Year-End Tax Planning
Contrary to the common notion, year-end tax planning should start as early as possible. Efficient businesses do not leave year-end tax planning to the last moment.
You can take advantage of certain last-minute moves to reduce the tax liability. You can take advantage of these strategies throughout the year as well.
Let us discuss a few top tax-saving tips for year-end tax planning.
Year-End Tax Planning
Consult a professional tax planner to devise an effective year-end tax plan. For that, you do not need to wait till the last moment.
For instance, if you haven’t already, discuss the right entity type for your business. Each entity type comes with certain tax advantages and caveats too.
Similarly, you can consult a professional tax advisor to discuss the current and next year’s taxable income. Many businesses struggled during the last one and a half years due to the economic recession. If you expect recovering sales the following year, it will be a good idea to accommodate that prospect right now.
Consider the Tax Brackets – for the Current and Next Year
Continue talking with your tax planning on your current and next year’s tax planning. If you expect low sales this year and higher turnover for the next, it will need some planning to adjust expenses accordingly.
Seeking advice from a professional here can help you manage the tax brackets. Just a few tweaks can bring your tax brackets down. However, this tip can work well if you do not wait till December for the last-minute adjustments.
Acceleration Strategy – Benefits and Risks
Income acceleration can suit your tax planning if you expect a higher tax bracket for the next year. For example, you may be in the 10% tax bracket due to low profits for the current year. Deferred payments mean you can quickly move from the 10% to the 12% or from 22% to the 24% tax bracket.
Managing accounts receivable efficiently can accelerate your current year’s income. You can ask clients to make early payments, early large up-front payments, and accelerate delayed payment collections.
Contrarily, if you’re expecting to be in a higher tax bracket this year, you should consider expense acceleration. For instance, making large up-front payments, accelerated depreciation, and making early payments.
Deferral Strategy – Benefits and Risks
Similar to the acceleration strategy, you can plan a deferral strategy as well. For instance, if your current year’s income sets in you in a higher tax bracket, you can defer a few collections.
Effectively, you’ll allow extended accounts receivable days to your clients. Contrarily, you’ll shorten the accounts payable period to accelerate payments.
Both acceleration and deferral strategies come with some benefits and risks. You can plan by consulting with a professional tax consultant to choose the right strategy for you.
Choosing the right retirement contribution plan can make a difference in your tax returns as well. Consider your business entity structure and your individual retirement contribution plans.
Businesses owners can use the following retirement plans:
- Simple IRAs
You can choose other qualified retirement plans as well. Most contribution plans do not incur a tax liability until withdrawals. These plans differ in the contribution due dates, maximum contributions, and account opening requirements.
Consider Equipment Purchases
You can plan to make early purchases of equipment to reduce the tax liability. Similarly, making a large down payment for leased equipment can also help you reduce the tax liability.
A similar move is to consider the accelerated depreciation for allowable equipment and machinery.
Some tips to adjust purchase expenses:
- Purchasing office supplies
- Upgrading equipment and tools
- Releasing vendor payments
- Making large down payments for leased equipment
Revise Quarterly Estimated Taxes
Businesses need to make quarterly estimated taxes. If you fall behind the estimations, the IRS will recover these taxes with your yearly tax filings.
An effective way of managing estimated taxes is to file quarterly taxes on time. For the last quarter, you can make adjustments.
Delaying estimated taxes can incur a tax penalty as well. Thus, adjusting estimated taxes before the last quarter’s due date can help you avoid penalties as well as manage total taxes.
You should not wait for the year-end tax planning till the last moment. Consulting a professional tax advisor can help you save money on taxes. You can plan according to the current and next year’s financial circumstances.
Dental Practice Purchase Checklist
Dental Practice Purchase Checklist | Even if you have been running a dental practice for years, buying a new practice can feel challenging. It’s an overwhelming experience for new buyers too. You may look to buy a new dental practice for a startup, expansion, merger, or acquisition.
Let us help you understand the process. We have prepared a dental practice purchase checklist for you. It will help you learn the key steps in the process of buying a dental practice.
Reach Out to Professionals
Buying a dental practice involves financial, legal, and managerial aspects. All of these issues require expertise. Seeking help from a relevant professional can make the process easier along with a Dental Practice Purchase Checklist.
Find a dental CPA that offers expertise and experience in handling financials related to buying/selling a dental practice.
Dental Business Broker
Choose a CPA that can offer you the services of a dental business broker as well. Also, consider a Dental Practice Purchase Checklist.
You must also consult a dental attorney to avoid legal complications. You can ask your dental CPA to help you chose the right person too.
Evaluate Options and Make an Offer
Evaluate different options by consulting your partners for the process. Once your team is satisfied with a potential seller, it’s time to make an offer.
Your Dental Business Broker and Dental CPA can work closely to help you make an effective offer and negotiate the price.
Submit a Letter of Intent
A letter of intent will be your formal offer and proposal to the seller. You can agree on some key points here to make the process smoother for both parties.
Here are a few key points you should include in the Letter of Intent (LOI).
- Make the letter of intent “non-binding” except confidentiality and no-shop points.
- Offer to purchase the structure of practice and not the ownership of the seller’s company.
- Price and payment terms.
- Accounts receivables /payables and excluded assets.
- A clause on the post-transition period.
- Confidentiality and exclusivity clauses.
- A clause on contingencies should you fail to obtain bank financing for the transaction.
Apply for a Practice Purchase Loan
You can apply for pre-approval of bank financing for the dental practice purchase. You can seek the help of a professional dental practice lender. Make sure to explore different options here.
Lenders and banks offer different financing rates for different credit scores. Try to secure the best loan deal here as it will have long-term implications for you.
Shop for Practice Insurance Policies
Your lender or bank along with the seller may require different insurance policies. You may also require insurance policies for legal compliance to run the dental practice.
Some key insurance requirements may include:
- General business liability insurance
- Property insurance
- Malpractice insurance
- Life and health insurances
Review the Sale Contract
You can become a buying party as a sole proprietor or as a corporate entity. You should consult the Dental CPA here to evaluate the best possible option for you. Each entity type comes with its pros and cons.
Then, you can consult with the dental practice attorney to review the purchase contract. Make sure the purchase agreement is consistent with the letter of intent.
Sign the Deal and Take Ownership
Once your team has reviewed the purchase agreement, it’s time to sign the deal. In the following phase, you should secure possession of the dental practice property.
At this stage, ensure to review the lease deal with the landlord. However, if the lease is expiring, you should contact the landlord to renew the lease as soon as possible.
Also, ensure to take possession of the property in good condition and specified terms.
Write a Letter of Practice Transition
You should formally inform the landlord, patients, staff, and other stakeholders of the dental practice about the transition.
Furthermore, writing a letter of practice transition can help you formally announce the change.
Post-Closing Transition Period
Your seller might have agreed to work with you for a while in the post-closing transition period. In addition, you can use this period to hire new staff or retain the existing employees.
Also, during this period you can work with the seller to figure out any adjustments for ongoing costs such as lease payments, utilities, supplies, and overhead costs.
Dental Financial Advisor
Dental Financial Advisor | Challenging economic times make financial planning harder. Uncertainty surrounds us for the time being. As for financial planning, the future can be uncertain and unpredictable as recessions are inevitable.
As a dental practice owner, you can work with a specialist to plan well. Financial advisors come with different industry expertise and experience. Choosing the right dental financial advisor to work with can make the process a lot easier for you.
Dental Financial Advisors
A dental financial advisor has the qualifications of financial advisory and experience in the dental industry. In other words, they are dental industry specialists.
Hence, you need financial advice from an expert at every stage of your dental practice career. From choosing the right entity structure to tax planning and retirement, you’ll need professional advice.
Overall, there is no better option than to consult an industry specialist. Thus, a generalist financial advisor can just do the job, a specialist will do it perfectly.
Financial Planning with a Dental Financial Advisor
In short, a dental financial advisor will make the financial planning a thorough process. It takes careful planning and expertise to devise an effective financial plan.
For this reason, you can expect the knowledgeable financial advisor to begin the process by asking questions. The advisor must fully understand your current financial scenario and goals for effective planning.
Here are a few key services that you can expect from a dental financial advisor.
Dental-Specific Financial Advice
Generalist financial advisors would take the generic route of financial planning. In addition, a dental financial advisor will take a customized route that matches your requirements.
Financial planning is unique for every individual and business. Understanding the financial goals and prospects is the key to successful financial planning.
A financial advisor that comes with an understanding of the dental industry can offer tailor-made financial advice. You can choose the right entity type, tax planning, cash flow management, debt planning, and practice succession with the help of a dental financial advisor.
Debt is the major source of financing for any dental practice. Unfortunately, debt is also the major cause of concern for many practices. It doesn’t have to be that way if you plan well.
A dental financial advisor can help you in assessing the existing debt plans. You can work with the advisor to create an effective debt management plan.
Overall, debt management includes choosing the right financing options, reserving cash, building a credit score, and increasing net worth.
Tax planning for your personal and corporate income is of utmost importance. Thus, many advisors can give you a short-term plan for tax planning that may result in tax evasion.
Effective tax planning requires a thorough understanding of your practice income and expenses. For this reason, it includes careful assessment of your entity structure too.
Also, you can use effective tax planning tools like entity structure, charity donations, interest deductions, tax credits, and deductions.
A Specialist Investment Advisor
Investment planning is critical for net wealth building. It also helps in achieving retirement goals. You should explore long-term financial goals through capital gains with investment plans.
Capital gains incur tax implications too. Hence, it is important to evaluate different options and secure the most tax-efficient investments.
A dental financial advisor can work with you to devise an effective investment plan. Some key points to consider here include your risk tolerance, existing portfolio, business liquidity, cash flow, and taxation.
Advice on Insurance Plans
You’ll always require different insurance plans for your personal and practice protection. For example, some insurance plans are required by law.
A thorough review of your existing insurance plans and exploring other competitive options can help you secure better plans. Also, you can explore a variety of insurance plans for life insurance, general building liability, employee liability insurance, practice and personal disability, and malpractice insurance to name a few.
Practice Succession, Retirement and Estate Planning
At some stage, you’ll need practice succession when you retire. Naturally, you would want to align your retirement goals with the practice succession planning. In other words, estate and personal wealth planning are closely linked with retirement planning as well.
Hence, a key advantage of working with a dental financial advisor will be to obtain expert advice on retirement planning and practice succession in conjunction.
Tax Planning For Dentists
Tax planning for dentists can be viewed as a means to reduce the tax liability within the laws. It’s important to differentiate the term from tax avoidance or tax evasion. When done properly, tax planning can bring long-term financial gains.
Tax planning is important for dentists like any other professionals. Taxes are a permanent part of your professional and personal lives. As a dentist, you can consult a professional such as a dental CPA to reduce the liability.
What is Tax Planning for Dentists?
Tax planning refers to a strategy or plan that is devised to minimize tax liability by staying compliant with the tax laws. Tax planning for dentists covers different personal and business financial aspects.
Efficient tax planning reduces the tax burden. Tax planning uses the deductions and tax credits to their maximum use. It also devises plans such as deferred income and early expense payments etc.
Why Dentists need professional tax planning?
Tax planning for dentists is devised to save money. It directly affects your wealth planning and retirement planning. Simply put any savings from taxes would go towards investments for long-term gains. These long-term investments can be retirement plans, stocks, real estate investments, or fixed-income instruments.
Dentists also often operate the dental practices as sole proprietors. It means careful tax planning for the business and personal income taxes become more important. Reducing the tax liability in such cases is a complex task. Thus, dentists should plan early for taxes to gain long-term benefits.
Savings for the Long-Term
That’s the prime objective of tax planning, to save money. Tax filing is a permanent obligation for dentists that could stretch to the retirement life as well. Thus, if planned well, tax planning can yield long-term savings.
Savings through tax planning for dentists offers multi-facet benefits. The more you save from taxes more you can put that money into investments. Invested money yields manifolds returns in the long-term. However, it’s important to distinguish between tax reduction and tax avoidance.
As a dentist, you can consult a professional such as a dental CPA to advise you on the long-term saving plans with tax planning strategies.
Retirement planning a key goal for any professional. Dentists can also take advantage of tax planning to maximize their retirement planning benefits.
One way of improving retirement planning returns is through maximizing the contributions to the retirement plans. You can choose the right retirement plan to maximize savings. Although you cannot avoid taxes on retirement plan contributions. Tax liability can be deferred and lowered through retirement plan contributions.
The other way is to maximize the savings through tax liability reductions. Any savings can go into investments such as fixed-income instruments like bonds.
Improved Personal Finances
Tax planning for dentists eventually affects personal finances as well. Particularly, for a dental practice running as a sole proprietorship. In many cases, business income is considered personal income. Hence, effective tax planning reduces the tax liability for your dental practice as well as personal income.
Effective tax planning can also help you grow personal wealth in the long run. You can devise plans such as financing a child’s education through business income to reduce the tax liability. It means you can save on some of the personal expenses and stay compliant with the tax laws as well.
Compliance with the Laws
One of the key purposes of tax planning for dentists is compliance with regulatory laws. Tax laws are changing with continuous amendments and provisions. Thus, keeping up with the tax law changes becomes a complex task. Effective tax planning helps a dentist stay compliant with these regulatory changes.
At the same time, you can take full advantage of tax provisions and temporary reliefs offered by the IRS. For example, in the recent Covid-19 economic hardships, the IRS allowed several tax provisions such as PPP loan forgiveness.
Improved Financial Planning
Financial planning is a strategic task that a business performs for long-term success. Tax planning for dentists is also a long-term strategic task. Thus, we can relate the effective implementation of tax planning as an integral part of the financial planning process.
For dentists, the tax expense can be one of the largest business expenses. Hence, planning to reduce the tax bill would affect every aspect of your financial life. As financial plans can be divided into short-term and long-term, tax planning can also be matched with these financial plans to achieve effective results.
Dental Bookkeeping Massachusetts
Dental Bookkeeping Massachusetts | Bookkeeping organizes the accounting records of your dental practice. You need to account for every penny that comes in or goes out of your dental practice’s accounts. Bookkeeping is the tool that maintains the records of every accounting transaction for your dental practice.
Dental Bookkeeping Massachusetts provides several benefits to any business. A dental practice can take advantage of professional bookkeeping services too. Moreover, one of the key benefits of outsourcing the bookkeeping function is to save time. You can focus on the core activity of your dental practice by saving time and money by outsourcing the bookkeeping function.
What is Dental Bookkeeping Massachusetts?
Bookkeeping is the process of recording, organizing, measuring, and presenting the accounting data of a business. For this reason, these records then become starting entries of financial statements. Thus, financial advisors can use the bookkeeping records to turn raw accounting data into useful financial information.
Bookkeeping for Dentists
Dental Bookkeeping Massachusetts would imply covering every accounting transaction related to the dental practice. These accounting transactions can range from income and expense entries, invoices, interest payments, payroll, tax returns, and so on.
Here are some of the key aspects of bookkeeping for dentists.
Segregated Accounting Records for your Dental Practice
Dental Bookkeeping Massachusetts is the organizer tool for your dental practice’s accounting records. You’ll get segregated accounts for your dental practice. It helps in maintaining organized account books of your business.
The setup of accounts is termed as charts of accounts. The broader categories of these accounts can be classified into:
- Income (Owner’s Equity)
Each broader category can then be further divided into several sub-categories. Financial analysts can utilize this information to measure performance. You’ll be able to benchmark the performance metrics against historic results or industry performances. Thus, bookkeeping records can help you stay competitive and organized.
Separate Personal and Business Finances
If you are running the dental practice as a sole proprietor, you’ll need to separate your personal and business finances. It will be a complex task to comply with tax regulations without efficient record-keeping.
Separating personal and business financials can also reduce your tax liability. As personal and business income is taxed differently. You can consult a professional such as a dental CPA to choose the right entity structure for your dental practice. For instance, you can choose a corporation entity for your dental practice to reduce your business liability and tax burden. However, it would require several other legal complications.
Know the Numbers – Financial Analysis
Even if your dental practice is making a profit, you would want to know; is it sufficient. You cannot assess the efficiency of your dental practice’s resources without measuring them. Moreover, bookkeeping is the tool that allows us to know these metrics.
Dental Bookkeeping Massachusetts maintains accurate records of every financial transaction in your dental practice. Thus, you can utilize these records for performance appraisal. For instance, you can analyze the account receivables days from clients to know which clients have been continuously delaying payments.
Furthermore, bookkeeping also lets you figure your profits and cash flow. Your dental practice can be profitable but illiquid or can be generating sufficient cash but remain unprofitable.
Close-Out Process and Reconciliation of Accounts
Reconciliation of accounts is an integral part of the accounting cycle for any business. It helps you stay organized and remove any errors from financial records. In addition, it can help you control theft, fraud, or misconduct of controls.
A close-out process is the preparation of accounts for financial statements. It involves account reconciliations and summarizing. Journal entries from account books are summarized and carried over to the financial statements.
Reconciliation of accounting records would help you mitigate financial errors. You’ll get a true picture of your account books, hence the profitability of the dental practice at any given time. Dental Bookkeeping Massachusetts is the tool that generates these key accounting records.
Entries for Financial Statements
The preparation of financial statements is a key part of the accounting cycle for any business. Bookkeeping provides accurate figures for all financial statements including the balance sheet, income statement, and cash flow statement.
Moreover, financial statements provide a summary of the financial position of your dental practice at any given time. For instance, the balance sheet depicts how much your practice owns and how much it owes to others. A cash flow statement provides the track of cash moving in and out of your dental practice. Therefore, accurate Dental Bookkeeping Massachusetts records mean accurate financial statements for your dental practice.
Sell Dental Practice Framingham
Sell Dental Practice Framingham | You have worked to make your dental practice a success. Selling a dental practice also needs hard work and special skills. Before you put up the “on-sale” board, decide the right reason for selling your dental practice.
Selling a dental practice for retirement will have different consequences from relocation or joint venture motives. Once decided, you can then consult a professional such as a business broker to help you through the transition.
Top Tips for Sell Dental Practice Framingham
Selling a running business takes time, often from a few months to a year or so. Hence, you should plan accordingly and make adjustments in time. You can utilize this time in preparations for selling the dental practice.
Here are the top tips that can help you in the smooth process of selling your dental practice.
Preplanning can help you stay organized and find the right buyer for your Sell Dental Practice Framingham . Also, it will help you get the right price that you’re looking for.
Early planning gives you time to reassess the situation realistically. For instance, you can review the current fair market value of the tangible assets of your dental practice. Consider the key questions such as; will the new buyer have to spend money on the medical equipment that we use?
Choose the Right Business Broker for your Dental Practice
The next key step for you is to choose the right business broker. Selling a dental practice requires knowledge of the transaction advisory as well as the industry trends. A business broker with dental industry experience can be the right fit for you.
You should ask questions to the business broker before finalizing the deal. Particularly, ask the brokers about their experience in dental practices. Always look to work with business brokers that come with the right experience and reputation.
Improving Business Valuation
Your chosen business broker will assess the dental practice for an early business valuation. Consider the fair market value of your dental practice. The key point at this stage is to create a plan to improve the business valuation.
A dental practice owns significant intangible assets such as goodwill. Working with a professional such as a dental CPA can help you improve the business goodwill. That will eventually increase the business valuation. However, improving business valuation takes considerable time. That’s why it is important to start planning early before you Sell Dental Practice Framingham.
Improving Assets of the Dental Practice
A dental practice owns valuable tangible assets such as medical equipment, building, and properties as well. Tangible assets present a significant proportion of total assets for a dental practice as much as intangible assets.
You can consult with your advisor on improving the valuations of these assets. For example, consider closing out the lease deal of an asset such as a vehicle if it’s near completion to make it a fully owned asset. At the same time, do not invest in sophisticated equipment just before Sell Dental Practice Framingham. The new owners wouldn’t want a conflict of choice straight away.
Plan about the Staff
It is important to keep the process confidential until the transaction completes. However, you’ll have to plan about the integral asset of your business; human resources. You can plan the transition with the help of a business broker.
You must also take into confidence your potential buyer about key employees. The decision will also depend on the new buyer’s planning. For instance, a potential buyer looking for a merger would eventually fire some of the staff and retain some. A buyer starting fresh with a dental practice might want to retain all the staff members for smooth operations.
Marketing for the Dental Practice Sale
As we advised you to keep the sale process confidential, marketing becomes a challenge. It is important to use the right marketing channels and avoid unnecessary ones. For example, there is no point in advertising your dental practice sale opportunity in a local newspaper if you wish to keep the process fully confidential.
You can use the right tools such as marketing through a business broker. Similarly, using professional network referencing can help you find the right buyer before Sell Dental Practice Framingham.
Keep your Business Documents Ready
Lastly, it is important to stay organized and prepared with all business documents. You’ll need to renew the license permits, tax returns, bank accounts, ownership of assets, and liabilities and so on.
Keeping business documents in order will save you time and complications at the time of the transition.
Purchase Dental Practice
When you think of purchase dental practice, you certainly with some relevant industry background. Similarly, seeking help from a professional that offers the same industry experience would make the whole purchase process easier for you.
A dental CPA comes with an accounting qualification as well as dental industry experience. A CPA would ideally communicate effectively on your behalf with the seller. Thus, the role of a CPA starts with finding a suitable dental practice for you to completing the sale agreement to purchase dental practice.
Why Use a Dental CPA to Purchase Dental Practice?
Purchasing a running and successful dental practice business may seem an easy task. Practically, it requires expertise and in-depth knowledge of transaction advisory and the dental industry. A dental CPA is in a unique position to offer you both skills required to complete the transaction.
Here are a few key reasons to partner with a dental CPA when purchasing a dental practice.
Finding the Right Dental Practice for You
Dental CPAs can help you find the right dental practice. That’s the foremost task that you can outsource to a dental CPA. A Dental CPA works with several dental practices for accounting and taxation services.
CPAs also offer transaction advisory services for buying or selling a dental practice. Thus, a dental CPA would be in an ideal position to find the right dental CPA practice for you.
Although it isn’t a legal requirement, you may need to restructure the entity ownership structure. Previous owners might have a different entity structure that suited their interests.
A dental CPA can offer expert advice on the right entity structure for you. It will have direct tax and profitability implications for your business in the long run. Hence, expert advice is essential for making an informed decision on the right entity structure for your newly purchased dental practice.
Due Diligence on the Dental Practice
You cannot perform due diligence on a dental practice unless you possess the right skills. A dental CPA is equipped with the right resources and access to the under-consideration dental practice to perform the due diligence on it.
The due diligence process would include:
- Recent and historic balance sheet performance.
- Recent and historic income statement, cash flow, and owner’s equity statements.
- Financial analysis on key performance indicators such as revenue break-down, overheads, debt-to-equity ratio, and so on.
- Analysis of the dental practice’s existing and new patients.
- Detailed reports on patient demographics.
- Fluctuations in the revenue streams or patient visits.
Dental Practice Valuation
Purchase Dental Practice | Business valuations are an expert’s job anyway. Evaluating a dental practice requires financial and industry expertise. A dental CPA with in-depth knowledge of the dental industry can appraise the valuation of the practice efficiently.
A dental practice owns a large proportion of assets in intangibles such as goodwill and customer retention. Measuring these intangibles and matching them against other assets of the business requires a special skill set.
Offer and Negotiations
Once you approve the right dental practice, you’ll need to make a suitable offer to the seller. Sending the right offer to the seller brings the other party to the negotiation table. You can then negotiate effectively with the seller to reach an agreement. A dental CPA with transaction advisory experience can prove an ideal choice for you at this stage too.
Securing Finances for the Deal
You can secure the finances for the purchase dental practice deal by yourself as well. However, consulting a dental CPA would offer you expert advice on some key measures. For instance, you can decide between variable or fixed-interest rate loan packages. Also, you can consult a CPA on keeping the gearing ratio of the business to an acceptable level.
Once both parties reach an agreed price, it’s time to move the transition process. At this stage, you’ll ideally collaborate with the dental CPA, Attorney, and other stakeholders simultaneously. However, the dental CPA can lead the transition process as most of the issues at this stage revolve around financial measures.
You can ensure a smooth transition process by verifying the legal documents as well as the financial statements of the business. A dental CPA can verify the accuracy of the financial documents of the dental practice for you.
Sale Agreement and After-Transition Process
Finally, when it comes to the formal sale agreement, you’ll need help from a CPA as well as an Attorney. A dental CPA would offer expertise on key financial measures to be included in the sale agreement. For instance, transfer of ownership rights for all assets, liabilities, contracts, leases, rentals, and so on.\
Learn More About Purchase Dental Practice
Dental Practice Transition Consultants
Dental practice transition consultants are in a unique position to offer services whether you look to buy, sell, or transition to a new dental practice. These professionals are experts in transaction advisory and come with in-depth industry knowledge.
A dental practice transition is a complex process. For instance, it requires thoughtful planning and perfect execution to complete a practice transition. Dental practice transition consultants need to balance the benefits of both sides in a transition process. Thus, it requires special skills and expertise to execute the transition successfully.
What is Dental Practice Transition?
A dental practice transition is a process of incorporating another entity into an existing practice with mutual consent. The process takes place by defining the mutual interests of both sides and transition to a new entity at a specified future date.
A dental practice transition can happen with a practice sale, buy, partnership, divestment, hiring associates, mentoring, and merger. However, the process is different from an immediate sale or buy transaction.
Dental practice transition is an important decision as it affects the mutual benefits of both sides. For instance, dental practice transition consultants can cater to the needs of both sides. They do this by developing a transition plan that works for both parties.
Dental Practice Transition v Immediate Transaction
A key distinction between a transition and a transaction is the nature of the process that follows the turn of events with contrasting features. A transaction looks to maximize the financial benefits of both sides. A transition aims to build stronger relationships between the two sides and also maximize the financial benefits.
A transition plan is developed with a goal of growth or transfer of ownership in mind. Nonetheless, it takes long-term planning and careful execution for a smooth transition. Both parties in a transition may have to work together for a while before the actual transaction takes place.
The Role of Dental Practice Transition Consultants
As we defined above a dental practice transition is a process that completes with a transaction. The primary role of a dental practice transition consultant is to form a success plan for the client.
As a dental practice transition consultant, we take a holistic approach to evaluate the state of practice and needs of our clients. We ensure our clients are ready financially, practice is prepared to showcase what it offers, and the transition takes place successfully.
Let us briefly discuss some key steps in a transition process that you should discuss with a dental practice transition consultant.
We help our clients to define their goals clearly. A transition can take place in several ways. Selling a practice requires a different plan than buying or partnering with another practice.
For this reason, we provide a clearly defined transition plan to our clients. This includes practice valuation to marketing, and increasing valuation to completing the transaction.
Practice valuation does not include profit discounting only. For instance, a practice inherits a brand name, intangible assets, goodwill, and human resources. Likewise, quantifying these intangible assets is a challenging process.
We ensure our clients the best practice valuation by using different valuation methods. Setting the right practice valuation price is important for a successful transition.
A dental practice may need a transition for several reasons. However, every case requires a different course of action and planning.
Some of the most common transition types include:
- Buying a practice
- Selling an existing practice
- Merger and Acquisition
- Divestment of a segment (branch)
- Associates and Partners
- Owner Retirement
Each transition process is unique. The most common types involve a sale or buying an existing practice.
Maintaining Practice Standards
You’ll need continuous support from dental practice transition consultants at every stage. Practice valuation is only the first step. Also, you need to ensure that your dental practice maintains the standards that back the price tag.
A step ahead, dental practice transition consultants should advise you to enhance practice value that will contribute to practice valuation eventually.
Price Negotiation and Course of Action
Next, dental practice transition consultants will do the marketing and find potential clients for you. Depending on your requirement, you may need to evaluate different partnering or client options.
Once both sides agree on a price, both sides should define a course of action. Moreover, a transition process may require working both sides for a while at the same place. Thus, as a dental practice transition consultant, we ensure both sides understand the needs of each side and work cohesively.
Completing the Transition Successfully
At the final stage of a transition, you’ll need to go through the formal agreements and paperwork. For instance, you may need to work with an attorney at this stage. However, you’ll need continuous support from the transition consultant for key issues such as transfer of funds, taxes, transfer of ownership, assets evaluations, etc.
Dental Practice Consultant
Dental Practice Consultant | All businesses require timely and accurate financial information to make key decisions. Financial information is key to understand and manage the business’s financial performance. Likewise, running a dental practice is challenging in itself. Managing the accounting and finance function of a dental practice can be challenging and time-consuming for a dental practice.
Fortunately, you can leverage the facility of accounting outsourcing to a professional such as a CPA. Consequently, there are pros and cons of outsourcing the accounting function. One key question around the decision is to think of a dental CPA as your dental practice consultant.
Role of a Dental CPA
A dental CPA can provide a wide range of accounting and consultation services. The foremost and primary role of a CPA is to offer accounting and bookkeeping services. These services form the basis of the finance function for any business. Accurate accounting records lead to accurate financial decisions.
The accounting and bookkeeping services of a CPA include:
- Accounting setup and selection
- Record-keeping and creation of accounts
- Financial statements
- Accounts payable and accounts receivable
- Budgeting and forecasting
- Tax preparation and filing
- IRS Audit Representation
Experienced CPAs can stretch their services beyond the basic accounting and bookkeeping function though. You can expect dental practice consultation and management advisory services from a skilled CPA.
A dental CPA can offer advisory services that can benefit your practice management. For instance, professional CPAs turn data into valuable financial information. You can leverage the power of data and insights to make informed decisions.
For example, you can get valuable reports on outstanding balances from regular clients that mount up the accounts receivables. You can then decide to ramp up on the receivables or outsource the balance as discounting to a specialist collection agency.
Why Choose a Dental CPA? Accountant v Software
You can hire an in-house accountant or choose to do it by yourself with the help of accounting software. Then what’s the purpose of outsourcing the services to a dental CPA?
An in-house accountant would increase the employee payroll budget for you. In the long run, you may incur higher costs such as employee benefits, payroll taxes, administrative expenses, and overheads.
Accounting software can be a useful option for your dental practice in the early days. You can fully utilize the data insights from the accounting software as well. But then, it wouldn’t speak to you when you want to ask a question.
How a Dental CPA is your Dental Practice Consultant?
Partnering with a dental CPA offers the right balance between a costs and benefits. Further, you can partner with a dental CPA to avail consultation services.
Business consultation services can prove pivotal in your dental practice management. A good dental CPA will educate and train you about the key aspects of running a successful dental practice. It will enable you to make informed decisions at every stage. Thus, a dental CPA will ensure you become powerful to make key financial decisions.
Here are some key CPA services that you can expect from a dental practice consultant.
Dental Practice Incorporation
Dental practice incorporation is a key decision that affects your practice’s profitability in the long run. In other words, you can consult with a dental CPA to choose the right entity type to minimize the tax liability. Thus, it will ensure that you stay organized and keep control over practice if you have partners.
Outsourced CFO Services
A dental CPA can offer virtual CFO services to your practice as well. Therefore, you can consult a professional for accounting and finance decisions at any stage. These key decisions include budgeting, forecasting, profitability analysis, tax planning, risk management, and so on.
Management and Consultation
These services include every financial decision that affects your practice’s operational efficiency. For instance, management and consultation topics include overhead analysis, equipment buy v lease, tax structuring, payroll management, capital acquisition, debt restructuring, and so on.
Tax Planning and Compliance
Effective tax planning requires strategic planning that bears fruits in the long term. Moreover, an expert dental CPA would ensure minimization of tax obligation yet remaining compliant with regulatory requirements.
Transaction Advisory Services
Certainly, you’ll need the transaction advisory services. Perhaps, you may need to sell the business for relocation or a new venture. Otherwise, you may just require valuation services for debt restructuring. In addition, these services always require the help of a professional broker such as a CPA.
Wealth planning can be a complex task for many dental practices. It starts with choosing the right entity type to maximize the tax benefits. Wealth management services include retirement plans and contributions, employee benefits, investments, health benefit plans, business exit planning, estate planning, etc.