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.