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Dental Tax

Don’t Overlook These Tax Deductions To Take Home What You Deserve

A dentist is one of the best professionals you can turn to if you need quality dental care. The IRS allows dentists to deduct a variety of expenses on their tax returns, including research and development, advertising, and professional dues. But are there any other tax deductions that dentists may be overlooking?

Yes, there are plenty of tax deductions that most dentists overlook. These deductions can help offset your income and take home what you make. In this article, we’ll take a look at some of the most common dental deductions that dentists may be eligible for.

Tax Deductions That Help You Keep What You Rightfully Make

There are a number of tax deductions a citizen can claim based on specific criteria. Some of these deductions apply only to dentists, while some others are universal. If you’re a dentist who’s looking to save your tax, speak to a professional dental accountant like Sigma to understand how our approach can help you save tax.

Let’s take a look at some unknown deductions you can claim.

1. Expenses Associated With Moving For Your First Job

Did you move more than 50 miles from your home for your first job? Firstly, congratulations on your new job, and secondly, did you know you can write off these expenses? All you’ll need are receipts to prove the expenses, and you can save yourself a chunk of change.

2. Donations Made Out Of Pocket

If you do any sort of volunteering work or charitable work, you can claim these deductions (Up to 60% of your gross income) under the new tax regime. The deductions include travel expenses, lodging, meals, sponsoring sports teams, and much more.

3. The Cost Of Job-Hunting

Job hunting is expensive and can take a toll on your pocket. If you’re moving to a new practice, you can claim the expenses associated with job hunting, such as costs relating to resume preparation, employment agencies, air travel, taxis, printing costs, and much more. You are eligible for this deduction even if you didn’t get the job.

Do note that you can get a deduction only if your miscellaneous itemized expenses exceed 2 percent of your adjusted gross income.

4. The Cost Of Child Care During The Summer

Many parents don’t know about this deduction, but if you have children, then any expenses related to child care during the summer can be claimed as a deductible.

5. Continuing Education Credit

If you’ve been considering learning something new to improve your dental business, like a course on Marketing or Finance, there’s excellent news for you. You can claim a 20% credit towards your tuition paid up to a maximum of $2000.

You can also claim this tax credit if you have a spouse or a dependent and you pay for their education. The only caveat is that the institute should be on the list of eligible institutes that qualify for this tax credit.

6. Tax Credit For Expenses On Child Care

For every child of yours under the age of 17, you can claim $2000. However, if you have 0 tax liability (Almost impossible), you can still claim $1400 towards child care.

7. State Sales Tax

As taxpayers, you are eligible to deduct state income or sales tax from your total taxable income. This is a relatively new deduction, and that’s why a lot of CPAs and tax consultants aren’t aware of it.

On the other hand, a professional dental CPA can help you avail of this tax credit and take home what you truly deserve. All we need to help you is your receipts, and we will take care of the rest.

8. Lost Deduction From Prior Years

If you weren’t aware of these deductions or didn’t claim some of these in the previous years, there’s still scope for you to recoup these. Many deductions, if not used in the filing year, can be carried over to the next year and claimed.

Speak to a professional dental tax consultant to understand how you can claim these for yourself.

Frequently Asked Questions

A medical and dental expenses tax credit is a credit that helps you reduce the Federal tax owed by you. Medical expenses like the cost of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments can be claimed to get an additional tax credit.

Any taxpayer who itemizes deductions on your tax return and has spent any amount of money towards medical or dental wellbeing and has the receipts to back it up is eligible for this tax credit.

There’s no straightforward answer to these questions, and it completely depends on how your CPA files your taxes. For example, an experienced CPA might be able to help you deduct your medical and dental expenses if you qualify. This handy questionnaire by the IRS on tax deductions can also help you determine if you can claim these expenses.

A professional CPA can help you apply for these credits and claim them. Speak to Sigma today to learn how we can assist you in optimizing your tax returns.

We hope this answers all your questions and doubts. If you’re looking for a professional dental accountant in Maryland, then please feel free to drop by our office for a free consultation and guidance session. We’re eager to meet you!

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EBITDA For A Dental Practice

The Best Way To Determining The Value Of Your Dental Practice

Are you ready to retire and spend time with your family? Are you looking for the best way to determine the fair market value of a dental practice in the USA? Today’s article will cover the best way to determine the value of your dental practice and how you can boost your valuation for your practice.

What Is The Most Commonly Used Method To Determine The Value Of A Dental Practice?

EBITDA or Earnings Before Interest, Tax, Depreciation, and Amortization is typically used when valuing dental practices.

The EBITDA valuation approach used by many investors is a hybrid approach combining market value and income. Investors use it to calculate how much cash is going to be available before deducting debt and capital expenditures.

Why Does EBITDA Matter?

Investors prefer the EBITDA method of valuation because it eliminates fluctuating factors such as taxes and non-cash expenses such as depreciation.

Boosting your EBITDA essentially boosts the valuation of your dental practice. An experienced dental accountant, like Sigma, can help you optimize your business to improve your EBITDA and other ratios.

EBITDA Calculation for Dental Practices

Calculating EBITDA is reasonably straightforward. You’ll need your balance sheet or income statements, preferably for the last 3 or 5 years.

Then, find your total revenue for the year. Subtract all your operating expenses leaving depreciation, amortization, interest, or taxes aside. This will give you your EBITDA

You can chart your EBITDA growth by figuring out your yearly EBITDA for the last 5 years and comparing how it grew year over year.

What You’ll Need For An EBITDA Analysis

  • Profit And Loss Statement, Ideally For The Last 3 Or 5 Years
  • Revenue Statement, Ideally For The Last 3 Or 5 Years
  • Current Balance Sheet
  • Owner Salary, Distributions, Benefits, Insurance, Perks Etc.

If all of this seems complex and tiresome, worry not. We’re here to help. Please speak to our team of expert Dental CPAs, who are always ready to help your dental practice grow with the help of dental bookkeeping and dental accounting services

EBITDA Multiples In America

Investors generally invest or buy a business at a fixed EBITDA multiple. We’ve been observing investments in technology companies at extremely high EBITDA, sometimes even 50x as well.

The EBITDA in the dental industry is far more conservative. Generally, an independent dental practice gets valued at 6x to 8x EBITDA. But, on the other hand, if it’s a chain of dental practices or a group, the EBITDA is usually higher, often 10x your current EBITDA.

Dental Practice Valuation: The Importance Of Competitive Pricing

Dental practices that are profitable are in high demand, and investors are ready to pay a premium for a well-structured, properly managed clinic. However, it’s essential to value your practice fairly if you want to turn over your business quickly.

Jacking up the EBITDA number isn’t that hard. However, it can backfire in the long run. Specialists like the dental CPA team at Sigma help you value your practice fairly while keeping the overall market trend in mind. A specialist dental accountant ensures you always get what you deserve while providing the optimum value to the buying party.

Ways To Improve EBITDA For A Dental Practice

1. Pricing At A Constant Level

Discounting is a sure-shot way of negatively impacting your EBITDA. Therefore, it is generally recommended to keep your pricing constant. Yes, running offers and discounts can be beneficial for the practice, but it positions your business as the place to be for bargain hunters, and we definitely don’t want to do that, do we?

2. Effective Management of Travel & Entertainment Budgets

Your travel and entertainment expenses are an investment into your business. Treat them like it. Any expenses done to improve your business should result in one of two things, an increase in revenue or a reduction in costs. However, most accountants tend to see these just as pure costs. Therefore, it’s crucial to optimize these budgets to ensure we reap the maximum benefit out of the investment.

Uncertain about how you can manage these effectively? Speak to a professional dental CPA in Maryland who can help you get the benefits you truly deserve.

Want To Learn More About Valuing Your Dental Practice?

Our team at Sigma works day and night to ensure we offer the best dental accounting services to dentists in the Tristate area. If you’ve been confused about your business’s accounting or want to plan for your retirement, now is the best time to speak to a dental CPA.

Please feel free to call us or drop by our office for a free consultation to understand how we can bring value to your dental practice and free up your time for the finer things in life. We’re always here for you!

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dental Practice owner tips

Tips To Deal With Burnout For Dental Practice Owners

Being a dentist is difficult. Being a dentist who owns their dental practice is even more challenging. Burnouts are very common in the dental industry, both among business owners and team members.

If you’re a dental practice owner, who’s burnt out and looking for some help, then read on. We’ll help you deal with your burnout and give you ideas on how you can free up your time while delegating administrative tasks to a professional dental accountant.

Tip #1 – Identify The Signs And Root Cause Of Your Burnout

Being bored, tired, or having trouble concentrating are all symptoms that indicate you are starting to burn out. If you ever find yourself or your team feeling demotivated or lacking enthusiasm, you know you’re on the path to burnout.

If you don’t act the moment you notice these signs, you may land in deep trouble. Studies show that burnt-out business owners lose 60% of their recurring revenue within 2 years of burnout.

If you’re able to identify the root cause of your condition, you can fix it before things go south. In our experience, usually, it’s the business administration part that takes a toll on dentists. Are you troubled by it as well? Allow us to help.

We offer comprehensive dental accounting and dental bookkeeping services at Sigma that help dentists free up their time for more important things in life, like spending time with the family. Please speak to us today to understand how we can help you.

Tip #2 – Identify Problems To Address

Managing a dental practice is difficult enough already, and the recent pandemic has exacerbated the difficulties even more. Many dentists find themselves exasperated by various challenges like lack of cash flow, a low number of loyal repeat patients, etc.

If your dental practice is facing these issues, you need professional help. Please speak to a specialist Dental CPA today to learn how you can fix these internal issues and get your dental practice back to its former glory.

Tip #3 – Identify New Things To Keep You Interested

A routine of repetition is the cause of burnout in multiple cases. Humans need novelty to keep them interested and engaged, and as dentists, novelty in practice is hard to come by. So, what’s the solution?

Learning new things or skills, attending conferences, even expanding your business practice with the help of loans and borrowings (It’s not always bad! read here) can all rekindle your spark in you.

Consider signing up with your local business and networking club, which is another excellent way to meet and learn from like-minded people.

The Impact Of COVID On Dental Practices

Covid lockdowns have been devastating for so many dental business owners. It has changed the way we do business. New and additional challenges that dental practices now face can also lead to burnout. Here are some things you can do to ensure your business tides over this situation unscathed.

  • Developing a pre-appointment screening process
  • Allowing plenty of time between patients for cleaning and decontamination
  • Developing and implementing staff protection strategies
  • Ensuring that anyone entering the facility is identified
  • Preventing a large number of patients from being in the waiting room simultaneously
  • Using tele-dental technologies, such as real-time video consultations

Save Time And Grow Your Revenues With Professional Help

Dental bookkeeping and dental practice accounting are best left to professional dental CPAs. Why? It’s simple, by offloading these tasks from your time, you can regain control of your focus and spend it on things that matter the most, family and growing your business.

As dentists, you’re experts at caring for your patients. So why not let accounting experts help you save your time? Speak to us today to learn how our Dental CFO services can help you grow your practice on autopilot while professionals handle your day to day administrative duties.

Our Dental Accounting Services Include

  • Dental Practice Bookkeeping
  • Outsourced Accounting And Bookkeeping
  • Preparation Of Monthly Financial Statements
  • Tax Preparation
  • Tax Planning Strategies
  • Cash Flow Analysis And Management
  • Forecasting And Budgeting
  • Quickbooks™ Set-Up And Support
  • Help With Starting A New Practice

Wrapping It Up

Everyone will suffer from burnout at some point within their careers. Identifying early signs of burnout is the most effective way of getting back on track.

We do much more than balance our clients’ books and prepare their dental tax returns at Sigma. We take care of all your bookkeeping and accounting needs for you so that you can focus on your work. In addition, our company has provided outsourced CFO and Controller services to numerous dentists from the tri-state area and across the country, providing all aspects of financial auditing and reporting, from bookkeeping to strategic consulting.

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Dental Practice Accounting Services

As A Dentist, These Things Should Scare You!

Imagine this. You’re on track to have a dental practice with an ARR of $3 million. You’re casually going through the records and notice quite a few discrepancies, but you can’t make sense of things. Unfortunately, this happens far too often in the industry, scaring so many growing dental practice owners. In this blog, we’ll take a look at a few things that should scare you as a dentist and serve as a wake-up call to bring your business in line with industry practices.

Fear #1 – Lack Of Financial Direction

You’ve been building your business slowly but steadily over the years, but it still feels like running on a treadmill. So even though you’re putting in a lot of effort, you seem to be going nowhere.

Yes, the Cash is flowing in, but you’re nowhere close to your financial goals and on your way to building real wealth. So how can you remedy this, you ask? The answer is quite simple by working with a certified dental CPA.

You might think, I have a CPA already. So why do I need to change? The honest answer to that is – you don’t. However, a professional dental CPA brings loads of industry experience that helps you plan your personal finances, your business’s growth, and your family’s future.

The strategies and techniques employed by a professional dental CPA differ a lot from those used by regular CPAs who serve various clients across industries. Please speak to a Dental CPA in Maryland today to understand how they can help you get a clear financial direction for you and your business.

Fear #2 – Lack Of Benchmarking And Competitor Analysis

In your bubble, you might be doing phenomenally well. However, you may be nowhere close to achieving your full potential as a business owner in the real world. This is where benchmarking comes into play.

A dental CPA can put systems and processes in place that constantly monitor your revenue and expenses to ensure that you’re meeting and even performing better than the industry benchmark as a business owner. This benchmarking not only allows you to reach your financial goals quickly and systematically but also enables you to realize how much money you might be leaving on the table.

We’re here to help you understand your current standing and guide you on the right path to choose moving forward. Book a consultation with us today. The coffee is on us!

Fear #3 – Embezzlement

So many dentists think that no one on their team would embezzle money from them. After all, you trust them right. Maybe it’s a family member or an employee who’s been working with you for years. Unfortunately, embezzlement is a much bigger problem in the industry than you might imagine.

A business making about $1.2 million a year could easily have $50-70 thousand embezzled without even anyone realizing that the money is gone.

Signs Of Embezzlement From A Dental Office

  • A newfound wealth is flaunted by an employee.
  • The personality of an employee changes drastically.
  • An employee always arrives first and leaves last.
  • One of the employees is always taking work home often.
  • An employee is always working overtime without good cause.
  • An employee is very resistant to change and often controls things on a micro-level
  • A worker never takes any vacations, sick days, or personal days

How To Prevent Embezzlement?

As a rule, always check your finances frequently and have a second set of eyes go through them to ensure they don’t find any discrepancies you might have missed. Having a professional dental accounting firm or a dental accountant help you with quarterly audits is another excellent way of ensuring your dental practice doesn’t bleed money.

Fear #4 – Lack Of Take-Home Profits

Profit is the reward we get as entrepreneurs for the work we put in towards growing the equity in our business. Your business might have a phenomenal cash flow, but are you taking home the profits you deserve?

We often see dentists becoming employees of their own business and taking only a paltry salary instead of the dividends they deserve. Planning your profit distributions is crucial to ensure you take home what you deserve every month consistently.

Speak to a dental accountant in Maryland to understand how you can structure your business in a way that allows you to take home what you deserve.

Fear #5 – The Big Bad Tax Shock

You had a fantastic year revenue-wise, but now comes the time to pay up. Uncle Sam wants to take his fair share, but are you prepared to pay up? When running a smaller practice, many dentists don’t put aside money to pay the taxes,, which can lead to a huge tax surprise at the end of the financial year.

You can overcome this shock by planning your taxes and implementing tax-saving strategies that ensure you’re always prepared when the tax season comes. If you’re not sure how you can plan your taxes, allow us to help. We’ve helped multiple small and mid-sized dental practices plan their taxes optimally.

We hope this article serves as a guide to you and acts as the wakeup call you need to audit your finances. Speak to us today about our dental practice accounting services and how we’re able to help small, medium, and large dental practice owners save money and time.

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Dental CPA Maryland

Dentists, Borrowing Money Can Actually Be Beneficial For You. Here’s How

Were you planning on upgrading your equipment or upgrading your IT infrastructure in the new year? Have you been saving up throughout the year for these upgrades? I’ve got some news for you. Read on to learn how borrowing money for these upgrades could be the best decision you make all year.

Today, the interest rates are low, which makes borrowing money for upgrades and new purchases easy and effective. By borrowing money instead of spending out of pocket, you can maximize your tax benefits while keeping the cash flow of your dental practice healthy.

Should Dentists Borrow Money For Tax Savings?

Yes, we firmly believe dentists should borrow money from the current market to expand their practice. This allows them to leverage the low-interest rates to fuel their growth.

Debt can be an inescapable trap if used injudiciously. However, if you work with an experienced professional dental CPA, we strongly recommend taking a loan with a tenure of 7 to 10 years for any upgrades, new purchases or improvements.

Why do we believe this is the best way to grow? Because we fundamentally believe that all significant purchases and equipment should be paid for throughout its useful life and not upfront. A long-term load helps you spread the outflow of cash across multiple years, which also helps with appropriate depreciation write-offs.

In our experience, dentists who have used this approach tend to always have cash on hand, ready for emergency use. Your earned money is better used for your personal growth, while borrowed money can be utilized for business growth. A professional dental accountant and dental tax consultant like sigma can help you structure your expenses in a way that’s beneficial for your dental practice as well as for yourself.

Are Low Interest Rates A Trap?

Interest rates are at record lows thanks to the economic troubles. Lenders are aggressively pushing loans with relaxed credit standards to attract more customers.

If you’re planning to start your dental practice, you can get a loan for as low as 2.99%, whereas expansion loads are available for as low as 3.5%. After getting your tax rebates and tax write-offs, these funds cost you less than 2.5% on average. This deal is too good to pass up.

So to answer the question, no. Low interest rates are not a trap and, if used judiciously with consultation from a professional dental bookkeeper and dental CPA. If you don’t have access to an expert Dental CPA in Maryland, speak to our team at sigma for a free consultation.

Can Borrowing Help Me Reduce My Tax Liability?

Yes, absolutely! According to the current tax laws, $1,050,000 can be expenses for purchases in a tax year. However, this number keeps changing, and you may not be able to keep up with the updates.

Any borrowed funds allow you to use your cash in hand to lower your tax liability even further by claiming tax deductions like retirement plan contributions.

We recommend focusing on your core competence and allowing a team of professional dental accountants and virtual CFOs to help you grow your practice. This way, you always take home what you deserve!

Does Borrowing Have Any Benefits For Me When I Want To Transition From My Dental Practice?

Absolutely! If you’re part of a large group of practices and plan to incorporate new partners or practices into your business, there are multiple benefits of borrowing money.

The cash outflow can be spread across the years and optimized by changing income division formulas or incorporating new members into the business. With each successive year of ownership, a new partner’s share of the cash burden will grow proportionately.

Similarly, if you’re nearing retirement and planning to sell your practice within a few years, you won’t have to bear the full cost of those upgrades and expenditures, which will be beneficial for you on a personal level.

The primary purpose of borrowing money for significant expenses is to create fairness in practice transition situations.

Other Benefits Of Borrowing Money For Dental Business Growth

1. It’s Convenient And Easy To Get Loans

Getting an investor on board can take months, if not years, for the deal to close. On the other hand, a business loan is a lot easier and convenient to get and usually requires getting in touch with a lender, submitting documentation, and getting the money in your account.

2. User-Friendly And Flexible

Loans are flexible and can be used for any purposes you see fit. On the other hand, investments are usually earmarked for certain kinds of expenses.

3. There Is No Profit Sharing

Investors expect regular returns in the form of dividends and distributions. On the other hand, loans don’t require any additional profit-sharing apart from what you already have in place. This is another major benefit of debt borrowing.

4. No Collateral Required

In today’s economy, getting collateral-free loans is a straightforward task. Most business loans are unsecured and don’t need any collateral as long as you meet the required qualification. This makes loans an excellent way for smaller businesses and startups to grow.

We hope this blog helps you understand how you can borrow money from the market and expand your practice while maintaining a healthy cash flow. If you are confused and need help with your dental accounting, dental bookkeeping or Virtual CFO services for dentists, then please feel to drop by our office to discuss how we can help you grow.

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specialist dental CPA

These Dental Accounting Mistakes Could Be Costing You Thousands Of Dollars In Lost Revenue

A growing dental practice needs stable cash flow for it to run successfully. Dentists like you are experts at helping people and running your medical practice, but accounting for a business is a whole different ball game. Many small dentists often overlook vital aspects of dental bookkeeping and make mistakes that cost them thousands of dollars in lost revenue.

In today’s blog, we’ll be taking a look at mistakes you should avoid as a dentist if you want to take home what you deserve. So, let’s dive in.

Dental Accounting Mistakes Only A Professional Dental CPA Can Catch

A Dental CPA uses an intricate accounting system that helps your dental practice run smoothly without hiccups. If you’re still making these mistakes, then it’s time for you to fire your dental accountant or CPA!

Mistake #1 – Treating Cash Flow And Profit Like One And The Same

Let’s take a quick look at what’s cash flow and what’s profit before we delve into this topic.

Profit – An organization’s profit is calculated by subtracting expenses from revenues for a specific time period. Net Profit is calculated after completing a Profit and Loss Statement and deducting all operational costs from it.

Cash flow – A company’s cash flow is calculated by comparing money coming in and going out of a dental practice during a specific period. Once the cash flow equation is computed, accounts receivables, inventory, and depreciation costs are considered.

Many dentists we’ve helped employ bookkeepers or accountants who don’t understand the fundamental difference between cash flow and profit. The results? Inaccurate financial reports that mislead business owners into making financially unviable decisions.

As a business owner, your sole focus should be on profits and increasing your profits. If your cash flow keeps rising, but your profits don’t, then it means your financials are flawed.

Speak to a professional dental CPA in Maryland today to understand how you can avoid this mistake and grow your bottom line.

Mistake #2 – Forgetting To Record Transitions In The Right Time Period

An expensive mistake dentists make is not closing the book at the end of every month.

If your accountant doesn’t close your month every month, you’ll face many issues when you reconcile your financial statements with your bank statements which will cost you dearly. Once your books are closed, no modifications should be made to them, which will ensure that you always have updated financial records on hand whenever you need them.

Reconciling all accounts of the business, preparing month-end financial statements, and ensuring all dues are cleared are all included in book closing activities.

Are you making this grave mistake and recording your transitions in the wrong time period? Please speak to an expert dental accountant in Maryland today to learn how we have helped over 50 dentists get their finances on track.

Mistake #3 – Misclassifying Expenses And Distributions

If you’ve structured your business as per your needs, you may be drawing a salary or taking distributions from your profits. One of the biggest mistakes we see small dentists in Maryland make is that they don’t classify these appropriately, which leads to underpayment of estimated taxes and invites the wrath of the IRS.

A professional dental accountant and bookkeeper in Maryland helps you classify these correctly to ensure you don’t irk the IRS and provoke them to do an audit of your business.

Mistake #4 – Failing To Monitor Key Performance Indicators

A dental practice is a business at the end of the day. If you don’t measure performance indicators and track them properly, you’ll lose out on insights that could help you grow.

A business is fundamentally built by two costs and revenue, i.e., profits and expenses. If you don’t track your expenses and consider your profitability when making growth decisions, you’re missing out. Is your CPA letting you make this mistake? Talk to us today to learn how we can help you.

Mistake #5 – Using An Non-Standard Chart Of Accounts

A chart of accounts is created when we track how funds are received and spent to make the financial statements for a specific period. For example, if your bookkeeper or accountant uses a chart of accounts that are generic and not specialized to a dental practice, then you’re making an unforgivable mistake.

In scenarios where non-standard charts are used, the financial statements and records are always skewed, which leads to wrong decisions because of a lack of insights.

Mistake #6 – Working With An Inexperienced Accountant

The last mistake on the list is also one that costs dentists the most in lost money—working with an inexperienced CPA who doesn’t understand how the intricacies of the medical industry can be an expensive mistake for any dentist. Why? Because they simply aren’t aware of all the claims, deductions, and loopholes that make running your dental practice more profitable.

An inexperienced dentist will also overlook many key things that an experienced dental accountant can catch and rectify. For example – A friend of mine told me this story where a dentist lost over $3,50,000 over 24 months due to employee theft, and they didn’t even know about it until they brought in an experienced specialist dental CPA to help them.

A CPA for dentist like Sigma has years of industry experience and has helped multiple dentists scale their business effectively with the help of Tax Planning Services for Dentists, dental accounting services, dental bookkeeping, retirement planning for dentists, and much more.

Talk to us today to understand how we can help you grow and scale your dental practice with the help of effective dental accounting solutions. Our friendly team of In Maryland is always happy to help.

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Improve Your Dental Practice Profits

How To Improve Your Dental Practice Profits – Effective Ways To Take Home More

The United States of America has over 200,000 dentists that operate their practice. This number is stated to keep growing. It’d be safe to assume that all these dentists are always looking to save up on their expenses and cost and increase the bottom line so they can take home more money for their families.

All dentists know how to provide excellent care to their patients. However, not all dentists know how to run a business well. You must have heard the term lean and agile in the context of running your business, but are you aware of what they mean? In this guide, let’s take a look at how you can improve your dental practice profits by trimming out the fat and making your business a lean, mean money making machine.

Effective Ways To Boost Dental Practice Profit

1. Increasing Your Capacity

The best way to boost your dental practice profits is by increasing your capacity to treat patients per hour. The more people you help, the higher your revenue. It’s simple.

How can you increase your capacity? By freeing up your time. Let me elaborate. If you spend an hour every day doing dental practice accounting and bookkeeping, then this is an hour in which you’re not treating your customers. You can offload the task of dental bookkeeping to a dental CPA in Maryland like Sigma to free up your time and resources.

Other ways to increase your capacity include –

  1. Hiring training staff to take care of low level issues and prep
  2. Streamlining your processes, so only the most pressing issues come to you
  3. Getting rid of administrative duties by outsourcing them

2. Specializing In High Profit Procedures

You might have heard this phrase – Money is in the niche! And we can’t agree more. You can specialize in high profit procedures like implants, endodontics, porcelain veneers, and setting crowns and bridges et al. to improve your bottom line. This isn’t to say that you should turn away your loyal patient base, but you can start marketing yourself as a niche or procedure specialist so all your new client base knows what to expect.

3. Strategic Partnerships Are A Key To Growth

Your family time is as important as your work time, if not more. So while you’re spending quality time away from your practice, you are losing out on revenue. You can consider partnering up with an up and coming dentist who’s looking for the resources to start their practice to run your clinic while you’re busy with other things in life. This has a multifold effect. You get more patients and loyalty, and you are able to give back to the local community by providing access to those who need it.

4. Reduce Dependencies On Dental Insurance

Insurance companies are always on the lookout to reduce the profits of a dental practice in shady and sneaky ways. Often, they fix the prices a clinic is able to charge for treatments which could seriously impact your bottom line.

If you have the resources and capabilities, consider developing your own financing program for your patients where they don’t have to rely only on insurance and can also opt for a part payment in the form of monthly installments.

Cut out the middleman and gain all the benefits and then some by utilizing the correct techniques and tools.

5. Focus On Customer Delight

Happy customers tend to have a ripple effect. Satisfied patients turn into brand advocates who, in turn, help you grow your customer base. The more positive reviews and testimonials you receive, the better your practice’s reputation. On the other hand, negative reviews can result in a loss of patients and decreased revenue.

It’s proven that maintaining your current patient base and growing your revenues through them is a lot easier than acquiring new patients. Some studies reveal that the cost of new customer acquisition is about 6 to 7 times higher than what you spend on retaining a customer.

The easiest way to retain your customers is to delight them with the help of stellar services, right from the receptionist to the primary healthcare provider- everyone must focus on customer delight.

6. Outsource Dental Accounting To Experts

As a dentist, you specialize in helping your patients get rid of tooth and gum related problems, but would you be able to help someone with a backache they may be having? Probably not. Similarly, a CPA who serves multiple industries may definitely be able to help you, but since they don’t specialize in dental accounting, they may not be the best choice for you.

A dental CPA in Maryland like Sigma has years of industry experience and has helped multiple dentists scale their business effectively with the help of Tax Planning Services for Dentists, dental accounting services, dental bookkeeping, retirement planning for dentists, and much more.

Talk to us today to understand how we can help you grow and scale your dental practice with the help of effective dental accounting solutions. Our friendly team of In Maryland is always happy to help.

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Tax Credits For Your Dental Practice

Do You Want Tax Credits For Your Dental Practice?

Did you know? – Dentists who pay more than 30% in federal, state, and self-employment taxes combined may be overpaying their fair share. A dental tax consultant can help you save your tax. Wondering how? Here are our best tax saving tips for dentists compiled for you. So, read on to learn how you can save tax as a dentist.

There have been significant changes to both high-income individuals and small businesses with the new tax law. Since you are a dentist who probably falls into both of these categories, be sure to familiarize yourself with the major changes as soon as possible.

Over the years, helping dentists save tax, we at Sigma have realized that about 95% of all our clients were paying way more in taxes than what they owed. The reason? Poor tax planning for dentists by CPAs who don’t specialize in dental practice accounting. Many CPAs fail to take advantage of all of the opportunities offered by the U.S. tax code because they simply aren’t aware of them. Here’s how you can get the benefits for your business.

1. Expense Your Equipment

Deductions under section 179 help you reduce your taxable income by accelerating how you expense new equipment. Buying new or used equipment can immediately be expensed up to $1,000,000. Having said that, if you purchased equipment worth more than $3.5 million, there are limitations. Call one of our expert dental accountants at Sigma to understand how you can use these expenses to save taxes.

Bonus depreciation can accelerate the expense process for new or used equipment. As an alternative to writing off 100% of the equipment’s value, you can depreciate the balance over the Modified Accelerated Cost Recovery System (MACRS) life.

2. Perform A Cost Segregation Study

Did you build, buy, or renovate your office building in the last 6 to 12 months? If yes, consider performing a cost segregation study.

How do cost segregation studies work? It allows you to use bonus depreciation to reclassify and expense some construction and renovation costs immediately using shorter depreciation classes.

A CSS can be complicated to undertake if you aren’t an expert at accounting. Fortunately, we have a qualified and certified team of Dental CPAs at Sigma who can help you perform the study.

3. Are You Appropriately Preparing For Your Retirement?

Are you deferring your wages into a 401(k) to prepare for your retirement? If yes, you can contribute and defer about $19000 if you are under the age of 50 and about $25000 if you are over the age of 50.

If you don’t have a plan for your retirement yet, you’re making a grave mistake! Talk to an expert today and get a customized program that may include contributions to an Individual Retirement Account (IRA). You can contribute about $6000 annually towards an IRA to save up on the 3.8% investment tax.

Additional Things To Consider –

  • Consider Roth deferrals or pre-tax deferrals.
  • Utilize the SIMPLE IRA plan for employees
  • Check out a 401(k) with safe harbor
  • Establish a defined benefit plan that is cash balance based

Jigna, our principal, is a retirement planning expert who has helped multiple dentists plan for a stable future. Join them on their quest for growth and stability by booking a call with us.

4. Use Your Family To Your Businesses’ Advantage

If you have children, you probably give them pocket money for expenses. Use this to your advantage by employing your children and participating in the IRS-approved strategy to reduce your payroll taxes.  This is a Win-Win as you get the tax saving while your children get money for their expenses or even college.

Unemployment taxes are not due until children turn 21. Additionally, they are not liable for payroll taxes, Social Security, Medicare, or unemployment taxes until they turn 18. They also will not be subject to the FICA and Medicare taxes on their wages. LLC owners can benefit from family tax breaks, just like sole proprietors.

Bonus Tip – Your Child’s College Education In The Future Can Save You Money In The Present.

If you plan on sending your child to college (Which you most likely will and should), you can set up a 529 Plan.

What’s a 529 plan? A 529 plan is a tax saving instrument where the contributions are tax-free, as long as the distributions are used for qualified educational expenses like college. Some states also offer additional tax benefits for a 529 plan.

You’re probably still fairly confused with all of this. Do you want help? Allow us to unburden you from taking care of your financial health. We at Sigma always strive to ensure that businesses that work with us are healthy and growing by providing the best dental accounting and dental bookkeeping services for them. Feel free to book a meeting with us, no obligations and no strings attached. The coffee’s on us.

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tax planning for dentists

Tax Reduction Tips For Dentists

We’re moving closer and closer to the holidays (Woo Hoo!), and this is perhaps the best time to look at your books and ensure your financial health, just like your patient’s oral health, is in good shape. Tax planning is your biggest asset when it comes to tax reduction and tax minimization. A certified professional tax planner in Maryland can help you reduce your tax burden and ensure that you take home what you rightfully earned.

In today’s blog, we’ll take a look at some tips we have for dentists who wish to save taxes with the help of professional tax preparation. If you have questions about your taxes or don’t know what deductions you should claim, then speak to a Certified Public Accountant (CPA) from our qualified team. At Sigma, we are dental accounting specialists.

Best Tax Reduction Tips For Dentists

Tip 1 – Ensure Your Business Entity Structure Is Set Up Appropriately

If you’re a new dentist, you might have started as a sole proprietor to save tax until you gain revenue. Many dentists are still filing their taxes as C-corps, which might not be as advantageous as you may think. Consider filing your taxes as an S-corp, which will ensure your business entity structure is appropriately set up to ensure growth. Talk to a dental CPA in Maryland today to understand how you can switch from filing taxes as a C-corp to an S-corp. A professional dental accountants can help you make this change retroactively as well. A member of our certified dental accounting firm can help you understand the benefits of filing your taxes in the correct category.

If you’ve set up a DPC or a dentistry professional corporation when setting up your business, then you made the right decision. You can “share income” with your family members as dividends, provided they work with your practice at least 20 hours a week throughout the year. You can share up to $30,000 without significant tax implications per member of your family.

Unsure if you’ve set up the business entity structure currently? Contact Sigma today to get a free consultation and to learn why dentists need a specialized dental accountant.

Tip 2 – Share The Tax Burden By Employing Your Kids

Children age six and above can legally be employed by a business in the United States. You must consult a professional Dental CPA like Sigma to learn how you can use the annual tax-free limit to share your tax liability with your kids. These limits are updated regularly, making them difficult to track but easy to implement if done by a professional.

You’ll be able to pay your kids by showing how you use them as models in your marketing and advertising or how they contribute to the upkeep of your space. This tax-free money that you can give to them every year can be used to fund their college education, pay for private school tuition, or be invested into a ROTH IRA.

Talk to a professional dental bookkeeper and accountant today to ensure you set your children up for success in the future.

Tip 3 – Add An Accessible Website To Your Businesses’ Marketing Arsenal

If you don’t have an accessible website to help you market your business, you’re missing out! The world is digital, and if you don’t have a digital presence in today’s day and age, you practically don’t exist.

The IRS has allowed dentists to write off up to 50% if you upgrade to an accessible dental website. This move aims to ensure adherence to the ADA – Americans With Disabilities Act. Most dentists think that the ADA only applies to physical offline locations, but as things quickly move online, various online assets like an accessible website become a necessity for any dentist.

If you’ve recently upgraded to an accessible website or plan on moving to a new website, then talk to a professional CPA for Dentists in Maryland and understand how you can use that to your advantage

Tip 4 – Prepare For Retirement

You may have just entered the industry and may not plan to retire anytime soon, but it never hurts to prepare for the future. Generation wealth for dentists can be built by accurate planning and timely execution.

There are many options available to help you plan for a stable retirement, right from a simple 401(K) to different kinds of IRA and everything in between. These options might confuse you, a dentist, but a specialized dental accountant like Sigma knows which plans are suitable for the type of investor you may be.

The plans you choose will be dependent on the size of your practice, your age, number of employees, so on and so forth. Talk to a dental accounting specialist who can help you plan for your retirement and ensure the wellbeing of your employees when the time comes to move on.

Tip 5 – Ensure You Claim All The Necessary Deductions

Did you know you can claim tax deductions on the annual holiday party you organize during the festive season? You can claim up to 100% deductions on six meals and entertainment if you invite all of your staff to the function. The deductions you lose by failing to reclassify these expenses into a separate category amount to 50%.

A professional tax consultant for dentists can help you classify your claims and ensure you utilize tax deduction to the maximum extent possible. That’s why it’s crucial to hire the right dental bookkeeper and dental tax consultant.

These five tips will help you save up on your tax liability and ensure that you prepare your taxes while providing maximum benefit to your dental practice. Talk to one of our experienced dental accounting team members to learn how we help dentists prepare taxes and ensure compliance while saving you money.

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Specialised Dental Accountant

Does A Dentist Need A Specialised Dental Accountant?

Several years ago, a friend of mine told me this story. There was a small but thriving dental practice owner in the tri-state area who lost $350,000 over the course of 24 months. Surely you wonder why he lost the money? The simple answer – Employee theft. Their trusted administrative assistant was quietly embezzling money out of business and into their own pockets.

So, how did you come to know about this? By meeting a professional dental accountant. The local CPA they had hired was unable to spot this nefarious activity because they didn’t specialize in dental accounting and didn’t consider the possibility that the funds were being misappropriated.

What can we learn from this story? The need for specialized dental practice accounting. That’s correct. So to answer your question, Yes, a dentist does indeed need a specialized dental accountant.

The Need For A Dedicated CPA For Dentists

There are a fair number of reasons why a dentist needs a professional dental CPA. They can help you cut costs and grow your revenue with the help of financial housekeeping.

The job of a dental account is not just keeping track of your books or maintaining your accounts but also ensuring that you avail of all the schemes and programs run by the government to help small businesses. They also monitor that you’re always compliant with the policies. Tax preparation and optimization is another vital task of any professional dental CPA.

Several experienced CPAs in Columbia, Maryland, provide virtual CFO services aimed at helping dentists scale their practice with the help of budgeting, forecasting, planning, and strategic implementation of financial decisions. For ambitious dentists looking to expand and scale their dental practices, the guidance and mentorship of a virtual CFO are invaluable.

What Should You Consider When Choosing A Dental Accountant

Many small business owners and dentists tend to overlook some crucial elements when selecting a professional dental accountant for their business which can end up costing them a lot in the long run. Here are some factors you should consider when hiring an experienced dental CPA for your dentistry practice.

1. Range Of Services

There are CPAs who are generalists, and then there are CPAs who specialize in serving a particular segment of the industry. During your next meeting with your CPA, ask them about their range of services and how any additional services that they recommend may have an impact on your revenue. If your CPA offers only a few services, then it may be time to switch. Call our expert dental accountants today to schedule a free consultation.

Common Dental CPA Services Include –

  • Payroll Services
  • Compliance Assistance
  • Corporate And Personal Tax Management
  • Helping With Fundraising
  • Financial Advice And Planning
  • Strategic Mentorship And Guidance

2. Level Of Experience And Expertise In The Dental Accounting Field

CPAs serve a vast array of customers and clients across industries which is why you must look at the level of experience and expertise they bring to the table when looking for your next dental CPA.

An experienced dental accountant will help you optimize your tax position, claim necessary deductions, avail specific governmental programs, and save money. Dental accountants can often act as the jack of all trades and help you achieve your business goals quickly while ensuring accounting compliance.

3. Communication And Transparency

Accounting is a complex field, and many dental accountants don’t transparently disclose their activities and strategies. An accountant who isn’t openly communicating, guiding, and mentoring you may not be a good fit for your business. Therefore, it’s vital to look at the level of transparency and the quality of communication they offer.

4. Value For Money

Businesses function on two essential components, revenues, and costs. The value you derive from incurring the cost of hiring a professional dental CPA should be more than the cost itself for it to be a valuable investment.

Choosing the best option doesn’t mean choosing the cheapest one. It would help if you weighed the benefits of your investment with the costs. We at Sigma offer packages built for small dental practices to help them grow with ease. Contact us today to learn more about our offerings.

5. Clarity And Transparency Of Fee

For you to plan your dental expenses effectively, dental bookkeeping and accounting costs must be transparent and clear. You don’t want any unpleasant surprises down the line, do you? Ensure that the dental accountant you hire offers transparent pricing and is open to discussing all the costs involved in hiring them upfront before signing you on as a client.

6. Ability to Answer Complex Questions

You depend on your dental account for all kinds of things that have to do with your money and finances. Would you want to work with someone who isn’t able to answer complex questions you may have from time to time? No, you wouldn’t. As someone who has a background in accounting, you’d expect your dental CPA to answer any type of money-related question you may have openly and transparently.

The best people to work with are those who can always provide you with the correct answers whenever you have a question. They can only do that if they have a firm grasp of what they must do and what dental practices need from their accountants.

So, there we have it! We hope you understand why we believe that dentists need specialized dental accountants. Do you need help finding a good dental CPA? Not anymore! Get in touch with the best dental accountant in Maryland today and schedule a consultation.

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