4 Pharmacy Accounting, Tax Tips

pharmacy accounting

Let’s say you own a coffee shop and you want to prepare the income statement for December 2016. You need to figure out your Cost of Goods Sold — how much you spent on the coffee you sold that month. Let’s also say that on December 1, 2016 a pound of coffee costs you $6, but on December 31, 2016 a pound of coffee costs you $7. There’s of course no way to know exactly which coffee you sold because you just poured it all in the coffee grinder as you needed it. Do you report your cost at $6/pound, $7/pound, or even in the middle at $6.50/pound? This is a very real problem in pharmacy, especially as prices fluctuate drastically, we have open bottles, and it is impractical to record the price for each individual bottle at inventory.

pharmacy accounting

Improving Your Pharmacy Accounting Services

Because pharmacies frequently dispense medications that are covered health insurance policies, a pharmacy accountant will almost always need to keep track of this information. The amounts that customers’ insurance plans will pay versus any remaining sums to be paid out-of-pocket to the pharmacy are usually listed on these financial reports. You’d like to spend the bulk of your day addressing the needs of clients, but sometimes the accounting burdens of running a pharmacy get in the way. You need accounting software built for small businesses to minimize the workload for you and your employees. FreshBooks offers best-in-class accounting tools designed with your pharmacy in mind.

pharmacy accounting

Five Tips To Improve Pharmacy Bookkeeping Processes

If you’re an independent pharmacy owner with revenues of more than $10 million, compliance within IRS Code Section 263A may be required. Section 263A requires resellers, or pharmacies, including controlled groups, with average gross receipts for the prior three years of more than $10 million to capitalize costs into inventory. “It’s like a hidden tax hike on those larger businesses,” Sykes said. As a pharmacist, you look after the health of community members by counselling clients on their medication options.

Pharmacy Accounting, Tax Tips

FreshBooks offers seamless integrations to manage payroll and track inventory directly from your account. Once you have an understanding of your current accounting system, take advantage of any technologies or processes to improve the accounting back office. This will streamline the accounting, provide better integrity in the data and produce timely financial information that you can rely pharmacy accounting on and thus manage your business by looking ahead not backwards. Furthermore, having timely and accurate information will open the door to proactive tax strategies you will not be aware of with a reactive accounting system. Technologies may include cloud-based options such as a hosted accounting file, automated bill paying process and workflow, as well as outsourced payroll processing.

pharmacy accounting

Bookkeeping Software Built for Your Pharmacy

Upper-level management is often tasked with overseeing various operations, including accounting and bookkeeping for pharmacies.
Our program was designed to empower you to take bold yet informed steps in your journey to creating a fulfilling career.
Your accounting should include technology enhancements to streamline your efforts and to make your accounting more efficient, timely, accurate, and transparent.
Remote patient monitoring is one approach that makes it possible to decentralize patient testing for clinical trials and recruit more participants.
The typical pharmacy accountant has a solid understanding of local and national tax laws as they pertain to this industry.

Supplier portals, like McKesson’s PharmaClik, can be used to obtain key information like invoices and billing information that is necessary in the bookkeeping process. By integrating your dispensary with your front of shop systems and syncing them to your accounting software, you can minimize errors and streamline your billing process. You should also make sure that you’re comfortable navigating these platforms and review their different reporting options to meet your reporting needs.

How to Choose Cash or Accrual Basis Accounting For a Pharmacy

We then work with the app for at least a few weeks before deciding whether to recommend it to our readers.
This is all done against a drug patent’s expiration, so time is of the essence in an already lengthy process.
Running a busy pharmacy means you need to be able to do important work from anywhere.
With an automated record keeping program, you can say goodbye to time-consuming manual data entry and be assured that your products are always in stock.

As well, it’s best to heed the expert advice of lawyers who specialize in pharmacy law to avoid issues from inexperienced lawyers. “Instead of waiting, you need to be proactive now,” said Scott Sykes, CPA, of Sykes & Company, P.A., an accounting firm focused on independent community pharmacies. For managers and leaders, you’ve already proven your ability to handle the day-to-day responsibilities. To pivot into this industry, focus on your ability to demonstrate knowledge of pharmaceuticals or a related field.

BETTER BUSINESS. BETTER PHARMACY.

FreshBooks stays in sync across all your devices, so you always have access to the latest financial data.
There are a surprising number of moving parts, so it’s not uncommon for bookkeeping to be backlogged and full of errors.
For participants in low-income or remote areas, for example, companies would need to provide mobile devices and ensure they have sufficient internet speed and connectivity.
We at Fusion CPA have worked with many small and medium-size pharmacies in Atlanta, Georgia, and the US.
If you take gross profit and subtract operating expenses (payroll, utilities, taxes, etc.), you will be left with net income, also known as net profit.
Clients can pay by credit card straight from an invoice with just a couple of quick clicks.

You can create a recurring profile in a few clicks and FreshBooks will automatically send the invoices for you, freeing up your team’s time for more important tasks. Pharmacies need a steady cash flow to pay their expenses and cover payroll. FreshBooks makes it easier than ever for clients to pay their invoices, so you don’t have to waste time chasing down payments. Get paid 11 days faster with convenient payment solutions that work for your pharmacy and your clients.