tag:blogger.com,1999:blog-86713688849120461422024-03-14T00:36:27.436-04:00Dental CPAsSince 1956, dental practitioners have counted on our team of dental accountants and dental CPAs for high-caliber guidance and support. We take a comprehensive approach with our dental clients. This translates into dental tax planning meetings, the ability to address special dental projects, and a network of trusted dental resources available outside of our firm.The Dental CPAs Teamhttp://www.blogger.com/profile/01741424947773329093noreply@blogger.comBlogger378125tag:blogger.com,1999:blog-8671368884912046142.post-83025986062364994162018-01-16T12:37:00.001-05:002018-01-16T12:38:08.115-05:00Tax Changes To Watch For In 2018<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-ua7QDOJySHs/Wl44UiwtMCI/AAAAAAAAVHY/dspeSVyliw4eJhIlZPpzxaCYFFmekJphACLcBGAs/s1600/Tax-Changes-blue.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="360" data-original-width="522" height="220" src="https://1.bp.blogspot.com/-ua7QDOJySHs/Wl44UiwtMCI/AAAAAAAAVHY/dspeSVyliw4eJhIlZPpzxaCYFFmekJphACLcBGAs/s320/Tax-Changes-blue.png" width="320" /></a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
2018 taxpayers will see many changes related to individual taxes due to the “Tax Cuts and Jobs Act” passed in December 2017. Many of the provisions in the new law expire (sunset) January 1, 2026. The changes affecting most individual taxpayers include:</div>
<div class="MsoNormal">
<b><span style="font-size: large;"><br /></span></b></div>
<div class="MsoNormal">
<b><span style="font-size: large;">Read the full article on our website. </span></b><br />
<b><span style="font-size: large;">Click here for direct access: </span></b></div>
<div class="MsoNormal">
<a href="https://nlgroup.com/dental-cpa-blog/tax-changes-watch-2018/"><b><span style="font-size: large;">https://nlgroup.com/dental-cpa-blog/tax-changes-watch-2018/</span></b></a></div>
<div class="MsoNormal">
<o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-45650183816142522017-07-24T11:27:00.001-04:002017-07-24T11:27:20.669-04:00Check out More Recent Blog Posts on our Website!<div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-gpYg2_oYNCU/WXYRv1f_2mI/AAAAAAAAOIA/kZ_gNYb1fa8_QrZzZVE-DK79r1O7sEXawCLcBGAs/s1600/DentalCPA_finalogo.websmall.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="104" data-original-width="448" height="74" src="https://2.bp.blogspot.com/-gpYg2_oYNCU/WXYRv1f_2mI/AAAAAAAAOIA/kZ_gNYb1fa8_QrZzZVE-DK79r1O7sEXawCLcBGAs/s320/DentalCPA_finalogo.websmall.JPG" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-uNGMtWZ5JVs/WXYRo8NiWTI/AAAAAAAAOH8/gR9X-sWCC48hxZqRmJV3eEW01rhzMhfewCLcBGAs/s1600/Dental_CPA_2017.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="400" data-original-width="600" height="213" src="https://2.bp.blogspot.com/-uNGMtWZ5JVs/WXYRo8NiWTI/AAAAAAAAOH8/gR9X-sWCC48hxZqRmJV3eEW01rhzMhfewCLcBGAs/s320/Dental_CPA_2017.jpg" width="320" /></a></div>
<div style="text-align: center;">
<span style="font-size: x-large;"><br /></span></div>
<div style="text-align: center;">
<span style="font-size: x-large;">Visit <a href="https://nlgroup.com/dental-cpa-blog/" target="_blank">www.dentalcpas.com</a> for the latest blog posts! </span></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-20008276731824643742017-04-19T15:10:00.000-04:002017-04-19T15:16:03.706-04:00Don’t Be So Quick to Turn Your Head on High Overhead<div class="MsoNormal">
So you’re in the market looking to buy a dental practice, and you’ve seen information from brokers with summary practice information.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As you’re looking at the overhead information, you think that some of the OH stats look really low and that must be great, and some look really high, and that must be terrible, so you quickly disregard the high OH practices and move on. Well, I’m here to tell you that sometimes the opposite is true.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The ones that appear to have low overhead may not have low overhead at all, or there’s a not so good reason the overhead is low….that’s going to have to wait for another blog. This blog is about the practice with what appears to be high overhead, which you think is bad.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Like ANY practice purchase transaction, a buyer MUST do their due diligence, and I’m here to tell you that sometimes high overhead can be a good thing.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
First, higher overhead while generally not a good thing will usually generate a lower asking price. Higher overhead means lower profits; lower profits usually mean lower values. So from a buyer’s perspective, a lower price can be a good thing in terms of price.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Second, once you dive into the overhead and find out WHY it’s so high, you might learn a little more about the practice and how the owner is actually running the practice. Maybe they’re being lazy and not shopping around for the lowest cost of supplies or worse; maybe they’re letting a staff member handle all the supply ordering without any controls. Maybe they’re using the most expensive labs out there. Maybe they’ve cut back to working three days a week which can make some of the fixed expenses seem high like rent, utilities, insurances, etc. and maybe they’re still paying staff for four days per week.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Third, maybe they’re a fairly aggressive taxpayer and like to try and deduct as much as they can thru the various expense categories. Sometimes this is the hardest area to verify and confirm, other times this can be detected and verified. This is when we get to advise the buyer that the overhead will be lower under their watch.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Fourth, one common aspect of high total overhead is high labor costs. As noted above, maybe it’s because the staff is getting paid for more hours than they’re working. That can be an easy fix, just add another day of production to match the hours they’re getting paid for…assuming the patients are there to allow this. Maybe the owner has been very generous and the staff is paid at the top of the market or even above the market for the area, or the owner is paying 100% of their health insurance premium and some pension contributions. This is a little more difficult to address and will usually require a buyer to “ease” into proper compensation and benefits. Sometimes it fixes itself when the employees leave, and the buyer can replace with market rate pay.<br />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Lastly, and the main reason for this blog, is maybe it’s because the hygienist comp is running 15% of revenue when it usually runs around 8-10%. Unfortunately, some buyers and their advisors won’t even look this deep to know exactly where the issue is. This is one reason we want to see the W-2s for each year and break them down into their departments. Many times, if hygiene wages are high it usually means the practice is generating a lot of hygiene production and you’ll be able to see this when you breakdown the production by provider. You may see hygiene production at 40% of total production when it usually runs around 25%. When you see it at 40% or more, you’ll almost always see hygiene wages greater than 10%, and that drives up the overhead percentage. It also usually means many of the other categories will be higher than the normal ranges as a percentage of revenue because there’s not enough dentistry. This isn’t always the case; however, we see it quite a bit with high overhead, high labor practice stats.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The lesson to learn here is DON’T automatically run away from a practice that appears to have high overhead. Look at some of the other stats first like the breakdown of production by provider, the specific department wage percentages to revenue and look at the schedule to see how many hygiene hours they have per week compared to dentistry hours. This information alone may provide the insight you need to pursue the opportunity and do a little more digging to see what the real deal is.</div>
<br />
<div class="MsoNormal">
Sometimes these high overhead practices are the goldmines you often read or hear about. Good luck and happy practice hunting!<br />
<br /></div>
<div class="MsoNormal">
<b style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px;"><u><br /></u></b></div>
<div class="MsoNormal">
<o:p></o:p><b style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px;"><u>About Tim Lott</u></b></div>
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13.2px;">Tim Lott, CPA, CVA has decades of experience working with dentists at all stages of their careers. He is a regular speaker at study clubs, societies, and dental schools. Tim is a frequent participant and a moderator on Dentaltown.com. You can reach Tim at </span><a href="mailto:tlott@dentalcpas.com" style="background-color: white; color: #888888; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; text-decoration-line: none;">tlott@dentalcpas.com</a><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13.2px;"> or any of the other dental partners/principals at (800) 772-1065 or </span><a href="mailto:info@dentalcpas.com" style="background-color: white; color: #888888; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; text-decoration-line: none;">info@dentalcpas.com</a><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13.2px;">. For more blogs, visit our </span><a href="https://nlgroup.com/dental-cpa-blog/" style="background-color: white; color: #888888; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; text-decoration-line: none;">Dental CPAS blog page</a><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13.2px;">. </span><br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-6043662794795408672017-04-11T11:25:00.000-04:002017-04-11T11:25:05.883-04:00Forgotten Tax Deductions<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;"><br /></span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">It’s estimated that most dental practices overpay their taxes. We don’t want yours to be one of them!</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">There are several deductions where your dental practice could be saving money on taxes, even on everyday expenses. Two words to keep in mind when claiming dental tax deductions: ordinary and necessary. Both conditions must apply for the expense to be tax deductible.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<a href="https://3.bp.blogspot.com/-LP4pzuLdc8o/WOz08kcWFyI/AAAAAAAAKeg/ejIHMyFLebIau1YtI7Ffn5BS3b8tDQ3KwCLcB/s1600/Tax%2Band%2Bbusiness.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="319" src="https://3.bp.blogspot.com/-LP4pzuLdc8o/WOz08kcWFyI/AAAAAAAAKeg/ejIHMyFLebIau1YtI7Ffn5BS3b8tDQ3KwCLcB/s320/Tax%2Band%2Bbusiness.jpg" width="320" /></a><span style="box-sizing: inherit;">Read below for eight dental tax deductions to keep more money in your practice. </span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Some tax deductions you’re probably already aware of, like premiums for malpractice insurance or the 50 percent deduction for meals and entertainment.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;"> Talk to your tax advisor to see what applies in your situation.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Supplies</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Everything from toothbrushes to cotton balls to dental eyewear can and should be tracked – and deducted. This includes office stationery and administrative supplies.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Lab Fees</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Lab fees can be 10 percent or more of your practice’s budget, so make them count on your taxes. Think x-rays, crowns, partials, molds, and dentures. Keep track of these fees for tax savings.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Continuing Education</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Even if you don’t consider yourself a lifelong learner, your office’s yearly subscription to a dental industry magazine could be tax deductible. So could your costs and fees associated with exams, licensing, conferences, and certifications. Go ahead and pursue that specialty!</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Vehicles</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">There are three ways to deduct vehicle expenses: 1) buy the vehicle through your dental practice (if your business structure is a corporation), and include personal vehicle expenses as income on your individual tax return 2) track mileage expenses or 3) track actual expenses.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Number one is complicated and merits a call to your tax advisor. The current mileage rate is 53.5 cents per mile for 2017 (54 cents per mile for 2016). Or, to track actual expenses, keep a log of oil changes, repairs and maintenance, gas, and so on. Note that ordinary trips to and from your office don’t apply for standard mileage rates, but trips to other offices or business meetings do.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Utilities</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Keep a record of your dental practice’s water, electric, gas, phone, internet, rent and/or mortgage payments.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Employee salaries, healthcare, and retirement accounts</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">You probably already know you can deduct the employer’s contributions to retirement and healthcare accounts. But you might not be aware of the recent change allowing </span><a href="https://nlgroup.com/dental-cpa-blog/tax-savings-dentists/" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">employer-funded health savings accounts</a><span style="box-sizing: inherit;">, or that your spouse can earn a salary that can also save money on taxes (there are many ways to do this; </span><a href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">call our office</a><span style="box-sizing: inherit;"> for more information).</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<a href="https://nlgroup.com/dental-cpa-blog/tax-savings-dentists/" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">Read our blog post on Tax Savings for Dentists for more information.</a></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Advertising and marketing</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">The cost of promoting your dental practice is tax deductible. So take out that ad in the local business journal, and send those mailers. Then include the fees on your taxes.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Legal and Tax Fees</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Finally, you can deduct the cost of your attorney and tax professional. We can show you how – </span><a href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">contact</a><span style="box-sizing: inherit;"> us today!</span></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-7780073487568912202017-04-07T10:48:00.001-04:002017-04-07T10:48:19.537-04:00Tech Practice Investments<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">The modern dental practice is an efficient, patient-centered experience that seamlessly integrates technology into everyday processes and procedures. Does this sound like your dental office? Even if you answered yes, read on for suggestions on the best technology to invest in for a more productive, profitable dental practice – and how to make your equipment wish list a reality with bonus depreciation.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<i style="box-sizing: inherit;">CAD/CAM Technology</i></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">If your dental practice doesn’t yet have a CAD/CAM system, now is the time to consider it. CAD/CAM, or computer-aided design and computer aided manufacturing, is a digital process that improves the design and creation of crowns, dental implants, dentures, and more. Since these systems can cost upwards of $100,000, it’s an investment that requires significant thought and careful planning.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<i style="box-sizing: inherit;">3D Printing</i></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Going hand in hand with CAD/CAM systems, 3D printing will allow you to produce your own custom orthodontics, implants, and restorations in the office. There are printers specific to orthodontics, general dentistry, and dental surgery, each with their own specifications. The cost of 3D printers varies and will generally be less than $5,000.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<i style="box-sizing: inherit;">Practice Management Software</i></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">There are many options for practice management software. The best software solutions will mirror your workflow and automate key processes. Costs vary from a few hundred dollars for the set-up of a cloud-based software program for a small office to $15,000 and above for locally hosted software programs and/or larger offices.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em; text-align: center;">
<span style="box-sizing: inherit; font-weight: 700;"><em style="box-sizing: inherit;">Keep In Mind: Certain types of software may not be eligible for depreciation. Contact our office for details</em>.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<br /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Purchasing one 3D printer should be fairly easy for most practices. After all, most corporate credit cards or lines of credit have a limit higher than $5,000. What if you’re looking at purchasing more than one 3D printer, investing in a custom software package, or buying a CAD/CAM system? Assuming you don’t have a large cash reserve or high credit line, what are your options for adding this technology to your dental practice?</span><br style="box-sizing: inherit;" /><span style="box-sizing: inherit;">The solution is bonus depreciation. 2017 is the last year for 50 percent bonus depreciation; the value decreases in 2018. As of now, bonus depreciation is set to expire in 2019.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">What Is Bonus Depreciation?</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">When you make capital upgrades to equipment or property, you can recover the cost of those upgrades through an annual tax deduction called depreciation. Most tangible property can be included, such as office furniture, computers, vehicles, and – you guessed it – CAD/CAM systems, 3D printers, and computer software.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<img alt="" class="aligncenter wp-image-2352 " height="220" sizes="(max-width: 367px) 100vw, 367px" src="https://i1.wp.com/nlgroup.com/wp-content/uploads/2017/04/Blog-SideNote2_Tech-Practice-Investments_04-7-17.jpg?resize=367%2C220&ssl=1" srcset="https://i1.wp.com/nlgroup.com/wp-content/uploads/2017/04/Blog-SideNote2_Tech-Practice-Investments_04-7-17.jpg?resize=300%2C180&ssl=1 300w, https://i1.wp.com/nlgroup.com/wp-content/uploads/2017/04/Blog-SideNote2_Tech-Practice-Investments_04-7-17.jpg?w=667&ssl=1 667w" style="border: 0px; box-sizing: inherit; display: block; height: auto; margin: 20px auto; max-width: 100%;" width="367" /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">What’s Not Included</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Although you can include many capital improvements in bonus depreciation, you cannot include the following:</span></div>
<ul style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; list-style-type: none; padding-left: 1.5em;">
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Land</span></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Property with a useful life of less than one year</span></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Property that is disposed of the same year you purchased it</span></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Personal property</span></li>
</ul>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">How It Works</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Typically, the cost of a capital upgrade is depreciated over the course of its useful life – generally, five years or more. But for equipment or property placed into service in 2016 and 2017, bonus depreciation allows for an immediate 50 percent deduction the first year. In 2018 and 2019, the benefit decreases to 40 percent, and – as of now – bonus depreciation will expire after 2019.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Depreciation allows you to recover the cost of normal wear and tear over the life of, say, your office’s dental chairs. An oversimplified example is if you purchased three new dental chairs in 2016 for $3,000 each. Instead of spreading that cost over seven years, if you bought the new chairs in 2016, you could deduct 50 percent of the basis – the amount you paid for the chairs – the year you placed the chairs into service, which was 2016. If you bought the chairs in 2016 but didn’t install them until 2017, then the useful life begins in 2017, the year you placed the chairs into service.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">The benefit is that you get more money back quicker. See our example below.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Calculating Depreciation</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">To calculate depreciation, you’ll need the total amount you paid, the year the equipment was placed into service, and the equipment’s salvage value – how much it’ll be worth at the end of its useful life. Subtract the salvage value from the total amount paid. This is the amount you can depreciate over the equipment’s useful life.</span></div>
<hr style="border-bottom-color: rgb(221, 221, 221); border-bottom-style: solid; border-left: 0px; border-right: 0px; border-top: 0px; box-sizing: content-box; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; height: 0px; margin: 1.5em 0px;" />
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em; text-align: center;">
<span style="box-sizing: inherit; font-weight: 700;">Example</span><span style="box-sizing: inherit;">:</span><span style="box-sizing: inherit;"><br style="box-sizing: inherit;" />You purchase a new CAD/CAM system in 2016 for $100,000 and it has a useful life of seven years. You determine its salvage value to be $20,000. The difference is $80,000. You can deduct $80,000 in depreciation over seven years.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em; text-align: center;">
<span style="box-sizing: inherit;">Purchase Price: $100,000</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em; text-align: center;">
<span style="box-sizing: inherit;">Useful Life: 7 years</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em; text-align: center;">
<span style="box-sizing: inherit;">Salvage Value: $20,000</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em; text-align: center;">
<span style="box-sizing: inherit;">100,000 – 20,000 = 80,000</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em; text-align: center;">
<span style="box-sizing: inherit;">80,000 / 7 years = $11,428 yearly depreciation deduction</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Each year for seven years, you could deduct more than $11,000. But if you use bonus depreciation, you could deduct $40,000 in Year 1 and about $6,600 for each of the remaining six years.</span></div>
<hr style="border-bottom-color: rgb(221, 221, 221); border-bottom-style: solid; border-left: 0px; border-right: 0px; border-top: 0px; box-sizing: content-box; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; height: 0px; margin: 1.5em 0px;" />
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<img alt="" class="aligncenter wp-image-2353" height="305" sizes="(max-width: 509px) 100vw, 509px" src="https://i0.wp.com/nlgroup.com/wp-content/uploads/2017/04/Blog-SideNote_Tech-Practice-Investments_04-7-17.jpg?resize=509%2C305&ssl=1" srcset="https://i0.wp.com/nlgroup.com/wp-content/uploads/2017/04/Blog-SideNote_Tech-Practice-Investments_04-7-17.jpg?w=667&ssl=1 667w, https://i0.wp.com/nlgroup.com/wp-content/uploads/2017/04/Blog-SideNote_Tech-Practice-Investments_04-7-17.jpg?resize=300%2C180&ssl=1 300w" style="border: 0px; box-sizing: inherit; display: block; height: auto; margin: 20px auto; max-width: 100%;" width="509" /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<br /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Depreciation terms vary based on the equipment. Note that while you can depreciate the cost of improvements to land, you cannot depreciate land itself. Calculating depreciation is more complex than the simplistic example we provided above. You should consult with a tax professional to review your specific situation.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Next Steps</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">If you’ve been thinking about making technology or other upgrades to your dental office, 2017 is the last year to take advantage of 50 percent bonus depreciation. Consider your goals for your practice and how you want to improve the patient experience. Then, </span><span style="box-sizing: inherit; font-weight: 700;"><a href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">contact us</a></span><span style="box-sizing: inherit;"> to go over your options. We can assess the tax implications of any new office upgrade and help you get the most out of your investment.</span></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-50093257039129452542017-04-07T09:58:00.000-04:002017-04-07T09:58:18.325-04:00Tax Savings for Dentists<div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-izCBP9sPjKw/WOeayWATL9I/AAAAAAAAKMM/zGHi3tCw5LIzg11RQX2Is4NgXhPpRXpcACLcB/s1600/Money%2BGrass.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="142" src="https://2.bp.blogspot.com/-izCBP9sPjKw/WOeayWATL9I/AAAAAAAAKMM/zGHi3tCw5LIzg11RQX2Is4NgXhPpRXpcACLcB/s320/Money%2BGrass.jpg" width="320" /></a></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;"><br /></span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Could you be paying too much in taxes for your dental practice? </span><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Below are five areas where you may be overspending.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<b style="box-sizing: inherit;">Deducting Business Expenses</b></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Other than the typical business expenses you’re probably aware of, like meals and entertainment and mileage, there are other deductible business expenses that could save you more on taxes. These include business insurance premiums, retirement plans, employee pay, medical benefits, rent, tax preparation services, and more. The key is if the business expense is ordinary and necessary.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<b style="box-sizing: inherit;">Entity Type</b></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Your dental practice’s business structure can also be a source of tax savings. For example, if you’re structured as a Limited Liability Corporation (LLC) or Sole Proprietorship, you’re paying the full amount of self-employment taxes, which are about 15 percent. If your practice is an S-Corporation, on the other hand, you only pay the employer’s share of self-employment taxes, or about 7.5 percent.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">There are other savings in business structure, too. You could consider more than one entity type. For example, patient and insurance receivables go through an S-Corporation, which saves money on self-employment taxes. You also avoid the double taxation characteristic of a C-Corporation. Your secondary entity, a C-Corporation, is used for management and administrative expenses. Or, you can elect to have your LLC taxed as an S-Corporation, whereby only the owner’s salary is subject to full self-employment taxes.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Income shifting can be a complicated but very effective tax savings strategy.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<b style="box-sizing: inherit;">Employee Benefits</b></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Offering employee benefits is a win-win: you create a more engaged, productive work environment and you can typically write off the costs. A sample of employee benefits you can deduct is below.</span></div>
<ul style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; list-style-type: none; padding-left: 1.5em;">
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Medical</span></li>
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Retirement</span></li>
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Fringe Benefits, including:</span><ul style="box-sizing: inherit; list-style-type: none; padding-left: 1.5em;">
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Transportation costs</span></li>
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Insurance (disability, life, etc)</span></li>
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Dependent care</span></li>
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Education reimbursement</span></li>
</ul>
</li>
</ul>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">There is added value with employee benefits, since they’re not counted as taxable income (unless your staff pays a portion of fringe benefits).</span></div>
<hr style="border-bottom-color: rgb(221, 221, 221); border-bottom-style: solid; border-left: 0px; border-right: 0px; border-top: 0px; box-sizing: content-box; color: #333333; cursor: default; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; height: 0px; margin: 1.5em 0px;" />
<h2 data-mce-style="text-align: center;" style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 1.5rem; line-height: 1.2; margin: 0px 0px 0.75em; text-align: center;">
<strong style="box-sizing: inherit;">Check <a data-mce-href="https://www.benefitnews.com/slideshow/20-companies-with-the-best-benefits-of-2017" href="https://www.benefitnews.com/slideshow/20-companies-with-the-best-benefits-of-2017" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">out these 20 U.S. companies</a> with the best employee benefits.</strong></h2>
<hr style="border-bottom-color: rgb(221, 221, 221); border-bottom-style: solid; border-left: 0px; border-right: 0px; border-top: 0px; box-sizing: content-box; color: #333333; cursor: default; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; height: 0px; margin: 1.5em 0px;" />
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<b style="box-sizing: inherit;">Medical Benefits</b></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Because this can be such an overlooked area of tax savings, medical benefits merits its own section.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">In general, you can write off the costs of the following payments on your dental practice’s taxes:</span></div>
<ul style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; list-style-type: none; padding-left: 1.5em;">
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Group health insurance premiums</span></li>
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Health savings accounts (HSAs)</span></li>
<li data-mce-style="font-weight: 400;" style="box-sizing: inherit; margin-bottom: 5px;"><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Health reimbursement arrangements (HRAs)</span></li>
</ul>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">An HRA option for smaller dental practices that do not offer group medical insurance is a Medical Expense Reimbursement Plan (MERP). MERPs allow you to cover a portion of your staff’s medical costs, including copayments, deductibles, and qualified medical expenses. In doing so, you can write off those medical expenses. MERPs can be useful for dental practices structured as sole proprietors or LLCs with less than 50 full-time and full-time equivalent employees. Although MERPs previously did not conform to ACA standards, updated regulations permitting MERPs took effect after December 31, 2016.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">Note: if your dental practice is a sole proprietorship, maximizing medical benefits will be more difficult.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<b style="box-sizing: inherit;">Year-End Tax Planning and Projections</b></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">There are few better ways to manage your tax burden than planning ahead. If you schedule a year-end planning session with your CPA, you can look at paying certain known expenses in December or making a charitable donation before year-end, both of which result in tax deductions. You will also get an idea of your income in the next year, and plan quarterly estimated payments. This saves money because if you underpay your taxes, you’ll incur a penalty come Tax Day.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span data-mce-style="font-weight: 400;" style="box-sizing: inherit;">We’re here to help manage your taxes. With tax season nearly over, now is a great time to plan for the rest of 2017. </span><a data-mce-href="mailto:info@dentalcpas.com" href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">Contact our office</a><span data-mce-style="font-weight: 400;" style="box-sizing: inherit;"> to schedule an appointment.</span></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-75416958845371925172017-03-22T10:02:00.000-04:002017-04-07T10:04:49.253-04:00Making the Most Out Of Financial Planning<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Did you resolve to make better financial decisions for your dental practice this year?</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Financial improvements are the third most popular resolution people make on January 1. It’s not too late to make progress for 2017. Use this guide as a starting point to set up your office for success.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Tips for Financial Success from the ADA</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">According to the American Dental Association (ADA), smart financial planning for dentists </span><span style="box-sizing: inherit; font-weight: 700;">begins with a</span> <span style="box-sizing: inherit; font-weight: 700;">profitable practice</span><span style="box-sizing: inherit;">. A profitable practice begins with raising fees. A good rule of thumb is to implement a small increase every ten months; that way, you’re netting one extra increase over a five-year period.</span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-EMnGUgKn5xE/WOeb2aVJfDI/AAAAAAAAKMU/fvW0K9iiMsIR4zVjlQE2f3lmOLCo9DWUgCLcB/s1600/Blog%2BSideNote_Financial%2BPlanning_03-22-17.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="191" src="https://4.bp.blogspot.com/-EMnGUgKn5xE/WOeb2aVJfDI/AAAAAAAAKMU/fvW0K9iiMsIR4zVjlQE2f3lmOLCo9DWUgCLcB/s320/Blog%2BSideNote_Financial%2BPlanning_03-22-17.jpg" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
<span style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px;">Next, on the ADA’s list of recommendations is </span><span style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; font-weight: 700;">collecting 100 percent net</span><span style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px;">. Make sure you see all the gains from your work. Setting your expectations lower can impact your profitability and your staff’s collection procedures. So if your monthly gross is $50,000 and after insurance adjustments and other write-offs, the net is $45,000, make $45,000 your collection goal. Don’t settle for less.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-XW-orSkzrv0/WOeboKFcyeI/AAAAAAAAKMQ/gahFN5hfnmcrJpuQIX-C7XEV8GLBOWwXQCLcB/s1600/Blog%2BSideNote2_Financial%2BPlanning_03-22-17.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" src="https://1.bp.blogspot.com/-XW-orSkzrv0/WOeboKFcyeI/AAAAAAAAKMQ/gahFN5hfnmcrJpuQIX-C7XEV8GLBOWwXQCLcB/s320/Blog%2BSideNote2_Financial%2BPlanning_03-22-17.jpg" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">The third tip for financial success is having a </span><span style="box-sizing: inherit; font-weight: 700;">plan for consistent growth</span><span style="box-sizing: inherit;">. Involve your staff in this discussion, and benchmark at least the following figures:</span></div>
<ul style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; list-style-type: none; padding-left: 1.5em;">
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Gross Production</span></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Net Production</span></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Collections</span></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">Net Collections</span></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><span style="box-sizing: inherit;">New Patients</span></li>
</ul>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">In 2015, the median gross billing for dentist owners in private practice, including specialists, was $640,000. The top source of gross billings in 2015 was private insurance, followed by direct patient payments, managed care, and government programs.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit; font-weight: 700;">Other Recommendations</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Other recommendations include viewing overhead expenses in terms of revenue, doing everything possible to ensure quality patient care, and properly managing debt.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Don’t be so quick to cut expenses if doing so would negatively impact practice growth. For example, investing in a new patient billing system requires up-front expenses, staff training, and perhaps ongoing maintenance expenses. If the new billing system allows you to serve patients better and more efficiently, it’s a win in the long run.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">When it comes to debt, debt that will increase your practice’s profitability and efficiency is good. Think mortgage, software, and better equipment. But any debt you struggle to pay off is problematic.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;">Practice growth planning is time-consuming and sometimes difficult. But it’s time well spent. Don’t put off your financial planning goals. Put a plan in place now and see the benefits throughout 2017 and beyond.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<a href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration-line: none; transition: color 0.15s ease;">Contact us today</a><span style="box-sizing: inherit;"> to make the most of the financial planning at your dental practice.</span></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<span style="box-sizing: inherit;"><br /></span></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-67061917106365645472017-03-16T11:39:00.000-04:002017-03-16T11:39:01.816-04:00At a Glance: Important Tax Deadlines for March and April<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
According to a recent study on dental practice seasonality trends, March and April are among the busiest months of the year. Does this sound like your dental practice?</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
If so, you’ve no doubt also noticed this coincides with tax season. To help make your busiest months a little easier, here are the tax deadlines for March and April.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">March 15</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Dental Partnerships </strong><strong style="box-sizing: inherit;">should</strong> File a 2016 tax return (Form 1065). Provide each partner in your dental practice with a copy of Schedule K-1 of Form 1065, or a substitute Schedule K-1. To request an automatic 6-month extension to file the return and provide Schedules K-1, use Form 7004 to extend your filing deadline to September 15.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<img alt="" class="aligncenter wp-image-2327 " data-mce-src="https://nlgroup.com/wp-content/uploads/2017/03/Blog-SideNote_NewToTaxPlanning_03-13-17-1024x614.jpg" height="301" src="https://nlgroup.com/wp-content/uploads/2017/03/Blog-SideNote_NewToTaxPlanning_03-13-17-1024x614.jpg" style="border: 0px; box-sizing: inherit; display: block; height: auto; margin: 20px auto; max-width: 100%;" width="502" /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Large Dental Partnerships (100+ partners) </strong><strong style="box-sizing: inherit;">should </strong>file a 2016 tax return (Form 1065-B). Provide each partner in your dental practice with a copy of Schedule K-1 of Form 1065-B, or a substitute of Schedule K-1. This due date applies even if you request an extension of time to file Form 1065-B by filing Form 7004. To request an automatic 6-month extension and move your filing deadline to September 15, use Form 7004.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">If your dental practice is structured as an</strong><strong style="box-sizing: inherit;"> S-Corporation, </strong><strong style="box-sizing: inherit;">file </strong>a 2016 income tax return (Form 1120S) and pay any tax due. Provide each shareholder with a copy of Schedule K-1 of Form 1120S, or a substitute of Schedule K-1. To get an automatic 6-month extension of time to file, <a data-mce-href="http://www.taxextension.com/resources/irs-tax-extension-form-7004-businesses" href="http://www.taxextension.com/resources/irs-tax-extension-form-7004-businesses" style="box-sizing: inherit; color: #477dca; text-decoration: none; transition: color 0.15s ease;">use Form 7004</a> and pay what you estimate you owe on your return.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">If your dental practice is</strong><strong style="box-sizing: inherit;"> electing S corporation treatment beginning with calendar year 2017, </strong><strong style="box-sizing: inherit;">you should </strong>file Form 2553 (Election by a Small Business Corporation). If you file Form 2553 late, S corporation treatment of your dental practice will begin with calendar year 2018.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">March 31</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">File the following forms with the IRS if they apply to your dental practice. Note that a deadline of March 31 for these forms only applies if you’re filing online.</strong></div>
<ul style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; list-style-type: none; padding-left: 1.5em;">
<li style="box-sizing: inherit; margin-bottom: 5px;"><strong style="box-sizing: inherit;">Form 1098 (Mortgage Interest Statement)</strong></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><strong style="box-sizing: inherit;">Form 1099 (Self-Employment Income)</strong></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><strong style="box-sizing: inherit;">Form 3921 (Exercise of an Incentive Stock Option), and</strong></li>
<li style="box-sizing: inherit; margin-bottom: 5px;"><strong style="box-sizing: inherit;">Form 3922 (Transfer of Stock Acquired Through an Employee Stock Purchase Plan)</strong></li>
</ul>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<img alt="" class="aligncenter wp-image-2325 " data-mce-src="https://nlgroup.com/wp-content/uploads/2017/03/Blog-SideNote_Tax-Deadline_03-13-17-1024x614.jpg" height="342" src="https://nlgroup.com/wp-content/uploads/2017/03/Blog-SideNote_Tax-Deadline_03-13-17-1024x614.jpg" style="border: 0px; box-sizing: inherit; display: block; height: auto; margin: 20px auto; max-width: 100%;" width="570" /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">April 18</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Dental Corporations </strong><strong style="box-sizing: inherit;">should </strong>file a 2016 income tax return (Form 1120) and pay any tax due. To request an automatic 6-month extension of time to file, use Form 7004 and pay what you estimate you owe on your return.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
You should also deposit the first installment payment for your 2017 estimated income tax.<br style="box-sizing: inherit;" />If you’re not already working with Dental CPAs for your practice’s tax planning, <a data-mce-href="mailto:info@dentalcpas.com" href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration: none; transition: color 0.15s ease;">contact us today</a>. We can help manage your tax liability and reduce your stress during your busiest months.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
For more information, contact out DentalCPA team at 844-DENT CPA (336-8272) or email<a data-mce-href="mailto:info@dentalcpas.com" href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration: none; transition: color 0.15s ease;"> info@dentalcpas.com </a></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-22989930848794935872017-03-15T11:38:00.000-04:002017-03-15T11:38:35.967-04:00Are You Ready For Tax Season?<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<img class="aligncenter wp-image-2292 size-full" data-mce-src="https://nlgroup.com/wp-content/uploads/2017/02/tax-word-cloud.jpg" height="440" src="https://nlgroup.com/wp-content/uploads/2017/02/tax-word-cloud.jpg" style="border: 0px; box-sizing: inherit; display: block; height: auto; margin: 20px auto; max-width: 100%;" width="680" /></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
If you haven’t already, it’s time to skim through your tax documents to ensure you are well prepared for filing. Here are some important items to remember:</div>
<ol style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px;">
<li style="box-sizing: inherit;">Check your records for invoices of single item purchases of more than $2500. These fixed assets need to be capitalized. Review your invoices to make sure nothing is coded as an asset that should be an expense or the other way around.</li>
<li style="box-sizing: inherit;">Gather all your year-end loan, bank, and credit card statements so you can tie down balances as of 12/31.</li>
<li style="box-sizing: inherit;">Review receipts of meals and entertainment to see if anything should be coded to employee expenses. Often, there’s a good number of items that are really lunch for the employees which have a great tax benefit.</li>
<li style="box-sizing: inherit;">Review your records of gifts distributed in 2016. Gifts that were either for marketing or employee purposes should be correctly coded for them to potentially be considered a deductible expense.</li>
<li style="box-sizing: inherit;">If you participate in an employer match program, ensure that all payments are made before you file your return.</li>
</ol>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
For more information or answers to questions specific to your practice's situation, call our office at 844-DENT CPA(336-8272).</div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-27392581019918083852017-03-15T11:36:00.001-04:002017-03-15T11:36:08.745-04:00Tips for Entering Your First Practice<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<img alt="" class="aligncenter size-medium wp-image-2263" data-mce-src="https://nlgroup.com/wp-content/uploads/2017/02/Dental-Student-300x162.jpg" height="162" src="https://nlgroup.com/wp-content/uploads/2017/02/Dental-Student-300x162.jpg" style="border: 0px; box-sizing: inherit; display: block; height: auto; margin: 20px auto; max-width: 100%;" width="300" />You are out of school, and it’s time to begin your dental career. Where will you start? Have you found a place to work? As multiple questions run through your head, let’s discuss some tips that will help you navigate through the “what’s next” phase so you can start in the right direction.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Gain Experience</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
Working for an existing practice will help you gain the experience you need to develop your skill sets as well as well help to build relationships with patients without the concerns or challenges of a business owner.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Do Your Research</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
When researching the best place to practice your associateship, it’s important that you take your time so you can find a practice that is a good fit. Don’t rush into an agreement if there are any uncertainties. Here are a few examples (not comprehensive) of what you should be discussing during the interview process:</div>
<ul style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; list-style-type: none; padding-left: 1.5em;">
<li style="box-sizing: inherit; margin-bottom: 5px;">Clearly communicate your income goals</li>
<li style="box-sizing: inherit; margin-bottom: 5px;">If you’re interested in purchasing the practice down the line, share your intentions</li>
<li style="box-sizing: inherit; margin-bottom: 5px;">Be honest about your skill sets and comfort level</li>
<li style="box-sizing: inherit; margin-bottom: 5px;">Inquire about the mentoring dentist’s clinical philosophy. Will you be expected to follow his or her guidelines fully?</li>
</ul>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
In order to find a good fit, open communication is essential. After covering your key areas, the mentoring dentist should also clearly communicate his or her expectations. Such as production goals, required schedule, transition plans, compensation, as well as the role you are expected to play in relation to the staff. Again, these are only a few examples; you should seek as much clarification as you need to confidently make a decision.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Begin Your Journey with an End Goal in Mind</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
Do you plan to own your own practice someday? Speak with your potential employer about the possibility of buying into or purchasing the practice in the future. Negotiate a guaranteed salary when you begin work at the practice. After nine months discuss basing your salary on the amount of business you bring to the practice.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Take Time to Consider Location</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
Pay attention to the location of the practice in which you are considering for your associateship. Ultimately, of you plan on owning the practice, its location will determine your future patient base, and how your revenue stream will look.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Develop Your Team</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
Begin relationships with bankers, CPAS, investment broker, attorney, and insurance agent as well as dental brokers. It’s never too early to establish a strategy with a team of advisors that can help you elevate to the next stage of your career. Also, building relationships with other employed team members can be beneficial later on in your career.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<strong style="box-sizing: inherit;">Have a Plan</strong></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
The key to successfully transitioning out of dental school is to have clear vision of the direction in which you want your career to go. With any professional journey, obstacles are inevitable. By having clear goals and a long term plan in place, you will remain on track for a successful future.</div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
For more information, contact our office at 844-DENT CPA (336-8272) or <a data-mce-href="mailto:info@dentalcpas.com" href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; text-decoration: none; transition: color 0.15s ease;">info@dentalcpas.com </a></div>
<div style="box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; margin-bottom: 0.75em;">
<em style="box-sizing: inherit;">Note: The content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.</em></div>
<div>
<em style="box-sizing: inherit;"><br /></em></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-15454940522857372952016-12-07T15:40:00.001-05:002016-12-07T15:40:16.250-05:00End of the Year Tips to Minimize Your 2016 Taxes<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">As many dentists know, the upcoming year end is always the time to consider minimizing your taxes. Here are a few tips from the CPAs at the <a href="http://www.dentalcpas.com/" target="_blank"><span style="color: #888888; text-decoration: none; text-underline: none;">Dental CPAs</span></a>.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<ol start="1" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Maximize your contributions to retirement plans. <a href="http://www.mydollarplan.com/401k-and-ira-limits/" target="_blank"><span style="color: #888888; text-decoration: none; text-underline: none;">Contribute more to your 401k</span></a> by the end of the year to reduce your taxable income and your tax bills.<o:p></o:p></span></li>
</ol>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 3.0pt;">
<br /></div>
<ol start="2" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Consider using a credit card to prepay expenses that can generate deductions for this year such as supplies. <br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">If possible, defer your income. Take capital gains in 2017 instead of 2016. This move only will be beneficial if you think you will be in the same or a lower tax bracket next year. <o:p></o:p></span></li>
</ol>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 3.0pt;">
<br /></div>
<ol start="4" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Consider bonus depreciation, it’s a way to write off the cost of an asset purchased for business use. The Section 179 2016 deduction limit is $500,000, which can be used on new and used equipment and off-the-shelf software. To qualify for the deduction, the equipment must be financed or purchased and put into service by the end of the day on December 31, 2016.<o:p></o:p></span></li>
</ol>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 3.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<i><span style="color: #222222; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Remember to keep records of the equipment or software purchases that you plan to claim for the Section 179 deduction, including where it was purchased, the date it was acquired, and the date it was placed into service. <o:p></o:p></span></i></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 3.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<br /></div>
<ol start="5" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Give away your money. If you were planning to give a lot of money to someone, utilize your annual gift exclusion of $14,000. This is not an income tax savings strategy but rather is an estate reduction strategy. If you are concerned about having a large taxable estate, don’t miss the opportunity to utilize your annual gift exclusion each year.<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Finalize your records. If you plan </span><span style="color: windowtext; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">to deduct mileage on your personal car, </span><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">make sure your mileage logs are complete. Review how <a href="http://www.mydollarplan.com/how-long-do-we-really-need-to-keep-those-papers/" target="_blank"><span style="color: #888888; text-decoration: none; text-underline: none;">long you need to keep your paperwork</span></a> before throwing out any records.<o:p></o:p></span></li>
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Sell investments such as stocks and mutual funds to realize losses. Then use those losses to offset any taxable gains you have realized during the year. Losses offset gains dollar for dollar. <o:p></o:p></span></li>
</ol>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 3.0pt;">
<br /></div>
<ol start="8" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">If possible, contribute the maximum to your retirement account ($18,000 for 2016, $24,000 if you are age 50 or over). These accounts can grow to a substantial sum because they compound over time free of taxes. <o:p></o:p></span></li>
</ol>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 3.0pt;">
<br /></div>
<ol start="9" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Fund your IRA. If you cannot make a deductible IRA contribution, consider whether you should make a non-deductible IRA contribution as it could become a possible future Roth IRA conversion for retirement or estate planning purposes. You have until APRIL 15, 2017 to make IRA contributions for 2016 but the sooner you get the money into the account, the sooner it has the potential to start to grow tax-deferred.<o:p></o:p></span></li>
</ol>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 3.0pt;">
<br /></div>
<br />
<ol start="10" style="margin-top: 0in;" type="1">
<li class="MsoNormal" style="background: white; color: #222222; line-height: normal; margin-bottom: 3.0pt; mso-list: l0 level1 lfo1;"><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Do an alternative minimum tax (AMT) analysis. If there’s a chance that you will be </span><span style="color: windowtext; font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">subject to AMT</span><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">, analyze your deductions to see if you are better off waiting to make some of the above moves. Once AMT comes into play, some of the end of the year tax moves will have no tax benefit. Deductions such as state income taxes and real estate taxes are always an AMT deductibility issue.<o:p></o:p></span></li>
</ol>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-53016971822041957352016-11-14T12:04:00.001-05:002016-11-14T13:38:34.866-05:00Get Your Education On!<div class="MsoNormal">
<b><span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 115%;">Get Your Education On!<br /><br /><o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">Have you ever wondered what you need to know about the financial operations of your practice? Have you ever wondered what you should be looking at and monitoring when it comes to your practice numbers? Well, you can stop wondering! Next month, our very own Lance Jacob will be teaching dentists on Dentaltown about these very issues, and you can learn as well.<br /><br /><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">Lance prepared a video course for Dentaltown that qualifies for CE, and the topic is “Improving Patient Care by Improving Practice Performance”. Let me tell you a little about it and some of the things you’ll learn.<br /><br /><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">Viewers of the course will gain some insight on what they need to be looking at when it comes to the operational performance of their practice and how their practice financials can aid in that insight. You’ll learn some of the key performance indicators you should be calculating and how to interpret the results. You’ll learn about what our latest performance statistics showed so you can compare your practice with those results. <br /><br /><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">Lance will discuss production, production adjustments, collections, production by provider, etc. This will include various revenue ratios you should be looking at and what the typical GP practice looks like as it relates to these ratios.<br /><br /><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">Lance will also talk about practice overhead for a GP practice and things you need to know about overhead specifics and what our survey results showed about the average overhead statistics for a GP practice. <br /><br /><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">If you’d like to get your education on, schedule an hour to view the course then login to Dentaltown today and begin learning. Lance's CE course will be available the first week of December. </span><br />
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;"><br /><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">If you’re not a member of Dentaltown you should be, their motto is “You’ll never have to practice alone again!” Sign up and become a member so you can view this course and many other courses...it’s a one-stop shop for much of your CE needs. The forums board is incredible with forums on just about every practice topic you can think of so you can get feedback from dentists just like you as well as other dental related consultants and experts.<br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;">For more information on accessing this CE course or to set up an appointment for a consultation on improving your practice's performance, please give us a call at 844-DENT-CPA, or visit <a href="http://www.dentalcpas.com/">www.dentalcpas.com</a> </span><br />
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;"><br /></span>
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;"><a href="http://www.dentaltown.com/Dentaltown/onlinece.aspx" target="_blank"><br /></a></span>
<div style="text-align: center;">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;"><a href="http://www.dentaltown.com/Dentaltown/onlinece.aspx" target="_blank">Click Here To Be Directed to Dentaltown's Continuing Education Page </a></span></div>
</div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;"><u><br /></u></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; line-height: 115%;"><u>About Lance Jacob</u></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif;">Lance Jacob is a Principal with Naden/Lean, LLC. He provides accounting, tax, and consulting services for individuals and businesses which include dentists, other healthcare providers, retail, and equine. With his equine clients, Lance works to ensure they are in compliance with the federal, state, and local taxing authorities with respect to employment, business tax and reporting issues.</span><span style="font-family: "calibri" , sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<br /></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-24227794366041413412016-11-02T14:47:00.001-04:002016-11-02T14:47:51.162-04:00Practice Sellers - How to Maintain Practice Value Before a Sale<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">During my many buyer representation engagements I tend to see some common issues when it comes to practice valuations that sellers could have avoided to help maintain their practice values. Here are some of those areas. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">1.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Clean Record Keeping</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">Remember, buyers and their advisors will be picking over your information, it’s like inviting someone into your home, and you want it to be clean. Your practice books and records should be the same way, clean, easy to read, and at your finger tips. For example, your Quickbooks file should match the tax return numbers and if not to the dollar, pretty darn close and easy to match up. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">2.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Complete and Accurate Practice Management (PM) Reporting</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">Make sure your PM software is current and accurate. You should be recording production, adjustments and collections by provider. Clean up your accounts receivables WELL before you plan on selling. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">3.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Don’t Coast</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">This is one of the worst things a seller can do prior to selling their practice. It decreases dentistry production and therefore, decreases practice revenue which buyers AND bankers do NOT like. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">4.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Don’t Reduce Your Hygiene Hours</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">Let me correct myself, THIS is the worst thing you can do. Not only are you reducing your practice revenue, you’re potentially losing patients as well. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">5.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Update Office Appearance and Equipment</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">Again, just like a house, an outdated décor with old equipment will generally create less excitement with a buyer and less excitement means a reduced offer. Create excitement with your buyers with current décor, updated equipment and a fresh appearance. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">6.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Overpaid Staff</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">Be aware of your staff compensation and make an effort to make sure it stays within “market” for your area. There’s nothing wrong with showing appreciation to your staff with discretionary bonuses, fancy trips, paying for CE travel, etc., however, make sure they’re aware that these are not customary fringes so they don’t come to expect it from their new boss. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">7.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Inflated Overhead</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">Well before you sell, I’m talking 2-3 years ahead of time, begin to evaluate your practice overhead expenses and make sure you’re ONLY spending on things you NEED. I’m not talking about skimping on updated equipment; I’m talking about wasting money on unnecessary supplies, small toys, unnecessary services, etc. Become a good CFO! Profits will drive value most of the time and wasted overhead eats into your profit and will usually drive down the value of the practice. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">8.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Office Policies and Systems</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">Well before you sell, make sure you have excellent operating systems and policies. If you’re not collecting a patient’s portion of the fee at the time of visit, make that change now. If you don’t take credit cards, start taking them. If you’re not running daily, weekly and monthly management reports, start doing so. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">9.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Track Your Referrals</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">At least one year prior to a sale, begin tracking the procedures you refer out every day and be prepared to provide your broker with some really good, accurate information for the prospective buyers. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoListParagraph" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 10pt 36pt; text-indent: -18pt;">
<span style="font-size: 14pt; line-height: 21.4667px;"><span style="font-family: Calibri;">10.</span><span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><span style="font-family: Calibri;"><strong><span style="font-size: 14pt; line-height: 21.4667px;">Dont’t Change or Eliminate any PPOs Prior to a Sale</span></strong><span style="font-size: 14pt; line-height: 21.4667px;">: </span></span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<span style="font-family: Calibri, sans-serif; font-size: 14pt;">This can backfire if you begin to see fewer patients even if the revenue stays about the same. In most cases when a practice decides to eliminate PPOs, there’s a transition period where you’ll have holes in the schedule. Those PPO patients that opt NOT to come back for their scheduled recare appointment or follow-up work will in turn cause revenues to be lower for a period of time. </span></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt;">
<br /></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt 0pt 0pt 36pt;">
<br /></div>
<div class="MsoNormal" style="background-color: white; color: #333333; font-family: Arial, Helvetica, sans-serif; font-size: 14px; margin: 0pt;">
<em><span style="font-family: Calibri, sans-serif; font-size: 14pt;">Tim Lott, CPA, CVA has decades of experiences working with dentists at all stages of their careers. He is a regular speaker at study clubs, societies, and dental schools. Tim is a partner at Naden/Lean, of which the Dental CPAs is a division. You can reach Tim at <a href="mailto:tlott@dentalcpas.com" style="color: #486884; cursor: pointer; text-decoration: none;">tlott@dentalcpas.com</a>or (800) 772-1065. </span></em></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-79403047423474077992016-09-14T12:42:00.000-04:002016-09-14T12:42:00.347-04:00Buying a Dental Practice and Wondering if Overhead was Adjusted Properly?<div class="MsoNormal">
There’s a great thread on dentaltown.com about why buyers should NOT pay for potential and projections. Part of the discussion revolves around normalizing cash flow, particularly the overhead of the practice. This prompted me to write a blog post to help potential buyers evaluate a seller’s cash flow specifically with overhead. <o:p></o:p></div>
<div class="MsoNormal">
Over the past 25 years or so, as I’ve assisted buyers with managing their due diligence, assessing the asking price, and improving the performance of the practice, I’ve witnessed how the overhead assumptions used to normalize cash flow can drive the price that sellers ask for their practices.<o:p></o:p></div>
<div class="MsoNormal">
I’ve compiled a list of common overhead expenses categories and some of the issues we’ve uncovered over the years. Buyers need to consider how various expenses might be impacted when they take over and how these expenses may have been adjusted for cash flow purposes. Keep in mind that many professionals <b><i> (broker, CPA, seller rep, sometimes the seller themselves, or anyone charged with the task of determining a practice's asking price)</i></b> who are trying to normalize cash flow, may not have known about these issues with the expenses they adjusted or simply didn’t take the time to understand how their adjustments might impact other expenses. After all, their primary responsibility is determining an asking price, NOT performing due diligence. That said, we know there are some professionals who will use overhead as a way to increase cash flow and therefore price. One way to accomplish this is by reducing overhead by adjusting (reducing) certain expense categories to “industry norms”. While the reduction in certain expenses may be valid and logical, unfortunately, we rarely see expenses adjusted by increasing them to “industry norms” which should follow the same logic. <o:p></o:p></div>
<div class="MsoNormal">
The items below should assist a buyer when evaluating a practice’s overhead and how that overhead might change under their control and how “industry norm” adjustments might impact price. At the very least this will help them to know the appropriate questions to ask.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Accounting/Professional Fees:</b> <br />Reducing this to “industry norms” may not take into account a CPA firm which also does payroll, maybe full-service bookkeeping, etc., a buyer may have to pay for the payroll processing and bookkeeping, therefore, automatically reducing this may be an oversight. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Advertising:<o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle">
If a seller’s cash flow has little to no advertising, a buyer has to ascertain whether or not they will need to add this expense in order to properly maintain the seller’s existing patient base with an increased flow of new patients. Many professionals overlook this as a necessary expense and will sometimes reduce it to “industry norms” for a FFS practice when that’s how the FFS gets its patients. So make sure you understand the appropriate level of this expense.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Computer Maintenance & Expenses: <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle">
Many times we see old practices that haven’t been computerized and this expense is missing completely from their cash flow. With today's technology, it makes absolutely NO sense to operate any business, including a dental practice without computers, software, and other technology. Buyers must determine how much they need to budget for this expense as part of their overhead.<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Contract Labor/Temp Help: <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle">
Many times when a practice pays an associate as an IC, the seller will categorize their compensation to this category. However, they may also use this category for temp assistants, temp hygiene, and maybe other necessary vendors. Sometimes, a professional will eliminate the entire expense assuming it is all associate related. A buyer needs to ask for details, maybe general ledger details, and/or associate 1099s.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Insurance:</b> <br />Many times, professionals fail to adjust (increase) insurance expense for some of the additional insurances that lenders may require to provide a loan to buyers.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Office Expense and Supplies: <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle">
The industry norm is around 1%-1.5%, many times if its more than that, the professional will reduce this expense to industry norms without any consideration for what the seller may be including in this category. We’ve seen the following expenses coded as office expense and supplies: payroll processing, merchant services, software maintenance and monthly PM software fees, employee expenses like bottled water, telephone expenses, cable/internet, janitorial, dental supplies, repairs & maintenance, etc. Buyers need to see the details and determine if the adjustments the professional made are valid.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Office Rent:</b> <br />This is primarily an issue when the practice owner also owns the space. We see some professionals completely overlook this missing expense or choose a very low rent assuming the buyer will buy the space or include the mortgage payment as the “normal” expense. We believe to maintain separation of the practice value and the value of the real estate, the normalized cash flow MUST include a fair market rent and related expenses that an arms-length tenant would pay. Buyers need to know what the fair market rental rate is, even if they’re buying the space.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Repairs and Maintenance:</b> <br />We’ve seen situations where the seller is very handy and will do their own repairs to equipment and the space or, repairs and maintenance was included in dental supplies of office expenses that have been reduced to industry norms. Unfortunately, everyone can’t be a handyman & therefore, if a seller’s cash flow has very little repairs and maintenance, the buyer needs to understand why and include an amount for this, especially if it’s been eliminated from other categories.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Taxes:</b> <br />If your locality assesses personal property taxes on the value or cost of equipment, many times the assessed value of a seller is very low or nothing. A buyer needs to understand this and determine how much they’ll have to spend due to state or locality regulations. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Dental Supplies:</b> <br />Here’s another category where professionals like to reduce it to “industry norms” without looking at the details to see if they should be doing this. We have seen practices combine their lab expense, office supplies, repairs and maintenance, etc. in dental supplies. For example, many supply vendors will issue their monthly invoices that include dental supplies, repair services and\or contracts, computer services and software and even equipment. Unless sellers are careful to allocate these invoices to the various categories, it winds up in dental supplies. The professionals simply miss this fact and reduce dental supplies to industry norms blindly. Also, if the practice uses a CADCAM/milling machine this will also explain “higher than normal” dental supplies, so you have to look at this area closely.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Lab Expense:</b> <br />As noted above, we see situations where the professional has lowered dental supplies that include lab to “industry norms” and fail to INCREASE lab expense to an appropriate level. We’ve also seen situations where practices may use an in-house lab or employee, or maybe the doc creates some of their own “stuff” which makes this expense low for them, however, the buyer may not be making their own cases or choose to use an outside lab they’ve been using.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Wages:</b><br /> Here’s another area where many professionals fail to look behind the total wages to learn more about who’s getting paid & why. This is why we want to see the W-2s, to see how much is being paid for assistants, hygiene, front desk, and admin. We’ve seen situations where professionals will lower the wages to “industry norms,” then, when we get the W-2s we see they have the cleaning person and/or bookkeeper on payroll. These are expenses the buyer will likely need yet the professional has eliminated them to industry norms.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Capital Replacement (replacing old f&e):</b> <br />Here’s an area where we rarely see professionals ADD expenses to accommodate the need of a buyer to replace old equipment that’s either on its last leg OR is simply too old to even be used in dentistry.<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->-<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal;"> </span><!--[endif]--><b>Telephone/Utilities/Internet:</b> <br />While we don’t see many issues with these categories, they should still be looked at for reasonableness…we’ve seen reductions for “estimated” personal cell phone usage that’s too high or reductions for “assumed” home phone or internet connections and we find out they are legit office expenses. We’ve also seen sellers use utilities for all three of these expenses, and the professional will reduce utilities to “industry” norms without looking at the details and asking the seller about them.<o:p></o:p></div>
<div class="MsoNormal">
As a buyer, you’re getting ready to go on the hook for hundreds of thousands of dollars of debt for a business. Don’t hesitate to ask for details of certain expense categories to see what the seller has been paying or to understand why a professional adjusted them. <o:p></o:p></div>
<div class="MsoNormal">
You, the buyer, are responsible for doing your due diligence on the business you’re buying, you better know exactly what it is you’re buying. That doesn’t mean you have to go into overkill and stuck in paralysis by analysis, however, unless you do this sort of work every day, you won’t know what to focus on or what to move beyond. <o:p></o:p></div>
<div class="MsoNormal">
Hopefully, this serves as a guide to those looking to buy a practice on how to evaluate the overhead of a practice and understand why normalization adjustments were made, if they should have been made and should different adjustments should still be made. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<b><u>About Tim Lott</u></b><br />Tim Lott, CPA, CVA has decades of experience working with dentists at all stages of their careers. He is a regular speaker at study clubs, societies, and dental schools. Tim is a frequent participant and a moderator on Dentaltown.com. You can reach Tim at <a href="mailto:tlott@dentalcpas.com">tlott@dentalcpas.com</a> or any of the other dental partners/principals at (800) 772-1065 or <a href="mailto:info@dentalcpas.com">info@dentalcpas.com</a>. For more blogs, visit our <a href="https://nlgroup.com/dental-cpa-blog/">Dental CPAS blog page</a>. <o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-49585229053280226522016-09-07T09:57:00.000-04:002016-09-07T11:13:28.651-04:002015 PRACTICE FINANCIAL STATS COMMENTARY – WHAT’S CHANGED FROM FIVE YEARS AGO?<div class="MsoNormal">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">We’ve completed the process of compiling our dental practice financial statistics based upon 2014 & 2015 data and the results show very little change compared to five years ago.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">Remember, the US economy went through a downturn beginning in late 2008 which lasted probably through the majority of 2012. Therefore, the 2010 results included some of those down years and compared to 2005 we saw some interesting changes, likely due to that downturn. However, many practices began to rebound sometime in 2012, and we saw significant upticks in some practices in 2013, 2014, & 2015. We were curious to see how this would impact the financial statistics for dental practices.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">We also know that over the past five years there’s been even more technology that practices are buying and using whether it’s their dental equipment, office equipment, computers, software, and even outside service providers (to handle calls, etc.). While we were a little surprised to see that overall, the changes were minor, we’ve summarized our findings below and provide commentary as to why we think some changes occurred.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Calibri;"> 1.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-size: 14.0pt; line-height: 115%;">Revenue</span></b><span style="font-size: 14.0pt; line-height: 115%;">:<br /><br /><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">The mix of dentistry to hygiene production has increased slightly in favor of the doctor, with a ratio of 3.1:1 as opposed to 3:1 five years ago. We expected the ratio to be even higher with practices adding implants, invisalign, other ortho, sleep dentistry, etc., however, we didn’t see a big increase.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">The surprising statistic is the adjustments or write-offs. Five years ago the “average” practice was writing off 19% of their gross production, and it’s decreased to 14.4%. With all the talk about everyone joining PPOs, especially with the downturn years, we expected that to increase. That said, we’ve also seen an increase in the number of practices that have been maturing and attempting to reduce their PPO participation. Many practices have implemented in-house membership plans to battle the PPO participation urge. In-house membership plans will show a write-off percentage in the 10% neighborhood. It’s also possible and likely that more practices are opting to report their GROSS production based on their PPO reimbursements instead of the UCRs…that’s unfortunate.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">We also see a positive increase in the ratio of hygiene production to hygiene wages of 3:1, up from 2.7:1 back in 2010. This increase is likely to the impact on hygiene wages that were forced down in many parts of the country due to the economy and practices doing a better job of making sure their hygiene departments are operating as efficiently and productively as possible.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Calibri;"> 2.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-size: 14.0pt; line-height: 115%;">Labor</span></b><span style="font-size: 14.0pt; line-height: 115%;">:<br /><br /><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">There wasn’t much of a change overall. If anything, we saw the lower end of the total labor cost range dip down to 25% and as high as 29% In some cases. The average is still around 27%, and that includes wages, payroll taxes, retirement plans and other benefits. Hygiene remains around 8-10%. However, assistants actually came down a little on the top end, from 9% to 8% while front desk wages bumped up on the lower from 5% to 6%.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Calibri;"> 3.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-size: 14.0pt; line-height: 115%;">Facility Expenses</span></b><span style="font-size: 14.0pt; line-height: 115%;">:<br /><br /><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">There was no change in the facility costs and rent expenses. They both remained similar to 2010, 6-7% overall facility costs and 5-6% for rent expense.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Calibri;"> 4.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-size: 14.0pt; line-height: 115%;">Lab and Dental Supply Expenses</span></b><span style="font-size: 14.0pt; line-height: 115%;">:<br /><br /><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">These categories are beginning to show the changes in technology and additional procedure offerings. Whether it’s the use of CADCAM equipment or adding implants to the procedure mix, we think we’re seeing the changes. Dental supplies were at 4-7% back in 2010, and we’re seeing them around 6-8%, again, the cost of implants, maybe some milling supplies and even some practices doing more endo. Lab was 5-8% back in 2010, and the top end has dropped down to 7%. Practices manufacturing their own crowns will see the drop in lab and practices doing larger cases without a milling machine could see their lab hit 10-12%.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-size: 14.0pt; line-height: 115%; mso-bidi-font-family: Calibri;"> 5.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]--><b><span style="font-size: 14.0pt; line-height: 115%;">Other Costs</span></b><span style="font-size: 14.0pt; line-height: 115%;">: <br /><br /><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">In total, other costs went from 8.8% in 2010 to around 10% in 2015, a slight increase of 1.2%. We see an uptick in advertising and marketing to 2% on average, up from around 1.5% and 1.5% for collection expenses, like carecredit and merchant services, up from around 1.2% back in 2010. We also see more use of outside service providers like call centers, providers offering in-house membership, patient reminder systems, website SEO services, etc. which is likely driving the increase in some of these other expenses.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">In summary, total overhead went from 48.8% in 2010 to around 51% in 2015. Keep in mind, this is based on gross production, we also provide the stats based on net collections for those practices that record their production based on PPO fees, NOT their UCR fees.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in;">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">So overall I’d say the changes from five years ago have been nominal, yet there are a few areas like revenue, production, and clinical costs that are showing signs of “changing with the times” and for the better no doubt.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in;">
<strong style="background-color: white; box-sizing: inherit; color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; font-size: 16px; line-height: 24px;"><a data-mce-href="https://nlgroup.com/wp-content/uploads/2016/09/2014-2015-Benchmarks.pdf" href="https://nlgroup.com/wp-content/uploads/2016/09/2014-2015-Benchmarks-1.pdf" style="background-color: transparent; box-sizing: inherit; color: #477dca; cursor: pointer; text-decoration: none; transition: color 0.15s ease;" target="_blank">CLICK HERE FOR THE 2014-2015 GP Dental Practice Financial Survey Results</a></strong></div>
<br />
<div class="MsoNormal">
<i><span style="font-family: "calibri" , sans-serif; font-size: 14.0pt;">Tim Lott, CPA, CVA has decades of experience working with dentists at all stages of their careers. He is a regular speaker at study clubs, societies, and dental schools. Tim is a frequent participant and a moderator on Dentaltown.com. You can reach Tim at <a href="mailto:tlott@dentalcpas.com">tlott@dentalcpas.com</a> or any of the other dental partners/principals at (800) 772-1065 or info@dentalcpas.com <o:p></o:p></span></i></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-34222980565434126252016-08-24T11:16:00.001-04:002016-08-24T11:16:51.243-04:00Protecting Your Goodwill <div class="MsoNormal" style="background-color: white; color: #00adef; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 15pt;">
<br /></div>
<div class="MsoNormal" style="background-color: white; color: #00adef; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 15pt;">
<span style="color: #484848; font-family: "Helvetica Neue", Arial, Helvetica, sans-serif; font-size: 13.2px; line-height: 15pt;">The most valuable component of the price of a dental practice is the portion allocated to “goodwill.” Goodwill represents the intangible assets of a business—the difference between an established, successful business and one that has yet to achieve success. In an established dental practice, goodwill consists largely of the name, reputation, and skill of the dentist and team, which have led to a strong, loyal patient base and consistent inflow of new patients. For the buyer, goodwill greatly increases the likelihood of continued cash flow from retention of that patient base and from new patients.</span><span style="color: #484848; font-family: "Helvetica Neue", Arial, Helvetica, sans-serif; font-size: 13.2px; line-height: 15pt;">For you, the seller, preservation of the goodwill of your practice is paramount to a successful transition. </span></div>
<div class="MsoNormal" style="background-color: white; color: #00adef; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 15pt;">
<br /></div>
<div class="MsoNormal" style="background-color: white; color: #00adef; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 15pt;">
<b><span style="color: #484848;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Keep on Building Goodwill<o:p></o:p></span></span></b></div>
<div class="MsoNormal" style="background-color: white; color: #00adef; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 15pt;">
<span style="color: #484848;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span></span></div>
<span style="background-color: white; color: #484848; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">In order to assure that you retain goodwill not only prior to selling but also through the critical transition time during and after the sale, you should maintain your reputation and good name within the practice and community at all times. Through the transition process and even afterward, remain involved in study clubs, the local dental association, community organizations and volunteer groups such as Rotary. This not only will help ensure that you receive proper compensation for your years of practice building, but also that your buyer receives full value. Even after you retire, positive support and praise for the new dentist (such as in social settings) will go a long way toward continued retention of patients in the new practice.</span></span><br style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #484848; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"></span><b style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"><span style="color: #484848;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Choose the Right Broker</span></span></b><br style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #484848; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><b><br /></b></span></span><span style="background-color: white; color: #484848; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Working with an experienced and ethical transition broker is also invaluable in preserving goodwill and value. The <a href="http://www.nltransitions.com/" target="_blank">right broker</a> will perform a legitimate appraisal and value the practice in a manner that reflects the true anticipated cash flow following the sale, rather than telling you what you may want to hear and subsequently luring a buyer into a bad deal that destroys goodwill. The right broker will also work to find a buyer who is an appropriate fit for the practice, one whose abilities, ethics and practice style match your own, preserving your reputation and the reputation of the practice. Additionally, the right broker will guide the entire process, working with lenders, accountants, and counsel who are knowledgeable in dental transitions. The right broker will also work toward the ultimate goal of having a satisfied seller and buyer, preventing negative interactions that can sometimes occur when working with an inexperienced or self-serving advisor.</span></span><br />
<span style="background-color: white; color: #484848; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span></span>
<span style="background-color: white; color: #484848; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">For more information, visit <a href="http://www.dentalcpas.com/" target="_blank">www.dentalcpas.com </a></span></span>Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-23503542401707785792016-07-14T10:30:00.000-04:002016-07-14T10:30:14.556-04:00Buyer Beware – Practice Prices Based on Rules of Thumb<div class="MsoNormal">
We’ve recently seen an uptick in practice purchase/sale transactions involving specialists such as endo, oral surgery, perio, and prostho. Obviously, the vast majority of practice purchase sales we see are general dentistry because the vast majority of practices out there are general dentistry.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A common problem we’re seeing when reading through reports prepared by brokers for these specialty practices to determine selling price is using general dentistry rules of thumb to determine that price. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Here’s what I mean:<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
One very common rule of thumb as it relates to the selling price for a general dentistry practice is that statistically, the “typical” general dentistry practice will sell for between 60-75% of the practice collections. I know, some will use 80-85% as the top end of the range and even bump the bottom number to 65-70% when using this as a valuation method, at the end of the day it’s still a statistic, a rule of thumb, NOT a valuation method.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The problem we see in some of the reports used to establish the price for these specialty practices is that they’re using the general dentistry statistics of 60-75% to determine the asking price for these practices, and these are NOT general dentistry practices.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
You see, most specialty practices are uniquely different than general dentistry practices in that their revenue is derived AND dependent on referral sources from other professionals. Rarely will a specialty practice’s location, name, signage, telephone number or website be the driving force behind their revenue like you’ll see in many general dentistry practices. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Practices, where revenues are driven by referral sources, present a higher degree of risk to any buyer of these practices since these referrals rely mainly on personal relationships with the selling doctor, especially when the practice has only ONE doctor/owner or a part time associate. IF it’s a group practice where the buyer is buying in to an interest of less than 100%, some of that risk is mitigated since there are other doctors/owners who are still working and can retain those referrals and assist in transitioning those referrals to the buyer. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Because there is a higher risk with retaining these referrals and transitioning the personal relationships from seller to buyer, the capitalization rates used to value profits are generally higher than you’ll see for general dentistry practices. Or said another way, the multiples of profits are generally lower for specialty practices compared to general dentistry practices. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Therefore, using general dentistry statistics or rules of thumb to determine the asking price of a specialty practice that depends on referrals will almost certainly provide a false or misleading number in terms of the value of the practice. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So for those specialist buyers out there looking to purchase a practice, just beware of this and make sure you do your own assessment of the practice financials to determine if the asking price is reasonable. <o:p></o:p></div>
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p><span style="font-size: x-small;"><span style="color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; line-height: 24px;">Written by </span><a href="https://nlgroup.com/profile/timothy-lott-cpa-cva/" style="box-sizing: inherit; color: #477dca; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; line-height: 24px; text-decoration: none; transition: color 0.15s ease;" target="_blank">Tim Lott, CPA, CVA</a><span style="color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; line-height: 24px;">. For more information on our services, please feel free to contact one of the members of the </span><a href="https://nlgroup.com/dental-cpas/" style="box-sizing: inherit; color: #477dca; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; line-height: 24px; text-decoration: none; transition: color 0.15s ease;" target="_blank">Dental CPA</a><span style="color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; line-height: 24px;"> team by calling 844-DENT CPA or emailing </span><a href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #477dca; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; line-height: 24px; text-decoration: none; transition: color 0.15s ease;">info@dentalcpas.com</a><span style="color: #333333; font-family: "Helvetica Neue", Helvetica, Roboto, Arial, sans-serif; line-height: 24px;">.</span></span></o:p></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-61422314676237243432016-07-07T10:42:00.000-04:002016-07-08T09:19:01.048-04:00What Percentage of the Purchase Price should be Allocated to Goodwill?<div class="MsoNormal">
I see this question frequently, and occasionally I get asked this question from potential buyers. I see claims made by sellers’ advisors that goodwill should be at least 80% of the total purchase price or worse, they suggest that anything lower than 80% will draw the attention of the IRS. This is just plain FALSE!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I hate to break the news to all the folks who believe that there are “standard” percentages that should be used, there aren’t! In fact, I often define goodwill for my buyers as “the difference”. That’s right; goodwill = the difference. Here’s what I mean by that.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Let’s assume you have two practices, each 4 Ops with nearly identical equipment and it’s valued at $150,000. Let’s also assume they’ll have the same allocation to the covenants of $5,000 and the only other remaining assets that need to be allocated are dental supplies and goodwill. Practice A has revenue of $1.5 mil and is selling for $1mil while practice B has revenue of $750k and is selling for $500k. Here’s the proper way to go about allocating the purchase price:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b> Practice A Practice B</b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Furniture and equipment $150,000 (15%) $150,000 (30%)</div>
<div class="MsoNormal">
Dental Supplies 20,000 10,000</div>
<div class="MsoNormal">
Covenants 5,000 5,000</div>
<div class="MsoNormal">
Goodwill (the difference) 825,000 (82.5%) 335,000 (67%)</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
You’ll note that goodwill is listed last as it should be the last item that is assigned a value. That’s because every other asset above it should be relatively easy to value and after you’ve agreed upon the values of them, the difference goes to goodwill. Furniture and equipment can be appraised, and dental supplies can be estimated based on practice revenues. You might even see allocations for other items like net contract receivables, consulting agreements, leasehold improvements, patient charts, etc. in every case, a value should be assigned to those assets FIRST then the remainder of the purchase price is allocated to goodwill, LAST!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Technically you’ll see the definition of goodwill, an intangible asset, as the excess amount paid for a business over & above its tangible and other asset values. In my world that’s the same as saying “the difference,” it’s that simple. Statistically speaking I would agree that with the “typical” dental practice sale, 75-80% of the allocated purchase price is usually goodwill, but it’s just a statistic, that’s it.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So don’t get sucked into someone else’s world when they tell you “goodwill should be at least 80% of the purchase price of a dental practice” and any other allocation will draw the attention of the IRS. If you hear a seller’s advisor say that then you know they’re NOT being truthful with you and you have to begin to wonder what other statements they’ve made that aren’t truthful.</div>
<br />
<div class="MsoNormal">
<span style="background-color: white; color: #222222; font-family: "helvetica" , "arial" , sans-serif; font-size: 11.55px; line-height: 16.17px;">Written by </span><a href="https://nlgroup.com/profile/timothy-lott-cpa-cva/" target="_blank">Tim Lott, CPA, CVA</a><span style="background-color: white; color: #222222; font-family: "helvetica" , "arial" , sans-serif; font-size: 11.55px; line-height: 16.17px;">. For more information on our services, please feel free to contact <a href="https://nlgroup.com/profile/timothy-lott-cpa-cva/" target="_blank">Tim</a> or one of the members of the <a href="https://nlgroup.com/dental-cpas/" target="_blank">Dental CPA</a> team by calling 844-DENT CPA or emailing </span><a href="mailto:info@dentalcpas.com" style="box-sizing: inherit; color: #011e41; font-family: helvetica, arial, sans-serif; font-size: 11.55px; font-weight: bold; line-height: 16.17px; transition: 0.25s ease, 0.25s ease;">info@dentalcpas.com</a><span style="background-color: white; color: #222222; font-family: "helvetica" , "arial" , sans-serif; font-size: 11.55px; line-height: 16.17px;">.</span></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0Dental CPAs 10626 York Rd, Cockeysville, MD 21030, USA39.4782796 -76.64409590000002539.4537696 -76.684436400000024 39.5027896 -76.603755400000026tag:blogger.com,1999:blog-8671368884912046142.post-1320342979606196662016-05-31T16:27:00.000-04:002016-05-31T16:35:53.429-04:00Buyer of A/R Beware<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-KMNix7bDlY8/V03yYT8-gJI/AAAAAAAACvw/DsCs04jDDT00JjWPlil42GpE2uLWYCNHACLcB/s1600/Buyer%2BBEware.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://4.bp.blogspot.com/-KMNix7bDlY8/V03yYT8-gJI/AAAAAAAACvw/DsCs04jDDT00JjWPlil42GpE2uLWYCNHACLcB/s1600/Buyer%2BBEware.jpg" /></a></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">About a year ago we were engaged to represent a buyer in their efforts to purchase a dental practice. The transaction went fairly smooth and it was one of those engagements where the client wanted to try & handle much of the transaction themselves…or at least as much as they felt comfortable with.</span><br />
<span style="font-family: Times, Times New Roman, serif;"><br /></span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">As the settlement day approached, the seller of the practice suggested that the buyer purchase the A/R (unbeknownst to us) and they even agreed on what seemed to be a generous allocation, 0-30, 90%, 30-60, 75%, 60-90, 60%, 0% older than 90 days. On the day of settlement the seller did what they normally do, generate a current A/R report, less patient credits so the parties could do the math and make that part of their settlement.</span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">Things seemed to be going ok for the first 30 days or so, then the buyer started to notice a couple of things. EOBs were arriving with amounts MUCH lower than what the A/R balances were showing and in some cases the EOBs showed services dates much older than what was reported in the various aged buckets.</span><br />
<span style="font-family: Times, Times New Roman, serif;"><br /></span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">Here’s what the buyer learned over a period of time - A) the seller was posting the charges WITHOUT posting the appropriate PPO/Insurance adjustments or at least an estimate of what the PPO/Insurance should have been and B) the software they were using retained any insurance A/R as a 0-30 balance even after 30 days.</span><br />
<span style="font-family: Times, Times New Roman, serif;"><br /></span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">So not only did the buyer pay 90% of inflated 0-30 balances because the PPO/insurance adjustments weren’t made, if there were any rejected claims that weren’t handled within 30 days those balances remained in the 0-30 bucket and the buyer overpaid for those balances as well. In the latter case they got hit twice as hard because not only would they have paid less than 90% on those older insurance balances, they also WAY overpaid on those balances because the adjustments weren’t made as well.</span><br />
<span style="font-family: Times, Times New Roman, serif;"><br /></span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">As a buyer if you’re going to purchase A/R, make sure you do your due diligence. Make sure all credits are removed, make sure the buckets are aged by date of service, make sure balances have been adjusted for actual or estimated PPO/insurance adjustments.</span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">We’ve seen situations where a software will take a 6-month-old balance and included it in the 0-30 day bucket because the software starts the aging at 0 days whenever an invoice is issued, even when the date of service is 6 months old !</span></div>
<div class="MsoNormal">
<span style="font-family: Times, Times New Roman, serif;"><br /></span></div>
<div class="MsoNormal">
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;">-The DentalCPAs Team</span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<span style="font-family: Times, Times New Roman, serif;"><br /></span></div>
<div style="color: #333333; font-size: 16px; line-height: 24px;">
<i><span style="font-family: Times, Times New Roman, serif;">For additional information and/or questions specific to your practice,contact one of our Dental CPA team members at 844-DENT CPA or <b><a data-mce-href="mailto:info@dentalcpas.com" href="mailto:info@dentalcpas.com">info@dentalcpas.com</a></b>.</span></i></div>
</div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-26964471269847859312016-03-29T09:12:00.000-04:002016-04-14T09:17:05.549-04:00Should You Employ Your Children? What are the Tax Benefits?<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Did you know? If you hire your children as employees to do legitimate work in your business, you may deduct their salaries from your business income as a business expense. This can be a substantial benefit for some as it allows you to shift part of your business income from your tax bracket to your child’s bracket. This can be a win-win situation for both you and your child. Not only does it allow your child to learn the value of work but it also provides them with insight on the family business. And, it’s a great tax deduction for you! You can pay your child under the age of 18 up to $6300 tax-free by taking the standard deduction. That’s money your child will have to spend on a car, college, clothes, gas, etc.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Here are some things you need to know</div>
<ol style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;"><a href="https://3.bp.blogspot.com/-tPVbiUfScvQ/Vw-XzuIwiEI/AAAAAAAACrU/H2ZZUtCl16QgPZduteFM4h5gfmtNO4vIwCLcB/s1600/kids%2Bat%2Bwork.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="https://3.bp.blogspot.com/-tPVbiUfScvQ/Vw-XzuIwiEI/AAAAAAAACrU/H2ZZUtCl16QgPZduteFM4h5gfmtNO4vIwCLcB/s320/kids%2Bat%2Bwork.jpg" width="213" /></a>
<li style="box-sizing: inherit; position: relative;">Your child must be a qualified dependent.</li>
<li style="box-sizing: inherit; position: relative;">Pay real wages for real work, paying in pizza and still taking the deduction won’t fly with the IRS.</li>
<li style="box-sizing: inherit; position: relative;">The job must be age appropriate and salary should reasonable match job responsibility.<br style="box-sizing: inherit;" /><em style="box-sizing: inherit;"><strong style="box-sizing: inherit;"><a href="http://www.dentalcpas.com/contact-us/" target="_blank">Contact us</a> for a list of jobs kids can do in a dental office</strong></em>.</li>
<li style="box-sizing: inherit; position: relative;">Document the job description and employee agreement. To avoid unnecessary scrutiny, maintain proper payroll documentations.</li>
<li style="box-sizing: inherit; position: relative;">Keep a timesheet of hours and day worked. This will help substantiate the amount of money received for work. It is good practice if the child deposits the paycheck in a bank account rather than cashing them as it shows the IRS the child took possession of the funds.</li>
<li style="box-sizing: inherit; position: relative;">Be aware of the tax requirements, payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the business is a sole proprietorship or a partnership in which each partner is a parent of the child. However, children who employed by S Corporations or partnerships that include nonparent partners or corporations are not exempt. Also, payments are not subject to federal unemployment tax if the child is under 21.</li>
</ol>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
If your child qualifies, you can avoid paying approximately 22 percent of their wages in tax. Before making the final decision of adding your child to payroll, consult with your CPA as the actual tax savings depends on your tax rate, your child’s rate, and the entity under which the business operates. For more questions on the benefits of employing your child contact us at <strong style="box-sizing: inherit;">844-Dent CPA </strong><span style="box-sizing: inherit;">or visit our main blog page at </span><span style="font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; line-height: 21px;"><a href="http://for%20more%20information%20and%20articles%20on%20practice%20management%2C%20visit%20our%20blog%20page%20at%20www.dentalcpas.com/news-events/" target="_blank"> www.dentalcpas.com/news-events/</a>.</span></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-67170497369837120062016-03-22T09:10:00.000-04:002016-04-14T09:18:03.896-04:00How to Conquer Leadership Challenges<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
It’s always great to hear about young dentists starting their practice, establishing a new partnership, or purchasing an existing practice. While some dentists are more comfortable with embracing the change and smoothly transition into their new roles, others have difficulties. Sometimes it’s hard being the new kid in town or one of the youngest members of your staff. Let’s face it; some people make the assumption that with youth comes lack of experience and regretfully, that can translate into a lack of respect. If you are a young dentist or new partner, it can take some time to establish your role of authority with another staff member who may have been around for 15+ years. Here are a few tips to consider for taking the lead:<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-5PTt61yduXw/Vw-YhKbpYjI/AAAAAAAACrg/qj9hyw6o_0QZ9Hn8Dy0-dTVWmdLx93G2QCLcB/s1600/Young%2BDentist_Sign.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="266" src="https://4.bp.blogspot.com/-5PTt61yduXw/Vw-YhKbpYjI/AAAAAAAACrg/qj9hyw6o_0QZ9Hn8Dy0-dTVWmdLx93G2QCLcB/s320/Young%2BDentist_Sign.jpg" width="320" /></a></div>
<br /></div>
<ul style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; list-style: none; margin: 0px 0px 1.5em; padding: 0px 0px 0px 2em;">
<li style="box-sizing: inherit; position: relative;"><b>Promote A Respectful Work Environment</b><br /><br /><ol>
<li><span style="font-size: 1em;">Always handle yourself in a positive manner; set the standard and hold all members of staff to it.</span></li>
<li><span style="font-size: 1em;">Ensure that you and your partner(s) are on the same page before taking action on employee relation issues. All partners need to be willing and committed to making changes if the current staff cannot handle their positions. Without a mutual understanding, your attempts at change will be tested.</span></li>
<li><span style="font-size: 1em;">When dealing with contentious issues, prepare yourself before approaching, it will allow you to have a clear mind and better handle any backlash.</span></li>
</ol>
</li>
<li style="box-sizing: inherit; position: relative;"><b>Establish Yourself in a Position of Authority</b><br /><br /><ol>
<li><span style="font-size: 1em;">People will only treat you how you allow them to, so grab the bull by the horn and take ownership of your role. If you plan to grow with the practice and eventually become the owner, it’s never too early to start acting in the best interest of YOUR practice.</span></li>
<li><span style="font-size: 1em;">Managing a staff of people who are older than you can be challenging, however, stand your ground is a respectful manner.</span></li>
</ol>
</li>
<li style="box-sizing: inherit; position: relative;"><b>Be specific when addressing employees</b><ol>
<li><span style="font-size: 1em;">Broad or general statements give the employee room to come up with an excuse.</span></li>
<li><span style="font-size: 1em;">Ensure manuals are updated and all staff members are aware of their role and responsibilities in the practice.</span></li>
</ol>
</li>
<li style="box-sizing: inherit; position: relative;"><b>Hold Employees Accountable</b><ol>
<li style="box-sizing: inherit; position: relative;">Review the portions of his or her job duties that are crucial steps in office operations.</li>
<li style="box-sizing: inherit; position: relative;">For example, if an employee is consistently failing to update health charts, have a direct conversation with that individual. Address that you have observed the job was not being done, stress the importance of the task to the patient’s safety and express that the problem will not be tolerated is no corrected. After all, patient’s safety is a top priority.</li>
</ol>
</li>
</ul>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
These tips are to get you started. We also recommend you doing some research on management styles and tackling leadership roles. For more information and articles on practice management, visit our blog page at /<a href="http://www.dentalcpas.com/news-events/" target="_blank">http://www.dentalcpas.com/news-events/</a></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-68764281756662067042016-01-26T09:03:00.000-05:002016-04-14T09:19:27.963-04:00Six Mistakes to Avoid When Filing Taxes<div class="separator" style="clear: both; text-align: center;">
<a href="https://1.bp.blogspot.com/-XyjHwuyDDto/Vw-Y0jcLnbI/AAAAAAAACro/cRCB0SmUuIQlFOq9xcdD_w4cpBhCiuk5gCLcB/s1600/tax-mistakes.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="228" src="https://1.bp.blogspot.com/-XyjHwuyDDto/Vw-Y0jcLnbI/AAAAAAAACro/cRCB0SmUuIQlFOq9xcdD_w4cpBhCiuk5gCLcB/s320/tax-mistakes.jpg" width="320" /></a></div>
<ol style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;">
<li style="box-sizing: inherit; position: relative;"><strong style="box-sizing: inherit;">Filing out tax forms with incorrect SSC number</strong><span style="font-size: 0.875em;">The IRS computers will automatically reject your deductions and credits if your Social Security number is wrong. This mistake seems careless </span><span style="font-size: 0.875em;">and trivial, but it is paramount to have the right Social Security number when filing your taxes. Your social security number is your tax ID number, which is linked to numerous transactions such as income statements, savings account interest, and retirement plan contributions. It is also vital to claiming tax credits. Since the majority of returns are now being filed electronically, a correct social security number is crucial. An incorrect social security number will result in the reject of an e-filed return. Double check all the numbers before submitting your return to ensure they are not transposed or missing digits.<br /><br /></span></li>
<li style="box-sizing: inherit; position: relative;"><strong style="box-sizing: inherit;">Incorrect Federal ID number used on 1099 MISC.</strong>Although your accountant can easily fix this, the less the IRS has to contact you, the better it is. The IRS matches 1099MISC and the Social Security number or Federal Identification number used. If you provide services, and the client you did the work for issues a 1099MISC, be sure they know to use the federal identification number of your business and not your social security number. If they use the wrong number, the IRS will send you a notice that you did not report income on your personal return, when in fact it was reported correctly on your business return. Also, watch out for spelling your business name incorrectly. Simple spelling errors can lead to rejected returns.<br /><br /></li>
</ol>
<ol start="3" style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;">
<li style="box-sizing: inherit; position: relative;"><strong style="box-sizing: inherit;">Not reporting non-deductible IRA contributions.</strong>Any contribution to an IRA, whether it is deductible or non-deductible, should be reported, so when you withdraw it, you are not taxed on it. Plain and simple, all contributions to an IRA must be reported.<br /><br /></li>
</ol>
<ol start="4" style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;">
<li style="box-sizing: inherit; position: relative;"><strong style="box-sizing: inherit;">Incorrectly reported estimated tax payments.</strong>If your accountant instructed you to make quarterly estimated tax payments, be sure to let him or her know the details of the payment for each installment. Provide the check numbers, dates of payment, and the amount of each payment. What often happens is people claim they made the payments as their accountant told them, but did not keep any records and inadvertently forgot a payment or two. If the accountant includes all of the estimated payments on the return when they all were not really made, the IRS or state government will send a notice of tax due with penalties and interest.<br /><br /></li>
</ol>
<ol start="5" style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;">
<li style="box-sizing: inherit; position: relative;"><strong style="box-sizing: inherit;">Incorrect bank account information entered for refunds.</strong>If you are having your accountant file your returns electronically and want your refunds directly deposited (or payments automatically) withdrawn from your checking or savings account, provide the correct account information including name of bank, bank routing number, and account number. This will avoid delays in processing your refunds and/or payments.<br /><br /></li>
</ol>
<ol start="6" style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;">
<li style="box-sizing: inherit; position: relative;"><strong style="box-sizing: inherit;">Forgetting your signature on your return!</strong>You must sign your taxes for the IRS to process your taxes. Filing your taxes electronically is a foolproof way to ensure your taxes will not go unsigned. These software packages do not allow documents to be sent unless every step is completed.</li>
</ol>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-24136579143339688172015-12-21T09:01:00.000-05:002016-04-14T09:04:46.388-04:002015 Tax Extenders Passed!<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
On December 18th, Congress and the President signed into law the “Consolidated Appropriations Act, 2016” and “Protecting Americans from Tax Hikes (PATH) Act of 2015”, both of which provide a number of significant tax changes.<strong style="box-sizing: inherit;"> </strong>The Protecting Americans from Tax Hikes Act will grow our economy and help American taxpayers keep more of their hard-earned dollars. This Act extends a number of important tax breaks and makes many of them permanent.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
<strong style="box-sizing: inherit;">Keys Facts You Should Know </strong></div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
According to <a href="http://www.dentalcpas.com/2015-tax-extenders-passed/~Link-1742~" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;">Accounting today</a>, here are some of the over 20 permanent provisions:</div>
<span style="background-color: white; font-family: helvetica, arial, sans-serif; font-size: 0.875em;"><ul>
<li><span style="font-size: 0.875em;">Increased expensing limitations and treatment of certain real property as Section 179 property;</span></li>
<li><span style="font-size: 0.875em;">The exclusion of 100% of gain on certain small business stock;</span></li>
<li><span style="font-size: 0.875em;">Reduction in S corporation recognition period for built-in gains tax;</span></li>
<li><span style="font-size: 0.875em;">The enhanced Child Tax Credit;</span></li>
<li><span style="font-size: 0.875em;">The enhanced American Opportunity Tax Credit;</span></li>
<li><span style="font-size: 0.875em;">The enhanced Earned Income Tax Credit;</span></li>
<li><span style="font-size: 0.875em;">The deduction for certain expenses of elementary and secondary school teachers;</span></li>
<li><span style="font-size: 0.875em;">The deduction of state and local general sales taxes;</span></li>
<li><span style="font-size: 0.875em;">Basis adjustment to stock of S corporations making charitable contributions of property.</span></li>
</ul>
</span><ul style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; list-style: none; margin: 0px 0px 1.5em; padding: 0px 0px 0px 2em;">
</ul>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
<em style="box-sizing: inherit;">For the full list of permanent tax provisions, <a href="http://www.dentalcpas.com/2015-tax-extenders-passed/~Link-1740~" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;">click here</a>. </em></div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Provisions extended and modified through 2019</div>
<span style="background-color: white; font-family: helvetica, arial, sans-serif; font-size: 0.875em;"><ul>
<li><span style="font-size: 0.875em;">Bonus depreciation (50% for 2015-17, 40% in 2018, 30% in 2019);</span></li>
<li><span style="font-size: 0.875em;">Delay on high-cost heath insurance plans (so-called “Cadillac” tax) from 2018 to 2020;</span></li>
<li><span style="font-size: 0.875em;">The New Markets Tax Credit providing $3.5-billion allocation each year through 2019, the carryover period for the credit has also been extended to 2024;</span></li>
<li><span style="font-size: 0.875em;">The Work Opportunity Tax Credit modified and enhanced for employers who hire long-term unemployed individuals (unemployed for 27 weeks or more) to 40 percent of the first $6,000 of wages.</span></li>
</ul>
</span><ul style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; list-style: none; margin: 0px 0px 1.5em; padding: 0px 0px 0px 2em;">
</ul>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Provisions revived and extended through 2016</div>
<span style="background-color: white; font-family: helvetica, arial, sans-serif; font-size: 0.875em;"><ul>
<li><span style="font-size: 0.875em;">Modification of the exclusion of mortgage debt discharge;</span></li>
<li><span style="font-size: 0.875em;">Mortgage insurance premiums treated as qualified residence interest;</span></li>
<li><span style="font-size: 0.875em;">The above-the-line deduction for qualified tuition and related expenses;</span></li>
<li><span style="font-size: 0.875em;">Over a dozen incentives for energy production and conservation.</span></li>
</ul>
</span><ul style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; list-style: none; margin: 0px 0px 1.5em; padding: 0px 0px 0px 2em;">
</ul>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
For more information on these tax provisions and how they may impact your business or personal tax situation, please contact your <a href="http://www.dentalcpas.com/contact-us/" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;">Dental CPA</a> tax representative directly. You can also contact our office at 410-453-5500, and one of our staff members will be happy to assist you.</div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-61710878941264970322015-12-11T08:43:00.000-05:002016-04-14T09:00:22.350-04:00Why You Need Certain Information for Your Due Diligence – Part II<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
I decided to write this blog series mainly because of the pushback we get from sellers’ advisors on some of the information we request when representing the buyer. The second items I’ll discuss are the practice management reports for production by provider by ADA code and production by payor.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
What’s interesting about the pushback we get on these reports is that we want these reports when we’re representing the seller and assisting them in coming up with an asking price or a value for their practice. We believe we can do a more thorough job for the buyer if we have this information.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Of course, we’ll get the standard response of “it’s in the information we already sent to you. Unfortunately, that’s not correct. Many times what they’ve provided is a summary of the production by category like diagnostic, preventive, restorative, etc. and it’s usually for the entire practice, not by provider. While this might be good information for practice management consultants to get an overview of the practice for their consulting engagements, it’s never enough information for a buyer who needs to understand how the collections are being generated and who’s generating them. We may also get a fee schedule and/or a practice production by ADA code. Again, good information, we just need more.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
You see, the buyer is in a different position than the seller. The seller knows what they do; they know what their hygienists do, but guess what, the buyer has no idea. The seller could be performing procedures that the buyer doesn’t perform which could mean the buyer can’t replicate the seller’s collections. Or, maybe the buyer does procedures that the seller doesn’t so there may be some upside potential for the buyer. You can’t determine that without seeing the procedures, ADA code no matter what the practice questionnaire might state.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
The other problem we often see is that many practices put the doctors’ exams under hygiene production. So we’re told the hygiene production makes up 40% of the total revenue of the practice when it’s more like 25%, which is closer to normal. Without seeing the detail and taking the seller’s word, the buyer might draw an incorrect conclusion that there’s a lot more dentistry to be done.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
The two other aspects of knowing the true production by provider is A) we can evaluate the hygiene production to their wages to see if it falls within industry norms and B) we can better assess “reasonable” compensation for a dentist when performing our price assessment. We see valuation reports that have used incorrect assumptions based on bad PM reporting where practice prices have been overstated because “reasonable” doctor’s compensation has been understated based on dentistry of only 60% of total practice revenue instead of 75%.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
The other PM report we ask for, production by payor, shows the total number of PPOs in the patient base. This also becomes important when trying to assess the collections generated by PPOs in which the seller is IN network with and the percentage of patients in PPOs where the seller is OUT of network.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Many of you already know about the Delta Premier issue, where buyers may not be able to retain the Delta Premier fee schedule w/o also participating with the regular PPO and therefore, a buyer won’t be able to replicate the seller’s collections in many cases. However, what many buyers of FFS practices fail to understand is the percentage of patients in a FFS practice that belong to PPOs. The buyer runs the risk of having those patients leave the practice to look for an IN network provider when the seller leaves the practice. The attrition rate is generally known to be higher in a FFS practice for a buyer anyway; if the buyer also knows that 40% of the patients have a PPO, then they need to appreciate that the risk of attrition could be worse.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
This report will also be helpful to a buyer who is buying a FFS practice with the intent of potentially joining PPOs in the future, or a buyer of a PPO/FFS mix practice who has the intent of potentially dropping out of some PPOs in the future. It’s very useful information for the buyer and, unfortunately, we get pushback from sellers and their advisors when asking for these reports.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
So here are some real life examples of why these reports can be very enlightening for a buyer:</div>
<ol style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;">
<li style="box-sizing: inherit; position: relative;">I’m in the middle of an assessment right now on an FFS practice where the top ten PPO payors represent about 35% of the practices total production. For the buyer, if they remain FFS, they run the risk of higher than normal attrition as patients may take the opportunity to go to an IN network provider. The buyer is also contemplating joining some PPOs as the practice revenue isn’t very high so they now know what the potential impact could be to the existing patient base and revenue by getting into certain PPOs.</li>
<li style="box-sizing: inherit; position: relative;">As mentioned above, we’ve seen valuation reports calculating reasonable doctor’s compensation for dentistry using a lower doctor collection figure because the doctor’s exams were under the hygiene production column. This has the effect of creating a higher value than would otherwise have created with proper information.</li>
<li style="box-sizing: inherit; position: relative;">We’ve seen other dentistry codes thrown under the hygiene column like crowns, extractions, etc., almost always by mistake. However, with production by provider by ADA code reports we can make the proper adjustments and provide a more accurate picture of practice price and performance for the buyer.</li>
<li style="box-sizing: inherit; position: relative;">We’ve seen situations where practices were labeled FFS when in fact they were a mix FFS/PPO practice and the PPO portion was significant enough that the buyer chose to walk away. We determined this when comparing collections to gross productions were less than 85% of gross production. In FFS practices, collections are generally greater than 90% of gross production.</li>
<li style="box-sizing: inherit; position: relative;">Lastly, we’ve seen production by provider reports that show other doctor providers in the past, like specialists where their revenue wasn’t removed from prior year collections even though their compensation was removed. Needless to say, prior year collections were overstated so that the asking price was way overstated. We would have NEVER known this if we only relied on a tax return and/or P&L collections.</li>
</ol>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
The fact is most practices have the PM software that can generate these reports easily, even if the office has to contact the software company to find out how to generate these reports. There isn’t any reason why sellers and their advisors can’t provide these reports and in our opinion, there isn’t any reason every buyer shouldn’t be asking for these reports.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Written by <a href="http://www.dentalcpas.com/profile/timothy-lott-cpa-cva-2/" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;"><strong style="box-sizing: inherit;">Tim Lott, CPA, CVA</strong></a>. For more information on our services, please feel free to contact one of the members of the Dental CPA team by calling 844-DENT CPA or emailing <a href="mailto:info@dentalcpas.com" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;"><strong style="box-sizing: inherit;">info@dentalcpas.com</strong></a>.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
<br /></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0tag:blogger.com,1999:blog-8671368884912046142.post-53261870656234133002015-12-03T11:59:00.000-05:002015-12-03T11:59:52.153-05:00Why You Need Certain Information for Your Due Diligence – Part I<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
I decided to write this blog series mainly because of the pushback we get from sellers advisors on some of the information we ask for when representing the buyer. The first item I’ll discuss are W-2s by year along with an employee roster for that year noting positions, average hours worked per week, hourly rate and any other benefits received.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Naturally one of the first responses we get is “why do you need to see the W-2s, all that information is either on the tax return or in the practice profile under the staffing section”.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Unfortunately, while the advisors mean well, they’re incorrect. The tax returns don’t list each employee, their wages, the department they work in, the hours they work, their hourly rate or the benefits like paid vacation and sick time. The tax return does show total wages; maybe an expense category called employee benefits and/or group insurance, however, it won’t tell you how much is for the staff and how much for the owner.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
The practice profile may list this info in more detail, usually ONLY for the current year though and we all know employees come and go and sometimes the practice changes on the number of staff, etc.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Another reason we want to see the details is to help the buyer assess the performance of the practice. We want to be able to tell the buyer what percentage of revenue is assistant wages, hygiene wages, front desk wages and admin wages. We also want to be able to verify any adjustments the seller’s advisors made to wages for owner family members who may get paid, but their compensation may not be market value. While we’d like to accept their adjustments as accurate, you’ll see below it’s not always the case.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
So here’s a list of real life experiences we’ve encountered by having the W-2 and employee roster information:</div>
<ol style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin: 0px; padding: 0px 0px 0px 1em;">
<li style="box-sizing: inherit; position: relative;">I’m in the middle of an assessment right now where the owners’ wages per the tax return were shown as $210,000 while the W-2 showed $260,000. Why the difference? The owner took a $50,000 bonus in December and when the internal p&ls were prepared they were coded to office wages (front desk/admin) and the tax preparer used the p&ls to prepare the tax returns. Needless to say, after normalization adjustments to overhead it was still overstated by $50,000.<br /></li>
<li style="box-sizing: inherit; position: relative;">We’ve seen on numerous occasions where the seller’s advisors who prepared the work to establish an asking price made reductions to overhead for family wages based upon what the seller told them about how much their family was getting paid. Unfortunately, that information was for the current year and not necessarily the same for the prior years, and the advisor assumed the same reduction in prior years for the family wages. In one case, the reduction was $35,000 for three family members where the owner JUST put them on payroll for the first time. So the $35,000 reduction in prior years was incorrect.<br /></li>
<li style="box-sizing: inherit; position: relative;">We had a case where the advisor reduced owners wages to normalize overhead by the tax return wages noted on line one for “officers” which most of the time is JUST the owner. They also reduced the staff wages by the spouses’ wages of $75,000. That would have been fine EXCEPT the owners wages were $75,000 lower than what was stated on the tax return because the tax preparer added the spouse wages to that line since she was listed as an officer. So they reduced overhead by the spouses’ wages TWICE.<br /></li>
<li style="box-sizing: inherit; position: relative;">We’ve seen on numerous occasions where potential buyers will back off their pursuit of a practice because the total wages are very high as a percentage of revenue compared to the norm. However, when we break it down by department and realize the hygienist and front desk wages as a percent of revenue is fine and it’s the assistant wages that are out of whack, the potential buyer reconsiders because they know they can likely improve upon that issue fairly easily.<br /></li>
<li style="box-sizing: inherit; position: relative;">We’ve seen advisor worksheets that reduce overhead by the amount the associate was paid in wages for all years, again, based on current year information. However, when we get the W-2s for prior years, we see that the reduction for prior years isn’t accurate. The advisor simply assumed the associate made about the same.<br /></li>
<li style="box-sizing: inherit; position: relative;">And lastly, my personal favorite…..we’re assessing a practice and when we ask for the W-2s we get a LOT of pushback….the seller and their advisors kept insisting we didn’t need them, the wages on the tax return were accurate and they could give us the breakdown by department. We insisted and the buyer was willing to walk away if we didn’t get this info. When they finally decide to give us the info they then proceed to tell us the W-2 totals will be greater than the tax returns because the doctor also works as an IC about 30 minutes away and receives 1099 income personally and they allocate the wages between the practice tax return and his IC income. Hmmm, ok, well let’s see the sellers’ personal return where this activity is being reported so we can review that and verify the allocation seems reasonable. Well, they resisted that of course & finally told the buyer they were no longer interested in selling the practice. Here’s the kicker, just about every overhead expense was on the low end of the normal range if not below the normal range and we suspect they were paying quite a bit of the practice overhead FROM the IC bank account (the personal bank account) and, therefore, making the profit look much more profitable then it appeared.<br /></li>
</ol>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
The fact is in the vast majority of the assessments we do the wages reconcile with the tax return and the adjustments made by the sellers advisors are accurate. Still, by having this info we’re able to provide so much more info to the prospective buyer about the wages statistics on the practice that goes beyond the price.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
Written by <a href="http://www.dentalcpas.com/profile/timothy-lott-cpa-cva-2/" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;" target="_blank">Tim Lott, CPA, CVA</a>. Send your questions to <a href="mailto:tlott@dentalcpas.com" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;" target="_blank">tlott@dentalcpas.com</a>.</div>
<div style="background-color: white; box-sizing: inherit; font-family: Helvetica, Arial, sans-serif; font-size: 0.875em; margin-bottom: 1.5em;">
For more information on our services, please feel free to contact one of the members of the Dental CPA team by calling 844-DENT CPA or emailing <a href="mailto:info@dentalcpas.com" style="background-color: transparent; box-sizing: inherit; color: #011e41; font-weight: bold; transition: color 0.25s ease, background-color 0.25s ease;" target="_blank">info@dentalcpas.com</a></div>
Anonymoushttp://www.blogger.com/profile/04493496592415150843noreply@blogger.com0