed, allow for opportunities to reduce expenses.
Using bookkeeping services also helps ensure this is done in a timely manner, and doesn’t get put off until it is too late to take any necessary action, which often happens when a pharmacy owner tries to manage it.
Many owners who do their own bookkeeping make a mess of their books. Often, they use the cash basis of accounting which makes it virtually impossible to separate and compare gross profit margins for the different departments of the store, track the discounts given to patients, track underpaid or rejected billings, any theft occurring, and so on.
Great bookkeeping done by professionals identifies opportunities for revenue growth, sources of money loss, and helps improve your store’s efficiency which is critical when you try to sell the business.
Inventory Management
A good accountant can help you reduce the cost of maintaining inventory. With the expense of maintaining an adequate but not excessive inventory, it is critical to get ordering of quantities just right, so products don’t expire and need to be thrown out, and you don’t waste valuable storage space on items that don’t sell.
Tracking your inventory turnover is critical in managing inventory. On average for a store, 12-13 turns per year is a great number to strive for.
Losing money needlessly due to poorly managed inventory reduces the actual profits from your store. This is especially important for independent pharmacies who already face shrinking rebates and profitability every year.
Financial Reporting to Ensure Financial Goals Are Met
Without clear, actionable reporting, and concrete tracking of benchmarked goals, pharmacy owners have no idea whether they are meeting their goals or improving their financial health, or whether there are key gaps and areas of opportunity where money is being lost unnecessarily.
A regularly updated balance sheet and other reports, provided in time to take action, can provide critical help in financial planning. You know exactly where you stand, and what areas need improvement in order to achieve your goals.
Many owners don’t value accounting services so they go with the cheapest option. This results in little to no reporting or advice given throughout the year. So by the time you get a report, it’s already six months after year-end.
As a result, a lot of owners are operating their stores with blinders on. The top 1% are looking at their numbers weekly or monthly.
Business Planning
For optimal, sustained growth right up to retirement, an accountant can help with business planning strategies and a business plan.
When starting a pharmacy, accountants can help you determine a proper corporation structure, assist with obtaining your bank financing, and create a plan of how many scripts you will need to fill in order to pay the bills.
For existing owners, accountants can help you improve efficiencies in your store so that you receive top dollar at time of sale. For example, helping you benchmark your store to the top 1% of stores of similar size so that you can see the strong and weak areas of your business.
An accountant can even help with retirement and succession planning, which can be a very complex and stressful aspect for most pharmacists.
Importance of Specialist Pharmacy Accountants
While any accounting firm can help with your business, to obtain the maximum potential benefits, find one that specializes in the pharmacy industry.
Specialists often come at a premium to other firms, who tend to charge very cheap. However, the benefits of working with a specialist far outweigh the investment to work with a specialist. When done right, working with a specialist will be your cheapest option in the long run. Here’s why:
Industry Specific Expertise
Not only will a pharmacy accounting specialist know pharmacy-specific tax opportunities, but also what key performance indicators to include in pharmacy accounting – what key areas predict the highest chances of success, and what areas will offer the greatest chances of increasing profitability.
Key Performance Indicators and Benchmarking
Specialists have a better idea of how other pharmacists and their businesses are doing, and what growth, profitability, and reduction in operating expenses are possible.
For instance, cost of goods sold is a critical initial metric for pharmacies, and common in most industries, but in the pharmacy business, inventory turnover, factoring in the cost of goods sold based over the average inventory maintained is especially important.
Staying Current on a Changing Industry
A pharmacy owner knows the industry is constantly evolving and changing, and an accountant that specializes in the pharmacy business does too; however, many generalist accounting firms and accountants don’t have this awareness. They don’t know about key issues that affect pharmacy accounting, and aren’t able to stay up on changes.
Pharma Tax offers the unique, pharmacy-specific accounting expertise you need to provide reliable bookkeeping services, and proactive guidance to help you boost your profits and grow your wealth. We offer tailored solutions to keep you on track to achieving your goals.
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