Good Accounting for Tax Planning Strategies
Good accounting goes beyond daily, weekly and monthly reconciliations and cash flow management. It also supports your pharmacy business decisions and tax planning.
In this video, Scotty Sykes, CPA, CFP® provides an overview of how good accounting practices can lead to better overall business management while mitigating tax impacts.
Independent pharmacies with a pulse on their accounting have been able to quickly mobilize and add supportive patient services such as testing and vaccinations. They are also ready for tax planning opportunities that help them manage future tax liabilities.
If you prefer to read this content, the video transcript is below.
Scotty Sykes – Well, what is good accounting, first of all? So good accounting is essentially having those daily, weekly, monthly processes in place, where you’re getting timely information, accurate information, information with integrity. And that would include the daily point of sale reconciliations, the bank reconciliations, credit card reconciliations, payroll, accounts payable. All those individual components there build up that fundamental system. And once you have that fundamental system in place, then that’s where that good accounting right there can really make you more money. Because when you have good solid data and good solid information month in, month out, you can use that information to better plan, to better understand what’s going on, to use your time and your pharmacy accounting as an asset to shift or change how you’re doing things, to modify how you’re doing things.
I mean, we saw pharmacies quickly modify and evolve their operations with COVID that hit, whether they were able to quickly jump into testing or quickly get into the vaccinations, modify their workflows. I mean, they all knew exactly what they could and couldn’t do. They had their finger on the pulse from an accounting standpoint; they knew their resources that were available and were able to act quickly.
So that good accounting is very important from the management perspective, but also from a cash flow perspective. And we’re talking about what you know you’ve got coming in, what you know is going out. Again, you have your finger on the pulse there. But it also allows you to be able to do that proactive tax planning to mitigate tax, expand your cash flow that way, so you’re not getting surprised on April 15th. You know what April 15th is gonna look like. You know months ahead of time. So you can plan for that cash outlay if it’s something you’re facing and incorporate that into your models and into your planning overall, in addition to all the other tax planning opportunities that can come with good accounting, retirement planning, charity planning, whatever it may be.
So good accounting is the foundation for really all successful businesses, but particularly for successful pharmacies and expanded cash flow.