How to Prepare Your Dental Practice for CPA Review
CPA review does not have to be a scramble. With proper preparation, you reduce costs, accelerate completion, and avoid surprises.
📚 Part of our reconciliation series: This article is part of The Complete Guide to Dental Practice Reconciliation, our comprehensive resource on closing your books accurately and preventing revenue leakage.
Why Preparation Matters
Unprepared practices cost themselves money. When your CPA must hunt for information, reconcile messy accounts, and investigate discrepancies, you pay for that time. Prepared practices pay for value-added work like analysis and advice rather than detective work and cleanup.
Good preparation also reduces stress, accelerates completion, and builds a better relationship with your accountant.
What Your CPA Needs
Financial records form the foundation of CPA review. Provide complete bank statements for all accounts for the full year, credit card statements for all practice cards, loan statements showing activity and balances, and investment and retirement account statements.
Practice management system reports should include monthly or annual production reports, collection reports by payment type, adjustment reports with reason codes, and accounts receivable aging at year-end.
Payroll information should include all payroll reports for the year, W-2s and W-3 summary, 1099s for contractors, and quarterly payroll tax filings.
Business records should include copies of major contracts and leases, equipment purchase invoices, insurance policies and premium payments, and legal documents for any entity changes.
Preparing Your Books
Reconcile bank accounts for every month of the year before the CPA arrives. Every account should show a zero reconciling difference with all outstanding items explainable.
Clear up unidentified deposits by researching and identifying the source of every deposit in your accounts. Unidentified items create questions and delays.
Review AR for accuracy by ensuring your accounts receivable reflects reality. Write off uncollectible amounts with proper documentation before review.
Document unusual transactions by preparing explanations for anything that might raise questions such as large or unusual expenses, related party transactions, or significant adjustments.
Common Issues to Address
Personal and business mixing creates complications. Separate any personal expenses that ran through business accounts and document any legitimate business use of personal funds.
Fixed asset records often need attention. Verify your asset list is current by adding new purchases and removing disposed items.
Payroll issues can delay the entire review. Verify all payroll reports reconcile and address any discrepancies before review.
Missing documentation slows everything down. Gather invoices and receipts for significant expenses before your CPA needs to ask.
Organizing for Efficiency
Create a submission package organized logically by category. Group bank statements together, payroll documents together, and so on. Use clear labels and consistent organization.
Provide digital files when possible because electronic documents are easier for CPAs to work with and reference.
Include a cover memo summarizing what is included, noting any unusual items, and listing questions you want to discuss.
Set a submission deadline with yourself and meet it. The earlier your CPA receives materials, the smoother the process.
The Review Meeting
Come prepared with questions about your financial performance, tax planning opportunities, and areas for improvement.
Bring additional documentation that might be requested based on typical CPA questions.
Take notes on recommendations and follow-up items.
Discuss next year by asking what you can do throughout the year to make the next review easier.
Year-Round Practices
Monthly reconciliation of all bank accounts prevents year-end scrambles.
Organized documentation filed as you go makes year-end assembly easy.
Quarterly check-ins with your CPA catch issues early and spread the workload.
Good bookkeeping throughout the year minimizes CPA cleanup time and cost.
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