AMAs help with accounting Accounting- methodical recording, classifying, and summarizing of business transactions Audit- review of all financial data in order to ensure the accuracy and completeness of the data Either internal an accountant employed by the practice or IRS Bookkeeping-accurate recording of transactions

Daily journal Charge/receipt slips Patient ledger cards Accounts payable/receivable Monthly summary Balance sheet 255

Records are kept in paper format or in software

Single-entry method Oldest One entry for each transaction Difficult Double entry method Requires more knowledge of accounting Assets=liabilities + owners equity One account is debited and another is credited for each transaction More time consuming Pegboard method Most commonly used system Efficient and easy to learn

Computer summaries Practice analysis report Aging reports

Absolute accuracy

Practices have 2 types of checking accounts: Regular business checking account (used most frequently) Account that pays interest May also be savings account Money for taxes or expenses that are not immediate will be kept in interest earning account

Check-an order to a bank to pay a specific amount of money Negotiable-to allow the legal transfer of money To be negotiable: Contain the specific amount to be paid Be made out (payable) to payee (could be the title of company instead of a person’s name) Carry the name of the bank that is making the payment Specify the date on which the payment is to be made Be signed by the payer, person who is writing the check and is promising to pay the money

Postdated-dated for the future Predated-dated in the past Third-party checks-written by an unknown third party Check with an annotation of “Paid in Full”-cannot accept this when it is not the full amount

Blank endorsement-signature of the person to whom the check is payable is placed on the back of the check (can be cashed by anyone) Full endorsement-indicates the person, company, account number, or bank to which the check is being transferred followed by payee’s name Restrictive endorsement-safest and most commonly used in business Restricted: For Deposit Only

Deposits-checks and cash placed into the account belonging to the practice Deposit slip Preprinted or at bank (blank) Proof Kept with check regsiter, checkbooks in secure place

Bank may return a check if: Not completed properly Missing date or signature Insufficient funds (NSF)-not enough money in the account Returned with a fee of $25

Physician must authorize with the bank who is allowed to sign all checks One person to write and another to sign (safe-avoid mistakes and misappropriations) 2 signatures

Bank reconciliation-the new balance on the statement must be compared w/ the checkbook balance to determine whether there is a difference between the amounts Steps: Compare cancelled checks from bank to bank statement Compare checks listed on statement with checkbook Compare deposits recorded in checkbook with statement Interest: record in checkbook Complete reconciliation form If final amount = great! If not, do again.

Efficient and accurate Activities available online: Checking balances in the accounts Receive electronic deposits Find out which checks have cleared Transfer money from one account to the other Pay bills E-signature-a unique identifier Granted in June 2000, same as paper and pen signature

Petty cash fund-fund containing small amounts of cash to be used for small expenses

Payroll-total earnings of all the employees in the practice If your job you will be responsible for these tasks: Calculate the earnings of employees Subtract the correct amount of taxes and other deductions Create employee payroll records Prepare the salary checks Submit payroll taxes Keep current with formulas and regulations issued by the IRS that affect payroll

Create a payroll information record with the following information: Name, address, SS#, marital status, # of dependents Pay schedule (how often they are paid: weekly or biweekly) Type of payment (straight salary or hourly) Employee requested deductions (employer sponsored insurance plan, contributions to a savings plan, additional taxes withheld) If not a citizen, must be authorized to work in the US Completed Employment Eligibility Verification Form Form I-9- Verifies the person is legally admitted alien or authorized to work in this country

Employer identification number (EIN)-enables the IRS to track the financial activity; of employers in meeting payroll and tax obligations AKA Tax identification number

Direct earnings Salaries (fixed amounts paid regardless of hours worked) Wages (pay based on an hourly or daily specific rate) When first hired, employees must complete the Employee’s Withholding Allowance Certification Form W-4 Number of allowances stated for exemptions to be used when calculating taxes withheld Wage bracket tables supplied by the IRS

Federal Insurance Contributions Act (FICA) Governs the social security system Law requires that a certain amount of money be withheld for SS Employee pays half the required contribution and employer pays other half The amount is deducted in two separate payroll taxes: One helps finance Medicare The other helps fund SS pension benefits These amounts are dictate by the IRS Are a percentage of the employee’s taxable earnings Congress can change this amount yearly

Offices use spreadsheet programs to calculate payroll Gross earnings Salary-amount of earnings for the period Hourly-number of hours times hourly rate Exemptions; state and local tax deductions-find the # claimed by the employee on the W-4 form, refer to the IRS tax table for the amount to be deducted, subtract them from gross earnings FICA taxes-withhold and deduct half the amount due for the pay period from gross earnings; other half paid by practice Unemployment taxes-vary by state; withhold as necessary Voluntary deductions-insurance, savings plan, additional tax withholding, etc. Employer’s obligation-Post the employer’s FICA contribution and taxes due to fed and state unemployment funds to physician’s account Net earnings=Gross – total deductions

Federal Unemployment Tax Act-FUTA Employers are required to help fund this account Used to help those who have been without work for a specified period of time as they seek new employment Percentage of each employee’s gross salary but is not deducted from employee’s salary-employer contributes Some states both employee and employer contributes Payments into a state unemployment fund are applied as credit against the FUTA tax Tax return obligations: practice must make federal tax withholding payments and FICA payments to a federal deposit account in a Federal Reserve Bank IRS imposes severe penalty for lack of monthly deposits Employer has to file a quarterly tax return, Form 941 to report federal income and taxes withheld from paychecks

Law requires employer to retain payroll records for 4 years Records must contain: Name SS# Address Number of exemptions claimed Gross salary earned Net salary paid Income taxes withheld FICA, state and local taxes deducted

Direct deposit-the employee’s net pay is automatically withdrawn from the practice’s account and deposited into the employee’s account Electronic funds transfer (EFT) Physician office must contract with the bank for this Employees must give employers their checking account numbers Employee receives a deposit stub showing gross, net, and deductions Advantages Loss or theft of checks is eliminated Productivity and cost-savings are increased Convenience of eliminating trip to bank, money available day of