It's Nothing Personal
At the last office where I worked, the staff was smaller, and there were only two doctors. One of the doctors was younger and fairly new, so much of the practice revolved around the older, more established one, and he was a handful.
We had a professional bookkeeper, but they often were unable to decipher the main doctor's credit card statements to determine which expenses were personal and which were professional. It was eye-opening to sift through the various charges--sometimes we learned more than we wanted to know--but it was also fairly time-consuming.
One year the IRS came knocking, and it wasn't pretty. Several of the expenses we listed under business got re-categorized to personal. The bookkeeper lost their job, and I was put on notice.
Afterward, the new bookkeeper we hired did a very simple thing to correct our muddle. They opened a credit card account for the practice, and forbid the doctors to use their personal cards for anything business-related. Having an account strictly for business purposes made everything clear and understandable.
It's important, especially in a smaller practice, to not let the doctors mix business with pleasure. Keeping clearly defined records are your best protection in the case of a potential audit.
Of course, I'd be very interested to learn of your experiences regarding this type of thing. Please feel free to leave a comment.
posted by Anne @ 7:44 AM
2 comments
2 Comments:
Our physicians are much like yours - we don't always get detailed receipts and the explanations that should accompany them. As a result, we do not allow any physicians to have a corporate card. All physicians must submit the expense item with original receipt and if it is a meeting during which food is served, a listing of individuals present and the purpose of the meeting. With respect to any professional organization meetings, the staff will use the corp card to purchase registration and airline tickets on behalf of the physician. The doctors have the option to either give us their personal card info to reserve their room or they may reserve the room on their own. Nearly all books and journals are purchased on behalf of the physician using the corporate card. The staff know to retain receipts and other necessary documentation. The physicians know that if they do not submit original receipts, they will not be reimbursed. It works perfectly – we are never in violation of IRS guidelines. The physicians have never complained.
After reading these two blogs, my advise is to reevaluate your legal and financial counsel (namely the accountant that allows for these things to go on.) It seems obvious to me that a business credit card should not be abused for personal gain and the physicians should be smart enough to recognize that. If there isn't a business credit card - there should be one. This card should be used ONLY for business purposes.
Furthermore, every business needs to establish credit - much like any individual old enough to have a card. Not only that - the business needs to develop good credit history for expansion and financing activities. Mixing personal and business activities is only asking for trouble and an orange jumpsuit.
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