How to Do Accounting for a New Optometry Practice Without an Accountant

Starting an optometry practice means you must handle accounting yourself, at least initially. You can do it without an accountant by using the right software, setting up a simple system, and staying consistent. This guide walks you through the essential steps, from choosing software to tracking expenses and preparing for taxes.

Step 1: Choose Accounting Software

Your first task is to pick a bookkeeping tool. You need something that handles income, expenses, and invoicing. Here are the top options for a new practice:

• QuickBooks Online: The industry standard. Plans start at $30/month for the Simple Start plan, which includes invoicing and expense tracking. Good for scalability.
• Xero: A strong alternative with similar features. Pricing starts at $13/month for the Early plan, but you may need the Growing plan at $37/month for more invoices.
• FreshBooks: User-friendly, ideal for service businesses. Plans start at $19/month, but the next tier at $33/month offers more features.
• Wave: Free for basic accounting and invoicing. You pay only for add-ons like payroll or payment processing. Good for very small practices.
• Zoho Books: Affordable, starting at $15/month. Includes inventory and project tracking, which can help if you sell eyewear.

Compare these based on your needs. For most new practices, QuickBooks Online or Xero is a safe bet. If you want to minimize costs, start with Wave and upgrade later.

Step 2: Set Up Your Chart of Accounts

Your chart of accounts is a list of categories for your financial transactions. It helps you organize income and expenses. Here is a basic structure for an optometry practice:

• Revenue: Patient services, optical sales, contact lens sales, other income.
• Cost of Goods Sold: Inventory purchases (frames, lenses, contacts), lab fees.
• Operating Expenses: Rent, utilities, salaries, marketing, insurance, equipment leases, supplies, professional fees, and miscellaneous.
• Assets: Cash, accounts receivable, inventory, equipment, and accumulated depreciation.
• Liabilities: Accounts payable, loans, and credit card balances.
• Equity: Owner’s investment and retained earnings.

Most software has a default chart. Customize it to match your practice. For example, separate “Optical Sales” from “Service Revenue” to see which part of your business is more profitable.

Step 3: Track Income and Expenses

You must record every financial transaction. Here is how to do it efficiently:

• Connect your bank and credit card accounts to your software. This automatically imports transactions, saving time and reducing errors.
• Categorize transactions as they come in. Set up rules to auto-categorize recurring expenses like rent or utilities.
• Invoice patients and insurance directly from your software. For patient billing, send invoices with clear payment terms. For insurance claims, use your practice management system, then record the payments in your accounting software.
• Record cash sales from optical sales or walk-in patients. Use a point-of-sale system that syncs with your accounting software.
• Reconcile accounts monthly: Compare your software records to your bank statements to ensure accuracy. This catches errors and prevents fraud.

Step 4: Manage Payroll

If you have staff, you must handle payroll. Options include:

• Payroll services within your accounting software: QuickBooks Payroll starts at $45/month plus $4 per employee. It calculates taxes and files forms.
• Standalone payroll services: Gusto or ADP. Gusto starts at $39/month plus $6 per person. They handle tax filings and direct deposit.
• Manual payroll: You can calculate and pay employees yourself, but you must handle federal, state, and local taxes. This is time-consuming and risky. Avoid unless you have only one or two employees.

For a new practice, using a payroll service is worth the cost. It ensures compliance and saves hours each month.

Step 5: Prepare for Taxes

You need to pay estimated taxes quarterly if you are a sole proprietor or pass-through entity. Here is what to do:

• Set aside money: Save about 25% to 30% of your net income for federal taxes, plus state taxes. Put this in a separate savings account.
• Track deductible expenses: Common deductions for optometry practices include equipment, supplies, rent, utilities, marketing, and professional fees. Keep receipts and categorize them correctly.
• Use accounting software to generate profit and loss statements: This report shows your income and expenses, which you need for tax preparation.
• File quarterly estimated taxes: Use Form 1040-ES. The IRS has a worksheet to calculate your estimated payments. Pay online via the IRS website.
• Consider hiring a CPA for tax filing: Even if you do bookkeeping yourself, a CPA can review your returns and ensure you take advantage of all deductions. This is a one-time cost, typically $300-$600 for a simple return.

Step 6: Monitor Cash Flow

Cash flow is the lifeblood of your practice. You must know your cash position weekly. Here is how:

• Review your cash flow statement in your accounting software. It shows cash coming in and going out.
• Track accounts receivable: Follow up on unpaid insurance claims and patient balances. Use aging reports to see who owes you money.
• Manage inventory: Avoid overstocking frames and lenses. Use inventory reports to see what sells and what doesn’t.
• Create a cash flow forecast: Estimate future cash inflows and outflows for the next 90 days. This helps you plan for slow periods or big purchases.

FAQ

Can I really do accounting without an accountant? Yes, with the right software and discipline. You must be organized and consistent. Many practice owners manage their own books for the first year or two.

How much time does it take per week? Expect to spend 2-4 hours per week on bookkeeping tasks, plus 1-2 hours monthly for reconciliation and reports. Using automation can reduce this.

What if I make mistakes? Mistakes are common. You can correct them by editing transactions or using the audit trail in your software. For tax filing, a CPA can fix issues.

When should I hire an accountant? When your practice grows and you feel overwhelmed, or when you need help with tax planning and financial strategy. Typically, this happens when revenue exceeds $500,000 per year.

The Bottom Line

You can handle accounting for your new optometry practice without an accountant. Choose reliable software, set up your chart of accounts, track everything consistently, manage payroll, and prepare for taxes. This approach saves you money in the short term and gives you control over your finances. As your practice grows, you can bring in a professional for tax filing and strategic advice. Start today by selecting your software and setting up your accounts.

Related guides

• Cash vs Accrual Accounting for New Optometry Practices
• 7 Mistakes New Optometry Practices Make in Their First Year
• 7 Questions to Ask Before Buying a New Optometry Practice