Announcer:
Hello everyone. Welcome to The Millionaire Dentist podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.
Casey Hiers:
Hello and welcome. This is Casey Hiers back at The Millionaire Dentist podcast in studio with co-host Jarrod Bridgeman.
Jarrod Bridgeman:
Casey, good afternoon. How are you?
Casey Hiers:
Oh, doing great.
Jarrod Bridgeman:
Good. I'm liking your whole jive today. It feels very positive.
Casey Hiers:
Well, we have a special guest here. I mean, we get real excited when we get somebody else in studio with us.
Jarrod Bridgeman:
And it's a real smart fellow too.
Casey Hiers:
Yeah, all those letters.
Jarrod Bridgeman:
That's right. What do you got there? MBA, CPA.
Kevin Rhoton:
I do, yes.
Jarrod Bridgeman:
What else you got?
Casey Hiers:
BA, badass.
Jarrod Bridgeman:
Yeah, BA.
Casey Hiers:
Kevin Rhoton, ladies and gentlemen. Thanks for joining us.
Kevin Rhoton:
Hey guys. Thank you.
Jarrod Bridgeman:
Kevin, you sent me an idea that you wanted to come in and record with us today, and I was like, "I do need someone else smart besides myself to be on the podcast, like Casey." So I loved your headline for this idea. You wouldn't want your CPA operating the drill, why are you operating QuickBooks?
Kevin Rhoton:
Exactly, and I had thought of this actually, probably with... I'll throw a little bone to Casey, just us talking about what we see with practice owners that come through our vetting process. And they spend a lot of time trying to hunt and peck and figure out what they need to do within QuickBooks.
Jarrod Bridgeman:
And from my understanding, QuickBooks has a learning curve to it.
Kevin Rhoton:
Yes, it does.
Jarrod Bridgeman:
It's hard to just step in and know what you're doing.
Kevin Rhoton:
Exactly. Yeah, it's definitely an accountant's software.
Jarrod Bridgeman:
So, nerdy.
Kevin Rhoton:
Yes. If you want to go there, yes. But we were just talking about... I know Casey has talked times about you don't want me poking around in your mouth with a drill or any of their...
Casey Hiers:
Hell, you can barely floss.
Kevin Rhoton:
I do, twice a year.
Jarrod Bridgeman:
Right before your appointment?
Kevin Rhoton:
Right before my appointments.
Jarrod Bridgeman:
That's right, that's right.
Kevin Rhoton:
Or eating popcorn.
Jarrod Bridgeman:
Well, and I feel like some people with their QuickBooks might be the same way. "Oh shoot, I have an appointment with my accountant. I better make sure my QuickBooks are up-to-date as much as I can be."
Casey Hiers:
Well, and first off, QuickBooks, it's a great tool for a business owner. It's a great tool for a dentist or specialist. I mean, it's a beautiful tool.
Kevin Rhoton:
And necessary. Some sort of accounting software is necessary.
Casey Hiers:
That's where the good stuff stops and the challenges start though.
Kevin Rhoton:
Yes. Yeah. And we've talked to many that they have their office hours where they're seeing their patients and then their employees go home, locks up the office, and here the dentist goes back to the office and tries to... "Okay, I've got to update QuickBooks, I've got to-"
Jarrod Bridgeman:
Or even take it home, and try and do it on home hours too.
Kevin Rhoton:
Absolutely. And they're at their desk at home.
Casey Hiers:
Two of the common things I'll hear, I'll hear a spouse go, "I'd love to get my husband or wife back. They're up till 10:00 AM on QuickBooks trying to figure out..." Or it's beautiful in dentistry how you can work four days a week and make good money, but then on that off day, they're in their office doing the business side or trying to do QuickBooks.
Kevin Rhoton:
Trying to do... Yeah, exactly. Spending way too much time on that when an accountant... I mean, I don't want to...
Jarrod Bridgeman:
Well, someone with that specialty, there's a reason why there's all these different fields out in the world in general, is because there's someone better than you in their particular field.
Kevin Rhoton:
I don't try to fix my own cavity.
Jarrod Bridgeman:
You don't tie the string to the doorknob anymore and just...
Kevin Rhoton:
Oh, I hate teeth. I have not pulled a single one of my kid's.
Casey Hiers:
You don't hate teeth, you don't like blood.
Kevin Rhoton:
Whatever.
Jarrod Bridgeman:
So Kevin, let me ask you, what are all the things that is expected of being kept in someone's QuickBooks?
Kevin Rhoton:
Yeah, so I'll preface this by things that we see lacking in practice owners when-
Jarrod Bridgeman:
Some things that are just not kept track of or maybe on board.
Kevin Rhoton:
When they come through the vetting process, we take a look at their books just to give them an overview of what we see is wrong. And many times it's the things like the bank and credit card transactions and reconciliations are not completely put in. All of these that I'll be talking about go to creating a profit loss and a balance sheet which shows you the health-
Jarrod Bridgeman:
Of your practice.
Kevin Rhoton:
... financial health of your practice.
Casey Hiers:
And also should probably tie to your taxes? Is that a...
Kevin Rhoton:
And should tie your taxes.
Casey Hiers:
So this would be the equivalent of you have a patient in the chair, but you have another patient's X-rays up and you're trying to do dentistry. I mean, to sum that up.
Kevin Rhoton:
That's a good analysis, yeah.
Casey Hiers:
Thanks pal. My work is done.
Kevin Rhoton:
Yeah, you can't prepare correct tax returns off of bad financials.
Jarrod Bridgeman:
Right, and I mean, would you say maybe the bank and the credit card transaction stuff, is that almost... I remember when I was a kid, my grandmother, every time she spent anything would open up her checkbook and write in exactly what she spent and where it was. So is that along the lines of that, sometimes people just aren't tracking their actual spending?
Kevin Rhoton:
Yeah. Yeah. And get behind, "Okay, I don't want to do it." Like Casey was saying, on their day off, maybe a Friday, well, they've got something planned for this Friday, so push it off. And all that just builds up. And you get behind, your financials, your QuickBooks doesn't get updated. And a lot of times... I mean, this isn't a dig on them but they don't know how to efficiently get that information in, and that's okay. That's not what they went to school for.
Jarrod Bridgeman:
For sure, for sure.
Kevin Rhoton:
So with us, on a monthly basis, we pull that in electronically. We do all the expense categorizations.
Jarrod Bridgeman:
Okay. So I mean, I get what that is, but what are some examples of some categories that a practice owner may want to implement?
Kevin Rhoton:
There's a lot of non-deductibles, a lot of... What expenses are deductible? What expenses aren't deductible? There's some that are only partially deductible. When you purchase equipment, that is a capital expenditure, that's not just a P&L expense.
Casey Hiers:
How about an au pair or a nanny?
Kevin Rhoton:
Unfortunately, that is not business tax-deductible.
Jarrod Bridgeman:
So with putting your bank and your credit card transactions on there, you're doing your category expenses and you're putting things in different categories. One of the things I'm kind of seeing right off the top that may be a secondary bonus to all this is looking at how much am I spending in each category? Am I spending too much on this particular field? I can compare that personally with my home finances. I have a category for groceries versus fast food versus buying snacks at the gas station and being like, "Maybe I shouldn't buy McDonald's this much."
Kevin Rhoton:
For sure. For our clients, when they come in for their annual meeting and with their monthly emails, we have many tracking metrics of expenses, of overhead, of, "This is where you're at year-to-date or on a monthly basis." Tracking those percentages. "Okay, you're a little bit high here on a trend. What can we do to lower that?" Or, "You're in good shape here-"
Jarrod Bridgeman:
Because we're not going to say the actual numbers, but we do have milestones or rough areas we'd like for people to be.
Kevin Rhoton:
Yeah.
Jarrod Bridgeman:
Yeah.
Kevin Rhoton:
Exactly.
Casey Hiers:
Well, you guys are getting into some good detail, but from my view, the complaints or challenges that I'll hear is, again, the time it takes. And then they spend that time and they put in that sweat equity, whatever you want to call it, and then they are behind, they're inaccurate, they're not right. They don't really tell you anything. It's actually a red flag because like you said, they don't tie to taxes.
Jarrod Bridgeman:
And they're making decisions based on the inaccurate information.
Casey Hiers:
It's like pulling a thread on a sweater and it just keeps going and going and going, and it all goes back to, "These QuickBooks need to be done." Well, now, hopefully our listeners out there are going, "Well, we're covered." A lot of people that think they're covered, when we look at it, what do you see, Kevin?
Kevin Rhoton:
Errors. And again, they don't know what goes where. Putting in a transaction, where does that go? "Okay, I think it'll go here," and when it shouldn't...
Jarrod Bridgeman:
Okay. That's all right. Let's say they're putting in the categories and things like that. Now, they may not know everything 100%. Is there a generic category of branding that might be, "Hey, when I turn this into my CPA," or whatever the case may be, "I really need help with this looked at?" Or is it just every time... I know we do every time look at everything, but let's just say Johnny, CPA down the street.
Kevin Rhoton:
When we look at practice owners' QuickBooks, financials, we see a lot of errors. And what we want to see is for them to leave the business side to us. We go in, we make those adjustments. A lot of our clients don't even touch QuickBooks. We take care of all of the transactions, all of the updates.
Jarrod Bridgeman:
Now, that's not the norm. We kind of go above and beyond, right?
Kevin Rhoton:
Right. Yeah, yeah. Very seldom do you see that in the accounting industry. During the onboarding process, pretty much with all of our practice owners, one of the things I do is I go back to the beginning of the year and do a cleanup of their QuickBooks, and many times there'll be those mistakes on categorizations of, "Okay, this just shouldn't go there. This should go here," and I'll take care of that for all of our new clients that come on.
Jarrod Bridgeman:
And they really appreciate that, I'm assuming,
Casey Hiers:
Kevin, here's a question. If you look at a hundred QuickBooks and financials and taxes, how many are... Let's say, you look at it and go, "Good, these are fairly clean. We can actually move on to some more tax strategies and look to reduce tax liability," versus you look at them out of a hundred and you're like, "Yikes, they need cleaned up in some regard?"
Kevin Rhoton:
I never want to say absolute, so I'll just say-
Casey Hiers:
Yeah, guesstimate.
Kevin Rhoton:
... 99 need some sort of cleanup out of those hundred.
Jarrod Bridgeman:
Okay. And one of the things that Casey and I had touched upon in obviously previous podcast episodes, how hard is it to try and calculate maybe how much your overhead is if your QuickBooks are not cleaned up or up to date or have just wrong information?
Kevin Rhoton:
Yeah, it's impossible.
Jarrod Bridgeman:
It's impossible.
Casey Hiers:
Well, it'd be like your grandma, if she missed a comma or a decimal point, it's close but it's actually completely wrong by a lot, right?
Jarrod Bridgeman:
Yeah, and that's why I got nothing when she died.
Casey Hiers:
Just memories.
Jarrod Bridgeman:
Just memories.
Casey Hiers:
Just memories.
Jarrod Bridgeman:
Just those sweet, sweet memories. Peace out, Granny.
Kevin Rhoton:
Those don't pay the bills.
Jarrod Bridgeman:
That's right. Kevin, with all these things you're talking about, these are just some of the basic things that we want people to cover or to do in their QuickBooks. There's a lot more to it. If a practice owner is out there and is not doing most of these or hardly any of these, what's the first step for them? If they are not working with us currently, they can always give us a call and we can see if they're a right fit to work with us, but what's something that the average practice owner can do today to get on the right steps? Just start doing it?
Kevin Rhoton:
Yeah.
Jarrod Bridgeman:
Maybe have a conversation with their CPA?
Kevin Rhoton:
Have a conversation with their CPA. Ultimately, it needs done.
Jarrod Bridgeman:
Now, a proactive CPA would've came to you in the first place and said, "Hey, we've got some stuff to work on here."
Kevin Rhoton:
Yeah. A lot of times, practice owners, they hire an accounting firm or a tax preparer that they get with January, February, "Here's my QuickBooks file, here's my bank statements."
Jarrod Bridgeman:
You ever had anybody come in with just a box full of receipts for you?
Kevin Rhoton:
We have not.
Jarrod Bridgeman:
Okay.
Kevin Rhoton:
Thankfully. Actually, thankfully with technology, we're able to get access to the electronic versions of things, so we pull that in. Now, some of it is just as messy as bringing in a box of receipts. It's actually that in some cases, that might be even more beneficial than having no receipts at all.
Jarrod Bridgeman:
Right, right. Kevin, anything else you'd like to follow up with today? I appreciate you coming in. You're always a blast to have and to hold.
Kevin Rhoton:
Yeah, I mean, just like you said, contact us.
Jarrod Bridgeman:
You know, what's interesting is we actually do a free tax assessment.
Kevin Rhoton:
We do, don't we?
Jarrod Bridgeman:
Yeah, so give us a call. I mean, we'll take a look at your stuff and we'll give you some baseline things that could be improved or maybe turn around and say, "You're killing it. You're doing an awesome job."
Kevin Rhoton:
Yeah. And best case scenario, we partner together and we take care... We take all of the QuickBooks work off of our practice owners' plates.
Jarrod Bridgeman:
All right. Go to fourquadrantsadvisory.com and you can call the phone number on the website or fill out a form and we'll reach out to you. Also, while you're there, click on the button that says events and check out where we're going to be next. In about one week, we're going to be in Denver in Boulder. Now, sad fact for all you Denver folks who have not registered yet, Denver in fact has sold out. We have no more seats left at the bourbon tasting in Denver, but we do have a handful of seats left for our brunch and CE course happening in Boulder on Friday, so check that out and make sure you register before that one goes too.
After that, we're going to be in several other places, including St. Louis, Boston. We're going to be in Atlanta and a town outside of Atlanta called Milton, which I believe we have a new practice on earth that lives there now. We'd already said we're going to go there, now we've got someone there, which is pretty intriguing. It's pretty fun. Small world. Kevin, once again-
Kevin Rhoton:
Lots of baseball towns.
Jarrod Bridgeman:
Lots of baseball towns, that's right.
Kevin Rhoton:
Catch a baseball game.
Jarrod Bridgeman:
Yeah. Kevin, I want to thank you once again for being here. Casey, thank you so much for being here, and we'll see you all later.
Kevin Rhoton:
Thanks.
Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information, and thank you to you, the listener for tuning in. The Millionaire Dentist podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to fourquadrantsadvisory.com and see why year after year they retain over 95% of their clients. Thank you again for joining us, and we'll see you next time.
