California dental owner guide
Monthly Accounting & CFO Support for Dentists
Monthly accounting should produce reconciled, tax-ready books and a reliable decision package. Fractional CFO support should use those records to forecast cash, explain changes, model owner decisions and confirm that agreed actions were completed.
What services should a dental CPA provide each month?
Monthly dental CPA services can include reconciled books, exception review, financial statements, payroll and owner-compensation coordination, cash-flow reporting, tax projections, decision meetings and follow-through. The written scope should identify which services are included, who performs the work, who provides final CPA review and what requires a separate engagement.
Bookkeeping records transactions. Monthly accounting closes and reviews the books. Fractional CFO support uses the closed books and operating data to make forward-looking decisions. A dental practice may need all three functions, but they should not be described as interchangeable.
As of August 2026
The monthly package should connect accounting to decisions.
- Close and reconcile cash, credit cards, loans, payroll and major balance-sheet accounts.
- Review exceptions instead of merely producing reports.
- Connect accounting data with production, collections, A/R and provider information.
- Translate the results into cash, tax, compensation, debt and investment decisions.
What financial reports should a dental practice review monthly?
A dental practice should review a reconciled profit and loss statement, balance sheet, cash-flow view, accounts-receivable aging, production and collections by provider, payroll and provider compensation, adjustments and write-offs, debt, and a short KPI dashboard.
| Monthly report | Decision it supports | Warning sign |
|---|---|---|
| Profit and loss | Profitability, expense trends and budget variance | Profit changes with no clear operational explanation |
| Balance sheet | Cash, debt, equipment, credit cards and owner equity | Unreconciled loans, negative balances or stale accounts |
| Cash-flow view | Liquidity, taxes, debt and owner distributions | Accounting profit rises while bank cash falls |
| A/R aging | Patient and insurance collection work | Older balances grow faster than collections |
| Production and collections | Provider capacity, payer mix and future cash | Production increases without matching collections |
| Payroll and provider compensation | Staffing, associate economics and owner salary | Payroll rises faster than sustainable collections |
| Debt and capital schedule | Financing, equipment and acquisition commitments | Near-term payments exceed forecast cash capacity |
What does a disciplined dental-practice monthly close include?
A disciplined dental-practice close confirms that the accounting period is complete before the reports are interpreted. A report generated from unreconciled records is not a finished monthly close.
| Close step | Control | Output |
|---|---|---|
| Cash and credit cards | Reconcile every bank and card account | Confirmed cash and complete spending |
| Payroll | Match payroll reports, taxes and books | Reliable labor and owner-compensation totals |
| Loans and equipment | Separate principal, interest and asset additions | Correct debt and fixed-asset balances |
| Revenue reasonableness | Compare deposits with collections and operating reports | Exceptions requiring investigation |
| Balance-sheet review | Clear stale, duplicate and unsupported amounts | Tax-ready supporting schedules |
| Management review | Explain material changes and assign actions | Decision memo or meeting follow-up |
Profit is not bank cash
How can a dental practice improve cash-flow visibility?
A dental practice can improve cash-flow visibility by combining a reconciled monthly close with a rolling 13-week cash forecast. The forecast tracks beginning cash, expected patient and insurance collections, payroll, vendors, debt, taxes, capital spending and owner distributions by week.
A 13-week forecast is long enough to expose quarterly taxes, three-payroll months, insurance delays and major purchases, while remaining short enough to update from current facts. The forecast should show a minimum cash threshold and name the action required if projected cash falls below it.
What does a dental cash-flow bridge show?
A dental cash-flow bridge explains why accounting profit and bank cash moved differently during the month. The bridge prevents an owner from treating profit as immediately distributable cash.
| Illustrative monthly cash bridge | Amount |
|---|---|
| Beginning bank cash | $180,000 |
| Operating cash generated | $95,000 |
| Loan principal payments | ($18,000) |
| Equipment deposit | ($40,000) |
| Estimated tax payment | ($32,000) |
| Owner distributions | ($45,000) |
| Ending bank cash | $140,000 |
This illustration shows positive operations but a $40,000 decline in bank cash because debt principal, equipment, taxes and distributions use cash without appearing as ordinary operating expenses in the same way.
Follow the money
Why does your dental practice show a profit but have little cash?
Accounting profit and available cash answer different questions. On accrual books, revenue may be recorded before it is collected. Depreciation reduces profit without a current cash payment. Equipment purchases, loan principal and owner distributions can use cash without reducing that month's operating profit in the same way.
A hypothetical month: $30,000 profit, $2,000 more in the bank
This simplified accrual example is not a client result or industry benchmark. The practice recognizes $120,000 of revenue, with $50,000 of payroll and benefits, $35,000 of other cash operating expenses, $1,000 of interest and $4,000 of depreciation. Accounting profit is $30,000. Collections are $115,000, so receivables increase by $5,000.
| Item | Amount |
|---|---|
| Accounting profit | $30,000 |
| Add back depreciation | +$4,000 |
| Increase in receivables | −$5,000 |
| Cash after operating payments | $29,000 |
| Equipment paid in cash | −$8,000 |
| Loan principal paid | −$7,000 |
| Owner distributions | −$12,000 |
| Net increase in cash | $2,000 |
Starting cash of $40,000 becomes $42,000. The practice earned a profit, but most of the cash was collected later or used for other payments.
Example assumptions: All cash operating expenses are paid this month, with no other working-capital changes. Interest is already included in operating payments and is not deducted twice. Equipment is capitalized for this book example; no tax deduction is assumed. Income-tax payments and other obligations are not modeled, so the ending bank balance is not automatically available to distribute.
Your monthly conversation
Five measures to review before your next cash decision
- Cash collected: Track actual receipts, not gross production.
- Receivables aging: Identify overdue or disputed balances and who will follow up.
- Payroll and benefits divided by collections: Keep the definition consistent, including the treatment of owner payroll.
- Other cash overhead divided by collections: Exclude payroll to avoid duplication and define whether interest is included.
- Projected available cash: Include reserves, taxes, debt payments, equipment and other upcoming commitments.
Compare these measures with your own history. They are not universal targets. A change in a ratio may reflect collection timing; investigate the reason before deciding what to change.
Leave the review with one number to investigate, a person responsible and a due date. Bring financial statements, receivables aging, loan details and upcoming obligations to that conversation.
JH Group CPA provides bookkeeping and part-time CFO services to dentists and dental practices. Explore coordinated dental accounting and advisory services to see how monthly reporting connects with owner decisions. The intro call confirms fit and scope; detailed review and recommendations require a defined engagement.
What is a fractional CFO for a dental practice?
A dental fractional CFO converts accounting and practice-management data into forecasts and decisions without serving as a full-time employee. The role can include cash forecasting, profitability analysis, financing models, compensation planning, acquisition support and accountability for implementation.
| Role | Primary responsibility | Typical deliverable |
|---|---|---|
| Bookkeeper | Record and reconcile transactions | Updated ledger and reconciliations |
| Monthly accountant | Close, review and explain the books | Financial statements and exception report |
| Tax CPA | Tax compliance and documented planning | Returns, projections and tax decisions |
| Fractional CFO | Forecast and model business decisions | Cash forecast, scenarios and action plan |
A practice does not need a fractional CFO merely because the title sounds senior. Fractional CFO work is useful when the owner faces recurring decisions that require reliable forecasts, cross-functional coordination and follow-through beyond tax-return preparation.
What should a dentist review before buying expensive equipment?
Before buying equipment, a dentist should model utilization, incremental collections or savings, training and downtime, financing, maintenance, software, consumables, taxes, working capital and the effect on cash reserves. A tax deduction does not make an uneconomic purchase profitable.
For example, a $150,000 system expected to contribute $5,000 of monthly cash before financing produces $60,000 annually only if the expected case volume occurs. The owner should test lower utilization, recurring costs, loan payments and the delay before staff can use the equipment efficiently.
Changing bookkeepers or CPAs
How does a dental practice transition to a new accounting firm?
A dental-practice accounting transition should begin with a controlled handoff, not immediate recurring entries. The new firm should obtain prior returns, the general ledger, reconciliations, payroll reports, loan statements, fixed-asset schedules, sales-tax or local filings when applicable, system access and a list of unresolved deadlines.
The initial review determines whether opening balances agree with prior returns and source records. If bank, credit-card, payroll, loan, fixed-asset or owner-equity balances are unreliable, cleanup should be scoped and priced separately from ongoing monthly accounting.
- Confirm every entity, return, bank account, card, loan and payroll account in scope.
- Identify the last reliably reconciled month and every open filing deadline.
- Transfer access through secure invitations rather than shared passwords.
- Document missing records and unsupported balances before recurring work begins.
- Set the monthly document deadline, close date, responsible team and communication channel.
How should bookkeeping, tax preparation and planning be separated?
A coordinated CPA relationship can cover several services, but the written scope should price and define each responsibility separately. This prevents recurring bookkeeping from being mistaken for historical cleanup, tax-return preparation or transaction advice.
| Service | Primary output | Separate-scope trigger |
|---|---|---|
| Monthly bookkeeping and accounting | Reconciled ledger, financial statements and exception review | New entities, added locations or unusual volume |
| Accounting cleanup | Corrected historical balances and supporting schedules | Unreconciled or missing prior-period records |
| Business tax preparation | Complete entity return and tax workpapers | Late, amended or multi-state filings |
| Individual tax preparation | Owner return integrating practice, investments and real estate | Complex transactions or additional returns |
| Tax and real-estate planning | Projection, alternatives and written action steps | Purchase, refinance, sale, exchange or ownership change |
Communication expectations should identify the secure document channel, routine response target, responsible team member, meeting frequency and situations that require a scheduled advisory review.
What should the monthly accounting engagement define?
- Accounts, entities and systems included in the close
- Client document deadline and expected reporting date
- Reconciliations and balance-sheet schedules provided
- Financial statements, KPIs and cash forecast included
- Payroll, owner compensation and tax-planning responsibilities
- Meeting frequency, attendees and written follow-up
- Who performs the work and who provides final CPA review
- Out-of-scope projects and authorization process
- Secure document exchange and access controls
- Implementation owner for every agreed action
Frequently asked questions about dental accounting and fractional CFO services
What services should a dental CPA provide each month?
Monthly dental CPA services can include reconciled books, exception review, financial statements, payroll and owner-compensation coordination, cash-flow reporting, tax projections, decision meetings and follow-through. The written scope should identify which services are included and who performs each task.
What financial reports should a dental practice review monthly?
A dental practice should review a reconciled profit and loss statement, balance sheet, cash-flow view, accounts-receivable aging, production and collections by provider, payroll and provider compensation, adjustments and write-offs, debt, and a short KPI dashboard.
How can a dental practice improve cash-flow visibility?
A dental practice can improve cash-flow visibility by combining a reconciled monthly close with a rolling 13-week cash forecast that tracks beginning cash, expected collections, payroll, vendors, debt, taxes, capital spending and owner distributions by week.
What is a fractional CFO for a dental practice?
A dental fractional CFO converts accounting and practice-management data into forecasts and decisions without serving as a full-time employee. The role can include cash forecasting, profitability analysis, financing models, compensation planning, acquisition support and accountability for implementation.
How does a dental practice transition to a new accounting firm?
The new firm should obtain prior returns, reconciliations, payroll and loan records, fixed-asset schedules, system access and open deadlines. An initial review determines whether the books can move into recurring monthly work or require a separately scoped cleanup.
What happens if a dental practice's books need cleanup?
Cleanup is separate from recurring monthly accounting. The scope should identify the affected periods, missing records, unreconciled accounts, unsupported balances and the deliverables needed for reliable reporting and tax preparation.
What should a dentist review before buying expensive equipment?
Before buying equipment, a dentist should model utilization, incremental collections or savings, training and downtime, financing, maintenance, software, consumables, taxes, working capital and the effect on cash reserves. A tax deduction does not make an uneconomic purchase profitable.
Related authoritative guidance
- IRS: S corporation compensation and medical insurance issues
- American Dental Association: Practice finance resources
- California FTB: 2025 S Corporation Tax Booklet
General educational information only. Numerical examples are illustrations, not budgets, forecasts or individualized tax conclusions. Reliable recommendations require complete accounting records, operating data and current facts.
Local dental accounting connections
Dental-practice owners can review the verified JH Group CPA office relationships on the Orange County dental CPA page and Los Angeles County dental CPA page. Each page identifies the local office, service boundaries and intro-call preparation steps.
Turn monthly accounting into a decision system.
See how monthly accounting, tax preparation and real-estate planning can be coordinated, then use the intro call to confirm fit, urgency, decision authority and the next paid step.
Explore the Coordinated Dental CPA Service