Tuesday, July 26, 2011

11 Reasons Why a Dental CPA is Preferable to a General Accountant for a Dentist

Here are 11 reasons why using a dental CPA is preferable to an accountant who isn't dental specific. We'd love to hear your suggestions for other reasons as well.

11. Your accountant doesn’t know the difference between a prophy and a root canal.

10. Your accountant doesn’t know how participation in insurance plans affects the percentage of adjustments to gross productions.

9. Your accountant doesn’t know what reasonable associate compensation models are.

8. Your accountant doesn’t know if your accounts receivable balance is ‘normal’.

7. Your accountant doesn’t know what your overhead percentages should be based on your specialty.

6. Your accountant doesn’t know how much your hygiene department productions should be relevant to their compensation.

5. Your accountant doesn’t know what portion of your practice should be dentist production versus hygiene production.

4. Your accountant doesn’t regularly present to dental association, study clubs and schools on such topics as, How to Buy a Dental Practice, Life after Graduation, Overhead Benchmarks, etc…

3. Your accountant has never heard of Dentaltown.

2. You don’t understand why vendors are saying that new Cerec is practically ‘free’ after ‘tax deductions’.

1. You are seeing twice as many patients as last year, but your cash flow is tight.

These are 11 reasons you should contact the Dental CPAs for a complimentary consultation about your practice performance.

Send any questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com
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Thursday, July 21, 2011

New Dentist Has Questions about Section 179

I am planning to start my first Dental Office this year. Everyone tells me it’s especially best to start this year, 2011, because of additional advantages due to the changes in the 179 Tax law.

I have tried reading up on it and honestly the verbiage is a little too confusing.

Can you "please " just break into simple words for simple folk like me.

I read somewhere that how much you can deduct also depends on how much you make this year.

So, if I open my Office in November / December and my income isn’t that great, is it still going to be beneficial?

Any help is appreciated.

It's painful to have a client come to us a year or two after they started to see that they took too much 179 in their initial years either wasting other deductions, or not being able to use them due to the entity they selected or wasting them at lower brackets like 10-15-25% when they would have been more valuable at 25-28-31-33+ in future years or ALL of the above.

If I start my practice in November / December, my income from the new practice is not going to be much.

Not only will your income not be much, you'll have the ability to absorb a bunch of losses IF it makes sense in your case.

If I am an independent contractor and have my checks towards the entity I create, can that be accounted towards my income for the year?

Yes it can; however, is that a wise decision? Probably not. You can achieve the same "tax" benefits with the proper structuring of your new entity.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com
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Tuesday, July 5, 2011

Dental Practice Valuation Issues – What a Seller Can Do

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.

1. Clean Record Keeping:

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.

2. Complete and Accurate Practice Management (PM) Reporting:

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.

3. Don’t Coast:

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.

4. Don’t Reduce Your Hygiene Hours:

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.

5. Update Office Appearance and Equipment:

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.

6. Overpaid Staff:

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.

7. Inflated Overhead:

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.

8. Office Policies and Systems:

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.

9. Track Your Referrals:

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.

10. Don’t Change or Eliminate any PPOs Prior to a Sale:

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.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com
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