IntroductionBe interactiveTell a little about myself
Who I am. A long time ago over 30 years in fact I roamed the halls in that boarded up building next door. Do they still print the Mirror or is everything digital?
So there I am 31 years ago with Karen who is still my wife. I even had a little more hair at the time. My guess is most of you weren’t even born when I graduated so that either makes me really old or you really young. I’d like to think the latter.
Back in the day our campus was extremely safe due to the hard work of classmates of mine including one who is a current instructor of yours. Does anyone recognize this handsome, fearsomevigilante?
Things for me didn’t turn out quite like my yearbook bio said. Did not do GPR instead went into the Air Force before becoming an associate and then starting my own practice. More interested in financial aspects of dentistry and got my CPA in 1996 sold my practice and the rest is history. So after practicing 17 years I made a career transition that on the surface seems totally dissimilar but is in effect very related as my accounting practice is well over 90% dentists and other health care professionals.Ask who is doing what and get a show of hands.
Who wouldn’t feel safe with such a ferocious Air Force captain protecting our skies? But enough about me.I would imagine most of you have a substantial amount of student loan debt. I am guessing well over $100,000. With that in mind what do you thinkis the most critical aspect of a successful practice or your own personal life?? CASH FLOW!
I am going to talk about the business basics of owning a dental practice but they could just as well apply to your personal finances.Just a basic primer on some of the things you should be aware of in running a dental practice.
What do you think some core expenses are.Explain conundrum of profit and no money to pay taxes on profit. Manage your debt smartly. You may have to wait to buy that fancy car.Niche lenders understand the dental business, more likely to lend money then a conventional bank although most are now owned by big banks. Rates may be a little higher but they are financing stuff that is not easily sellable so they would not recoup their cash outlay if dentist goes bankrupt.What do you think is easier to control: income or expenses?
Get good, knowledgeable around you.
Be even more wary of a dentist selling his/her own practice. Inevitably overpriced. Anecdote Avionne not buying into friends practice. What will you most likely have the selling dentist does not have? Always comes back to cash flow.Mention helping/prodding dentist save >$40K in interest on loan modification. Why trust important tax and accounting decisions to someone who may not be as knowledgeable, much as you would use a specialist in dentistry.
Insurance is an important of your financial plan.
Use your advisors to help you make decisions that can impact the practice. They have contacts that can potentially save you money and make the process move more smoothly.
You are faced with different choices as to how to be taxed.
Explain my preference and why
Let’s talk about the things you should know about that affect your bottom line. Don’t keep this stuff a secret as that doesn’t help anyone. Anecdote of equipment bought at end of year but not found out about until recurring payments seen in following year and large deduction missed.
Anecdotes/stories about using a payroll service- worth the money!; Penalties and interest if payments even a day late. Many complex compliance issues. Your time is worth more than what you are paying a PR service. May be tempted to not pay payroll taxes and you don’t want to mess with Uncle Sam. The payroll withholding is NOT your money.And no matter how much you may want to keep pay information confidential between employees THEY TALK.
What is depreciable? Anything that has a useful life of over 1 year. May set a threshold cost so that anything over that cost is depreciated and anything under that cost is expensed in the year of purchase.
Big and/or expensive stuff is depreciable.
Ask if anyone knows what “Cash Basis” means. Explain what that means regarding income, bad debts, expensesGo through example of a bad debt not being collected. Produced $500 collected co-pays and deductibles at time of appt. because you are a dental practice not a bank, but insurance ends up paying less than anticipated so that a $100 balance still exists. After sending Mr. Jones a bill for the $100 he just decides he is not going to pay. Can you write that off on your tax return?Do you record your patient accounts receivable on your tax return?
Set up and contribute to some type of retirement plan right from the start. There are different types of plans and now is not the time to discuss the benefits of one plan over another.What do you have working in your favor compared to me for instance at this time? TIME!
Any questions?I really enjoyed speaking with you today.If you would like to contact me either call or e-mail me. Check on our website for an area dedicated to dentists. And if you are interested we can include you on my blog mailing list.
Starting your dental business uof md presentation
Presented to University of Maryland School of Dentistry Advanced General Dentistry ResidentsLarry S. Goldberg, DDS, CPA, CVA
Starting a practice? Associating? Military? Academics/research?
“Students who graduate…from public schools paid an average of $124,397 for their education, while those in private schools paid $223,788.”- ADANews, September 5, 2011
Key Metrics Core Expenses- ratios to watch Financing, borrowing money, niche lenders Paying down debt and profitability
Your accountant will help you with: Entityselection and tax implications Projections • Feasibility of business opportunities • Be wary of brokers selling practices Taxes- payroll, income, corporate Record Keeping Obtaining federal and state ID numbers
Your lawyer will help you with:Negotiating contracts • Leases • Buy/sell • Partnership • Employment
Your insurance advisor will help you with: Personal disability Life Malpractice Officeoverhead Workers’ compensation Health Long term care
Your banker will help you with: Financing Banking services
Sole Proprietor • Self-employment tax • No owner salary • Estimated taxes
S Corporation • Payroll taxes and withholding • Owner takes a salary • Distributions • Corporate protection
INTERNAL RECORDS INFORMATION FOR CPA Patient information QuickBooks files • Charges Self recorded or • Payments Use bookkeeper/CPA • Adjustments Payroll records • Treatment notes Large equipment purchases Human resources related Financing terms records
I have employees. What do I need toknow?? Paperwork and forms (W-4 and I-9) DIY or payroll service? Employment manual or handbook Employee benefits and retirement plans
Dental practices are very equipmentintensive. You can depreciate thisequipment over time.Current tax law allows accelerateddepreciation on equipment purchases.
WHAT IS AN EXPENSEWHAT IS DEPRECIABLE? ITEM? Dental equipment Dental supplies Computers Lab costs Cabinets Rent Furniture and fixtures Employee salaries Improvements Normal and reasonable cost incurred in a business
Asa service business a dental practice will use Cash Basis accounting for tax reporting
Retirement and financialplanning from the start.
Larry S. Goldberg, DDS, CPA, CVA410-356-1000Larry.email@example.com