Most first-year money problems in a DPC practice come from a handful of habits, not from bad luck. Separate accounts, monthly books, a tax set-aside and a cash floor prevent most of them. Here are the mistakes I see most often and what I'd do instead.
Mixing personal and practice money
Paying practice bills from a personal card, or personal bills from the practice account, makes every one of those transactions a question later. Open practice accounts before you spend the first dollar. Here's why it matters.
Waiting until tax time to do the books
Catching up 12 months of books in March is slower, costs more and finds problems too late to fix them. Monthly books also show you where the practice is heading while you can still act on it.
Skipping the tax set-aside
Nobody withholds tax from your profit. If you take home everything that's left each month, the April bill comes out of next year's cash. Ask your CPA for an amount and move it to a separate savings account every month. This post covers estimated payments.
Pricing once and never looking again
Your opening price was set before you knew your real costs. Look at revenue per member and your costs after six months. Here's how to model a price change before you announce one.
Hiring ahead of the panel
A first hire is a monthly commitment. In a made-up example, a $4,500 a month hire needs 60 members at $75 a month only to cover their cost. If the panel isn't close to supporting it, the hire comes out of your pay or your reserve. This post shows how to test a hire first.
Not knowing the cash floor
A cash floor is the lowest balance you'll let the account reach. Without one, a slow month or a big equipment bill can catch you short. Start with your cash runway.
Recording what you put in the wrong way
Money you put in before opening has to be recorded as a loan or a contribution, and the choice matters later. Here's how to handle it.
What I'd do this week
- Check that every practice cost is paid from a practice account or card.
- Confirm your books are reconciled through last month.
- Set up a monthly transfer to a tax savings account.
- Write down your cash floor and check today's balance against it.
Common questions
I already made some of these. Is it too late?
No. Most of them can be fixed going forward, and a few need cleanup in the books. Start with separate accounts and monthly reconciliation.
When should I bring in a bookkeeper?
Once money starts going out for the practice. Setting up accounts and categories early costs less than fixing them later.
What's the one habit that matters most?
Monthly books that are reconciled to your statements. Every other number depends on them.
Want your first year on solid ground?
We set up your books before you open, reconcile every account every month and send your P&L and Balance Sheet by the 15th. If that's what you need, apply to work with us.