A veterinary clinic is really three businesses in one building: a medical service practice, a pharmacy, and a small retail store. Each has its own margins, its own costs, and sometimes its own sales tax rules. Books that lump them into one revenue line and one supplies account cannot tell you which part of the practice is earning money.
Here is how to structure a clinic's books so the numbers are useful to you and ready for your tax preparer.
Split revenue the way the practice actually earns it
Set up separate income accounts for at least professional services (exams, surgery, dentistry, imaging, lab work), pharmacy, and retail products such as food and supplements. Most practice management systems can produce a daily sales report already broken into these categories; record the daily or weekly totals from that report rather than individual card deposits, so revenue lands in the right buckets.
Pair each revenue stream with its own cost of goods sold account: drugs and medical supplies dispensed, and retail products sold. That gives you a real margin on the pharmacy and the retail shelf — often where clinics discover that a product line barely breaks even once shrinkage and expired stock are counted.
Sales tax on pet food, retail goods, and dispensed medications varies by state, and some states treat prescription and non-prescription animal medications differently. Confirm the rules for your state and collect and remit accordingly. Sales tax collected belongs in a liability account, not in revenue.
Wellness plans, deposits, and financing
If clients prepay for a wellness or preventive care plan, or leave a deposit before a scheduled surgery, that money has not been earned yet. On accrual books, record it as a liability — unearned revenue or client deposits — and recognize revenue as the services are delivered. Plans billed monthly are simpler, but still track which visits each plan has already covered.
Card processors and third-party client financing providers typically deposit the payment minus their fees. Record the full sale as revenue and the fee as a separate expense; recording only the net deposit understates both revenue and a cost that adds up quickly. Reconcile deposits back to the practice management system's daily totals so a missing batch or a chargeback is caught within days, not months.
Doctor pay, relief vets, and equipment
Payroll is usually the largest expense line. If associate veterinarians are paid on production — a percentage of the revenue they generate, often with a guaranteed base — the books need to support that calculation by tracking revenue by doctor, and the pay itself still runs through payroll with withholding like any other wages. Split payroll expense between doctors, technicians, and front-desk staff so you can see the cost of each role against revenue.
Relief veterinarians who work as independent contractors are paid outside payroll. Collect a Form W-9 before the first payment and track what you pay each one; anyone paid $600 or more for services during the year generally needs a Form 1099-NEC. Whether a relief vet is truly a contractor rather than an employee depends on how the work is controlled, so get that question answered properly rather than assumed.
Digital radiography, ultrasound, anesthesia machines, and dental units are capital purchases. Record each as a fixed asset with its date and cost, and record any equipment loan as a liability with each payment split between principal and interest. Your tax preparer decides how to depreciate or expense them; your books need the records to support that decision.
Books your practice can run on
Evolv Bookkeeping is $199 per month flat. Every bank, card, and loan account is reconciled each month, revenue and cost of goods sold are kept in the categories your practice actually uses, and your financial statements arrive by day 2 of the following month, with 1099 prep for relief vets and other contractors at year end.
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