Who Should Pay for Dental CE Expenses?

If I'm taking a course and paying for hotel, etc what is the best way to benefit? Is it best to have my employer pay my CE and deduct from my pay check before taxes? Or is better for me to write a check for the CE and list it at the end of the year during taxes? How do people go about this?

Here's the deal:

You're better off letting the employer pay. You save both income AND payroll tax and you're employer saves their share of the payroll tax. Win\win.

IF you pay it personally you could list it as an unreimbursed employee business expense and you may lose a portion of it depending on your adjusted gross income OR you could be subject to AMT where you actually lose the benefit of the deduction.

If the employer pays you, you avoid all those what-if's & are GUARANTEED the income tax savings AND the payroll tax savings to boot.

This post first appeared on DentalTown.

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

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Who Should Pay Lab Cost on a Dental Redo?

I pay my associate 40% of production and I pay all lab.

This past month my associate had to remake a denture for a patient. He just made this denture the previous month. Now there was a second lab bill. Since the patient doesn't pay for the second lab bill, who do you think should swallow that extra cost, me as the owner or should the associate pay for the second lab bill?

And yes I know I should be paying on collections, not production. But that’s the arrangement we had, I just took over his practice and when I was associating with him he paid me 40% of production as well.

When we structure the compensation of an associateship agreement we always have the lab (whether 100% or some partial %) come off the top (prior to the computation). A short math example will show why:

Lab taken off the bottom line:

$10,000 -- Monthly Collections per Assoc.
<$500> - refunds or reductions (varies)
_______
$9,500
X 35% - Compensation % (varies)
_______
$3,325 - Calculated Compensation
<$450> - 50% of incurred lab bill
________
$2,875 - Monthly compensation

Lab taken off the "top":

$10,000 -- Monthly Collections per Assoc.
<$500> - refunds or reductions (varies)
<$450> - 50% of incurred lab bill
________
$9,050
x 35% - Compensation % (varies)
_________
$3,167.50 - Calculated Monthly Compensation

As you can see from the illustration, it is rather advantageous to the Associate to have the Lab, and/or rework (if they are going to be required to cover it, which should be spelled out in the associateship Agreement) be reduced prior to the computation - to the tune of $292.50.

Your math is the way it is because in the 2nd example you've only charged the assoc 17.5% (35% of 50%) of their lab instead of 50% as in the first example.

IF the employer wants to charge the same % of lab as the employees comp, say 35%, example #2 should look like this:

$10,000 -- Monthly Collections per Assoc.
<$500> - refunds or reductions (varies)
<$900> - lab bill (100% mind you)
__________
$8,600
x 35% - Compensation % (varies)$
__________
3,010 - Calculated Monthly Compensation

IF the employer wants to charge a different % lab compared to comp, say charge them 50% of the lab & pay them 35% of their NET collected production then your example #1 is right on.

This post first appeared on DentalTown.

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

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Collecting Money From a Dental Patient

I have a patient that owes me $2500. She was denied by Care Credit. Her ability to pay me is questionable. So here is my solution. Co-sign with her on Care Credit. I get my money. She pays them. If she defaults, I pay the balance to Care Credit then I begin billing her and add the interest to her bill. She likely will default with me as well, but now we are back to where we started plus some interest. What do you think people? Let's not address how I got myself in the situation of her carrying such a large balance without a prior financial arrangement......we will save that for another day.

....then she tells two friends, they tell two friends, they tell two friends & all of a sudden you have all these new patients wanting you to co-sign for them......hey, is that a great marketing idea or what ?

I vote crazy......

This post first appeared on DentalTown.

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

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Can I Take The Section 179 Personally?

I am buying about $200,000 worth of equipment. Can I take the benefit on my personal taxes and derive more of the benefit that I could otherwise through my corporation.

Maybe, however, why not keep it simple, take the deduction at the corporate level and reduce your w-2, therefore getting the benefit on the personal return. I guess I’m not seeing why you'd want to jump through more hoops to arrive at the same bottom line?

If you need to borrow money from the corporation to supplement your income, do that. Just make sure you document everything and seek advice from your CPA and\or attorney.

This post first appeared on DentalTown.

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

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Buying A Dental Practice That Has An Out-Dated Look

Tim,

The more I read from you the more I like you.

My first practice was $30,000 (total purchase price) and it grossed a bit more than that in a year. I borrowed $70,000 more and spruced it up a bit, with results much like you described. A few years later (almost 20 years ago now) we sold the practice to Cycledoc who has further improved it an turned it into a thriving practice.

I think we were around 10 times the initial gross when we transitioned.Patients don't have emotional attachments to old dental stuff. All in all, I think a dental office should be "slightly" better decorated than the average home in the area.

Thanks Neil.

As I’ve said, I’ve been through a number of similar older practice buys. Two years ago a client bought a practice with the old brown 1970 wood paneling through-out the entire office, one of the first things he (and a friend) did was go in over a weekend and simply re-paint it a whitish\eggshell type color to simply brighten the place up. He said his team arrived for work Monday morning (he wanted to surprise them) and commented how different, brighter and better the placed looked AS did just about every patient that came in over the next couple of weeks. Over the next 6 months he replaced some of the older chairs, equipment, desks, shelving, updated the wall coverings (pictures, etc.) and had numerous compliments.

It created excitement among his team to the point that they wanted to help and make suggestions. Needless to say he's done VERY well with that practice, almost doubling the revenue from $530k to nearly over a million over the past 24-36 months.

This post 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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