Expert CPA Tips: What to Ask before You Buy a Dental Practice
Buying a dental practice is a significant investment that requires thorough preparation and guidance from a certified public accountant (CPA). They can help you navigate the financial aspects of the acquisition and ensure that you make informed decisions. However, not all CPAs are the same, that’s why you should ask questions when choosing who to work with. Below are some questions to ask your CPA when buying a dental practice.
What Is Your Experience in Working with Dental Practices?
The first question to ask your CPA when buying a dental practice is about their experience. Not all CPAs have experience in this area, and it is crucial to work with someone who understands the unique financial aspects of the dental industry. An experienced dental accountant will be able to provide valuable insights and guidance on topics such as practice valuation, financing options, tax planning, and other financial considerations specific to dental practices.
What Is the Current Market Value of the Dental Practice?
Determining the value of a dental practice is a critical step in the acquisition process. Your CPA should be able to perform a comprehensive analysis of the practice’s financial records and provide an accurate valuation. This analysis should consider factors such as revenue, expenses, patient base, location, and equipment. The market value of the practice will influence your negotiations with the seller and your financing options.
What Are the Tax Implications of the Acquisition?
Buying a dental practice has significant tax implications that require careful consideration. You can ask for guidance on tax planning strategies from your accountant to help minimize your tax liabilities. Some things to discuss include:
- The tax implications of the purchase price allocation
- The tax treatment of intangible assets such as patient lists and goodwill
- The tax implications of financing options such as loans and leases
- The tax implications of the entity structure of the practice
What Financing Options Are Available?
Financing the acquisition of a dental practice requires careful planning and consideration. Your CPA should be able to provide guidance on financing options and help you determine the best financing strategy for your situation. Some of the financing options to discuss with your CPA include:
- Traditional bank loans
- Small Business Administration (SBA) loans
- Seller financing
- Equipment leasing
What Is the Financial Health of the Practice?
It is crucial to assess the financial health of the business you’re buying. Your accountant should be able to review the practice’s financial statements and identify any red flags or areas of concern. Some of the financial aspects to review with them include:
- Revenue trends
- Expense trends
- Profit margins
- Accounts receivable and payable
- Cash flow
What Are the Staffing and Payroll Considerations?
Buying a dental practice involves taking on the existing staff and payroll obligations. Your CPA should be able to guide staffing and payroll considerations, including:
- Reviewing the current employment contracts
- Identifying any potential labor law issues
- Evaluating the payroll and benefits structure
- Calculating the payroll taxes and benefits obligations
What Are the Insurance Considerations?
You need to take various insurance obligations when buying a dental practice, including malpractice insurance and liability insurance. Ask your CPA to guide you on insurance considerations, including:
- Reviewing the existing insurance policies
- Identifying any potential gaps in coverage
- Evaluating the insurance premiums and deductibles
Buying a dental practice is a significant investment that requires careful planning and guidance from a qualified CPA. Asking the right questions when selecting a CPA can help you make informed decisions and navigate the financial aspects of the acquisition process successfully. The questions outlined in this article provide a starting point for your discussions with a potential CPA and can help you identify the best candidate to work with.
Are you looking for a CPA who understands the unique financial aspects of dental practices? Turn to Ash Dental CPA. We specialize in buying, selling, and valuing dental practices and can provide valuable financial guidance for your acquisition. Schedule a consultation with our dental accountants today.