Medical practice bookkeeping stands or falls on stream-by-stream reconciliation. A practice receives income under a core contract, through additional service arrangements, from enhanced and locally commissioned work, from reimbursements, and often from private non-NHS work such as reports and medicals. Books that reconcile each stream to its statement monthly produce year-end accounts on schedule; books that record lump bank credits produce months of queries. This checklist is written for practice managers and partners who own the finance function.

Income: every stream reconciled to its statement

The core discipline: for each funding stream, keep the monthly statement, record the income against the correct category, and reconcile the statement to the bank credit, noting deductions taken before payment. Deductions at source often mean the bank receives less than the statement value, so books built on bank figures alone understate both income and the deductions the accounts must show. Private and non-NHS income, from medicals, reports and room hire, needs its own invoice sequence and a monthly check that everything invoiced was banked.

Partner drawings are not wages, and the books must show it

Partners in a practice partnership are not employees. The monthly amounts they take are drawings: advances against a profit share that is only finalised when the accounts are done. The bookkeeping must record each partner’s drawings separately and completely, including amounts paid on their behalf such as personal tax or superannuation payments made from the practice account. Practices that blur drawings into general payments invite an unpleasant surprise at accounts time, when someone’s current account turns out overdrawn. A clear drawings schedule per partner, updated monthly, is the cheapest dispute prevention a partnership can buy.

Staff payroll: the practice’s biggest cost, fully evidenced

Medical practices employ significant teams, and payroll is usually the largest expense line. The records must include everything the GOV.UK guidance on PAYE for employers requires: pay records, deductions, pension contributions under auto enrolment, and reports filed on time. Practice-specific wrinkles deserve extra care: variable sessional staff, overtime patterns, maternity and sickness records across a large team, and locum cover engaged directly rather than through payroll. The distinction between an employed staff member and a self-employed locum matters, and the practice should hold the paperwork supporting each locum’s status; the locum’s own record duties are set out in accounting records for locum doctors.

Premises, reimbursements and the costs behind them

Whether the practice owns its building, leases it or occupies under other arrangements, keep the underlying documents: leases, mortgage or loan statements, rent reimbursement notifications, service charges, and invoices for maintenance and improvements. Premises reimbursements should be matched against the costs they reimburse, not left as unexplained credits. Improvement spending needs its documentation kept long-term, because its treatment in the accounts and in any future sale depends on the facts.

The monthly medical practice bookkeeping checklist

  • Reconcile every funding statement to its bank credit, logging deductions
  • Reconcile every practice bank account
  • Update the drawings schedule for each partner
  • Run and file payroll reports, checking sessional variances
  • Invoice and chase private and non-NHS work
  • File supplier invoices and match any reimbursements
  • Note anything unusual while it is fresh

Records behind all of this must be kept for the minimum periods HMRC publishes. Partners and sole practitioners follow the self employed rule in the GOV.UK guidance on keeping your pay and tax records, while a practice that trades through a limited company follows a separate and longer company rule, so check the page that matches how the practice is structured rather than assuming one period covers both.

Failure patterns we see in practice books

  • Income recorded from bank credits, so pre-payment deductions vanish from the books
  • Partner personal payments made from practice funds but recorded nowhere
  • Sessional staff paid off-payroll without status paperwork
  • Reimbursement credits never matched to their costs, inflating apparent income
  • Private work invoiced from a side spreadsheet nobody reconciles

Where outside help changes the economics

A capable practice manager can run this checklist in-house with the right systems. Help pays for itself when the finance role is vacant or stretched, when a partner change forces the drawings and current account picture to be exact, or when the monthly close has slipped by a quarter or more. Our payroll and auto enrolment service takes the heaviest recurring burden off practice teams, and comparable checklists for dental practices and pharmacies cover the neighbouring professions.

Frequently asked questions

What makes medical practice bookkeeping different from ordinary small business books?

Three things: income arriving through multiple statement-driven funding streams with deductions at source, partnership drawings in place of salaries, and an unusually large payroll relative to turnover.

How often should partner drawings be reviewed against expected profit?

At least quarterly. Drawings set at the start of a year drift from reality as income and costs move. A quarterly sense check against management figures keeps the correction small.

Who should reconcile the practice’s funding statements?

Someone who is not the only person with access to the bank, ideally. In small teams perfect segregation is impossible, but the practice can still ensure a partner reviews reconciliations they did not prepare.

Do reimbursements count as practice income?

They are receipts that offset specific costs, and the books should pair them with those costs rather than leaving them to inflate income. The accounts treatment follows from that pairing.

How we can help

Our support for doctors includes practice bookkeeping, payroll and the drawings and reconciliation disciplines this checklist describes. Request a quote and we will assess your current monthly close.