I purchased an existing practice with an existing S-corp in place. I'm getting a lot of different messages from what to do as far as creating a new S-corp under me. I want to reuse the practice name. The person at the secretary of state's office said all I would need to do is change officer name to my name. Is that normally what you do? Or do I have to file a new entity, then have the old one dissolve somehow and then change my new entity name to the old one?
Thanks.
I'm surprised you didn't create your entity at LEAST 2-4 weeks prior to settlement. When you create this new entity, have you planned for the processing of notifying all the appropriate people? Landlord? Lender? Vendor? Insurance companies? Payroll service? etc., etc., etc.
Getting that DBA name sounds like the tip of the iceberg for you.
This first appeared on Dentaltown.
Monday, July 12, 2010
Thursday, July 8, 2010
When Should Dental Tax Planning be Done?
I recently took up several part-time positions, with some paying me as an independent contractor. I think one of the positions is paying me as a W2. I may have an idea of how to file taxes using W2, but I am totally clueless about how to do it as an IC.
You better KNOW!
When exactly should I go to accountant to get my IC taxes done?
Done? Sometime between Jan-Mar of 2011.
To plan properly to get them done? NOW!
My yearly income taxes were done by a local accountant for $100/yr in a NYC area. How much more expensive will it be if I were to seek out accountant services for filing my IC taxes?
It depends on who's doing them and whether or not you want to PLAN NOW, AND get them done later. Just to get them done, maybe the person that did them for $100 will do them for $150. You have to ask.
This first appeared on Dentaltown.
You better KNOW!
When exactly should I go to accountant to get my IC taxes done?
Done? Sometime between Jan-Mar of 2011.
To plan properly to get them done? NOW!
My yearly income taxes were done by a local accountant for $100/yr in a NYC area. How much more expensive will it be if I were to seek out accountant services for filing my IC taxes?
It depends on who's doing them and whether or not you want to PLAN NOW, AND get them done later. Just to get them done, maybe the person that did them for $100 will do them for $150. You have to ask.
This first appeared on Dentaltown.
Thursday, July 1, 2010
How Should the Purchase Price for Dental Practice be Allocated?
Hi,
Is this a good allocation of $ for the buyer for tax advantage?
PURCHASE PRICE $475,000.00
Furniture and Equipment $ 110,000.00
Covenant Not to Compete $ 1,000.00
Patient Records $ 179,000.00
Goodwill $ 185,000.00
TOTAL $475,000.00
Tuscon Dr.
I would switch patient records and covenant not to compete. It has nothing to do with taxes. I just wouldn't feel comfortable in a transaction where the covenant not to compete is so low. What happens if it is violated? Is it worth more than $1,000 if you have to sue for it. Whereas, patient records are just paper and x-rays and pertain more to goodwill.
Try and keep the equipment allocation as high as possible for taxes, you should negotiate over this amount.
Tim Lott
I agree, though possibly for a different reason.
IF Nevada has a sales tax on furniture and equipment, they may also tax patient records. IF NV has an annual property tax on furniture and equipment, that could also be costly over the years. So please be careful to consider other taxes, and not just income tax.
Here in MD, with that allocation, the buyer would really be getting the short end of the stick when you consider ALL the tax issues, and not just income tax.
What has your tax advisor advised?
Jason Patrick Wood
As long as there is language stipulating that the allocations are for tax purposes and is not meant to be a damage award, etc. then the amount is irrelevant, however I like to have a slightly higher covenant just so it passes the IRS smell test and therefore usually use an arbitrary figure of $10,000. NV has a peculiar law on sales tax on equipment that has not truly been settled yet. Therefore, to avoid it I would recommend an allocation of a consulting agreement and a supply allocation.
Tim Lott
How about this allocation?
Original Suggested
Equipment and furnishings $6,000 $50,000
Dental Supplies $1,000 $5,000 (including hand pieces, small tools)
Goodwill $20,000 $21,000 (including patient records)
Covenant Not to Compete $46,883 $10,000
Leasehold Improvements $16,117 $0
Patient Records $20,000
Consulting $24,000
Total $110,000
Thanks Tim. Is consulting deductible? Why does it help the seller to minimize the equipment value?
Probably because their tax basis is zero so any allocation will be ordinary income.
This first appeared on Dentaltown.
Is this a good allocation of $ for the buyer for tax advantage?
PURCHASE PRICE $475,000.00
Furniture and Equipment $ 110,000.00
Covenant Not to Compete $ 1,000.00
Patient Records $ 179,000.00
Goodwill $ 185,000.00
TOTAL $475,000.00
Tuscon Dr.
I would switch patient records and covenant not to compete. It has nothing to do with taxes. I just wouldn't feel comfortable in a transaction where the covenant not to compete is so low. What happens if it is violated? Is it worth more than $1,000 if you have to sue for it. Whereas, patient records are just paper and x-rays and pertain more to goodwill.
Try and keep the equipment allocation as high as possible for taxes, you should negotiate over this amount.
Tim Lott
I agree, though possibly for a different reason.
IF Nevada has a sales tax on furniture and equipment, they may also tax patient records. IF NV has an annual property tax on furniture and equipment, that could also be costly over the years. So please be careful to consider other taxes, and not just income tax.
Here in MD, with that allocation, the buyer would really be getting the short end of the stick when you consider ALL the tax issues, and not just income tax.
What has your tax advisor advised?
Jason Patrick Wood
As long as there is language stipulating that the allocations are for tax purposes and is not meant to be a damage award, etc. then the amount is irrelevant, however I like to have a slightly higher covenant just so it passes the IRS smell test and therefore usually use an arbitrary figure of $10,000. NV has a peculiar law on sales tax on equipment that has not truly been settled yet. Therefore, to avoid it I would recommend an allocation of a consulting agreement and a supply allocation.
Tim Lott
How about this allocation?
Original Suggested
Equipment and furnishings $6,000 $50,000
Dental Supplies $1,000 $5,000 (including hand pieces, small tools)
Goodwill $20,000 $21,000 (including patient records)
Covenant Not to Compete $46,883 $10,000
Leasehold Improvements $16,117 $0
Patient Records $20,000
Consulting $24,000
Total $110,000
Thanks Tim. Is consulting deductible? Why does it help the seller to minimize the equipment value?
Probably because their tax basis is zero so any allocation will be ordinary income.
This first appeared on Dentaltown.
Tuesday, June 22, 2010
Dental Hygienist Compensation Question
I opened my practice in central Maryland 3 months ago. We have been growing like crazy. I am seeing about 6 or 7 new patients a day. The only problem with this is I have no time for dentistry, as all I do is new patient exams, prophies and scalings. We are booked out almost till the end of June (about 4 weeks). I am ready to hire a hygienist.
I put an ad on craigslist for a hygienist and received several applications. At first I wanted to hire an experienced hygienist, but ALL of the applications I received from experienced hygienists were clearly just looking for a higher paycheck, and not for a better workplace. I actually had one hygienist write in her cover letter, "I may not even want to work for you; I just want to see what my options are." I do not want to hire someone just in it for the money.
I also received several applications from very recent hygiene school graduates. They are enthusiastic and excited for the new opportunity. I decided I would interview the new grads and see what they were like. Obviously, they have no experience and are going to be slow at first, but I was impressed by their enthusiasm. I want to hire someone who can grow with the practice, and stay long term. I want to hire someone willing to work part time at first, and then, if they work out well, work full time.
My question is: how much should I offer to pay these new graduates? One asked for $34-38 per hour. That seemed on the high-end to me, but maybe I am not realistic. What types of salary are you paying your hygienists? What I was thinking about doing is paying them a lower rate for a 90 day trial period, and if they work out well, bumping up their salary and hours. What do you think of that type of setup? I am concerned about paying on production because we participate with several PPOs, and I do not want to lose money hiring a hygienist. Do you offer your hygienists benefits, like vacation/sick time, health-care or a retirement plan?
Thanks!
Paying $34-38 per hour is LOW from what I've seen here in MD over the past 5+ years. If you were to ask what you should expect to pay I would have replied $40-45 per hour. That's actually lower than what I would have replied with about 1-2 years ago.
...Last piece, the rule of thumb in terms of hygiene pay is that they should be compensated about 25%-30% of what they produce per hour.
…as a ratio this equates to the hygienist producing 3-4 times what they are paid. Here in this tri-state area (MD\DC\NOVA) while this ratio held true more than 7+ years ago, the ratio averages about 2.7 times what they're paid these days. This is because hygienist compensation has increased sharply over the last 5-7 years in this area.
Again, the 2.7 times their compensation for their production is an average. There are practices doing 3.5-4 times their compensation (not many though) just like there are practices doing 2-2.5 times their compensation.
So if you can get your statistics for their compensation in the range of 30-40% of their production, you're doing pretty well. Getting it below 30% and you're doing great...at least in this tri-state area.
Thanks for all of the advice! I interviewed a bunch of candidates and one candidate just seemed to gel with the office from the moment she walked in. Her references spoke extremely highly of her. We just called and offered her the job and she was ecstatic. She is going to work 2 days a week until we are busy enough to have her work more, and then I'll have her work 4 or 5 days a week. I am excited and hope she works out well.
The anticipation is killing me, were the ranges of compensation close?
I am paying her $34 an hour. I am buying her an LED light for her loupes, which I guess you could call a benefit. There are no other benefits other than that, although I guess working with me in my awesome practice, with my great equipment and staff is a benefit. In a year or so, when I set up a retirement plan for myself, I will get something that I can offer to all my employees. She said she did not want health insurance, due to her spouse having it, so we are good on that. I didn't mention it to her, but I am a strong proponent of CE, and will probably take my entire staff to things now and then so that is a benefit as well.
Thanks for the feedback, very helpful. You did VERY well!
This first appeared on Dentaltown.
I put an ad on craigslist for a hygienist and received several applications. At first I wanted to hire an experienced hygienist, but ALL of the applications I received from experienced hygienists were clearly just looking for a higher paycheck, and not for a better workplace. I actually had one hygienist write in her cover letter, "I may not even want to work for you; I just want to see what my options are." I do not want to hire someone just in it for the money.
I also received several applications from very recent hygiene school graduates. They are enthusiastic and excited for the new opportunity. I decided I would interview the new grads and see what they were like. Obviously, they have no experience and are going to be slow at first, but I was impressed by their enthusiasm. I want to hire someone who can grow with the practice, and stay long term. I want to hire someone willing to work part time at first, and then, if they work out well, work full time.
My question is: how much should I offer to pay these new graduates? One asked for $34-38 per hour. That seemed on the high-end to me, but maybe I am not realistic. What types of salary are you paying your hygienists? What I was thinking about doing is paying them a lower rate for a 90 day trial period, and if they work out well, bumping up their salary and hours. What do you think of that type of setup? I am concerned about paying on production because we participate with several PPOs, and I do not want to lose money hiring a hygienist. Do you offer your hygienists benefits, like vacation/sick time, health-care or a retirement plan?
Thanks!
Paying $34-38 per hour is LOW from what I've seen here in MD over the past 5+ years. If you were to ask what you should expect to pay I would have replied $40-45 per hour. That's actually lower than what I would have replied with about 1-2 years ago.
...Last piece, the rule of thumb in terms of hygiene pay is that they should be compensated about 25%-30% of what they produce per hour.
…as a ratio this equates to the hygienist producing 3-4 times what they are paid. Here in this tri-state area (MD\DC\NOVA) while this ratio held true more than 7+ years ago, the ratio averages about 2.7 times what they're paid these days. This is because hygienist compensation has increased sharply over the last 5-7 years in this area.
Again, the 2.7 times their compensation for their production is an average. There are practices doing 3.5-4 times their compensation (not many though) just like there are practices doing 2-2.5 times their compensation.
So if you can get your statistics for their compensation in the range of 30-40% of their production, you're doing pretty well. Getting it below 30% and you're doing great...at least in this tri-state area.
Thanks for all of the advice! I interviewed a bunch of candidates and one candidate just seemed to gel with the office from the moment she walked in. Her references spoke extremely highly of her. We just called and offered her the job and she was ecstatic. She is going to work 2 days a week until we are busy enough to have her work more, and then I'll have her work 4 or 5 days a week. I am excited and hope she works out well.
The anticipation is killing me, were the ranges of compensation close?
I am paying her $34 an hour. I am buying her an LED light for her loupes, which I guess you could call a benefit. There are no other benefits other than that, although I guess working with me in my awesome practice, with my great equipment and staff is a benefit. In a year or so, when I set up a retirement plan for myself, I will get something that I can offer to all my employees. She said she did not want health insurance, due to her spouse having it, so we are good on that. I didn't mention it to her, but I am a strong proponent of CE, and will probably take my entire staff to things now and then so that is a benefit as well.
Thanks for the feedback, very helpful. You did VERY well!
This first appeared on Dentaltown.
Friday, June 11, 2010
Acquiring a Dental Practice and Merging it into an Existing Practice
I have an opportunity to purchase an existing dental office that is 3 miles away. The doctor is in her 60's and is willing to sell and work in my office 2 days a week. Time frame for her to exit the office will have to be evaluated. It is a FFS office with no PPO, similar to mine with an exception that I am a provider to Delta Premier and United Concordia. She is willing to share her numbers before meeting with the broker to see if it is feasible for us to pursue. Any advice what to ask and look for?
You should have her run reports of patients that have those providers to see if any of them will be able to use them in your office. Then get a breakdown of production by provider to see how much additional hygiene hours you'll need. Once you do that, get a list of her employees and their hourly rates and find out what benefits she may pay to compare with yours. You'll also have to compare vacation days given, etc, and compare with yours. If you hire any of her employees, the compensation packages, benefits and PTO days will have to match. You will need to evaluate the fee schedules and find out if you do any procedures she doesn't and vice versa.
These are just a few things off the top of my head.
Thanks Tim for your responses. She wants to practice with us 2 days a week. Will the purchase price be lower or higher than a typical practice acquisition without the dr staying on?
The price should be less than the typical acquisition where you're also buying tangible assets and the space.
I can't say I've noticed differences in prices with or without the doctor staying. That's up to the parties and I just haven't seen it used as a negotiation point in the majority of the deals I'm involved with.
All that said, you certainly stand to retain much more of the patients with the seller staying on board and assisting with her GW transfer as opposed to having her out immediately.
This first appeared on Dentaltown.
You should have her run reports of patients that have those providers to see if any of them will be able to use them in your office. Then get a breakdown of production by provider to see how much additional hygiene hours you'll need. Once you do that, get a list of her employees and their hourly rates and find out what benefits she may pay to compare with yours. You'll also have to compare vacation days given, etc, and compare with yours. If you hire any of her employees, the compensation packages, benefits and PTO days will have to match. You will need to evaluate the fee schedules and find out if you do any procedures she doesn't and vice versa.
These are just a few things off the top of my head.
Thanks Tim for your responses. She wants to practice with us 2 days a week. Will the purchase price be lower or higher than a typical practice acquisition without the dr staying on?
The price should be less than the typical acquisition where you're also buying tangible assets and the space.
I can't say I've noticed differences in prices with or without the doctor staying. That's up to the parties and I just haven't seen it used as a negotiation point in the majority of the deals I'm involved with.
All that said, you certainly stand to retain much more of the patients with the seller staying on board and assisting with her GW transfer as opposed to having her out immediately.
This first appeared on Dentaltown.
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