A Conversation with Dr. Mark Costes on the DentalPreneur Podcast Part III

dentalpreneur podcastYou know one of my big pet peeves when we do financial analysis for almost 100 clients now

and when we’re  doing our own it’s very straight forward  because we have 10

dental practices when we’re doing our own financial analysis we get the Profit and Loss every

month from our CPA and it’s very easy to track from month to month. Our overhead and any

expenditures we have in any particular categories and whatnot. I have been working with a

number of clients whose CPA is are very reluctant to give them a Profit and Loss any more

frequently than quarterly. To me that’s very difficult to do an analysis specially when we’re

trying to to get an improvement and a decrease in a particular line item say for instance lab fees

or dental supplies. So is that common for a business CPA to only supply financial reports Profit

and Loss and  Balance Sheets every quarter.

In my world if the client wants it Monthly he’s going to go to get it monthly. We want it to be a

valuable service.

t’s nice to hear directly from the voice of a CPA that that the type of service that you’re

providing.

Yes. And I  luckily at my firm we’re set up where we can do that kind of stuff. I have

three other CPA is on staff with a total staff of 10. So we do what our clients need.

That’s great. So how often do you think that US dentists should be reaching out and

communicating with our CPA. Do you think that the CPA if they’re a relatively conservative

CPA that you should also get some sort of tax

coach to see if you can offset the  conservative nature of your CPA.

We tell clients when they come to us for a tax plan, that doesn’t mean you need to leave you a

CPA you could take the plan, we can implement it with you and then you can go back to your

current CPA where you could take it back to him and you can implement it with him. The code

says you can do this. Here’s the code. If he has a problem with the strategy he should speak with

us and we will point out where the code says you can do what is in the tax plan. But typically

we find that if they have an accountant or CPA that’s not willing to  think outside the

box and listen to what other people say. Be open minded. They may want to find another CPA.

But when we do a tax plan it doesn’t mean you need to work with us on a regular basis.

  1. So back to the first part of that question how often should we be talking to our CPA?

On a regular basis. Now if you are somebody that wants monthly P & L’s then you should be

talking to him at least once a month. They should be having a conversation about that P & L.

There’s going to be questions that the accountant and his staff are going to have that you’re going

to need and so somebody on his staff is going to have to answer in order to make sure that when

you get the P & L, it’s accurate.

And at the very least quarterly and in the beginning you know you’re going to have a lot more

conversations until everybody is up to speed and understand fully what’s going on.

I’m going to get some more specific questions just based on my own personal interest. How

about travel?

When is travel legitimately written off and entertainment and business outings say with a group

of dentists where you’re talking about you know issues that are happening in the practice or or

maybe your you’re taking about a selling doctor to potentially buy his practice and you’re doing

something that that’s entered it would be considered entertainment or some sort of an outing.

Well well typically meals and entertainment are 50 percent deductible because the government is

saying well you would you have to eat yourself. So you shouldn’t be able to deduct that.

(BASED ON THE NEW TAX LAW ENTERTAINMENT IS NO LONGER DEDUCTIBLE)

As for travel. We have a worksheet that we use, it’s based on the length of time of

travel what you’re doing during that time that says how much of that travel is the deductible or

not deductible and it makes a difference whether you’re in the country or outside

the country.

Well let’s just say you’re going to a conference in San Diego from New York and

you’re going by yourself the full cost of that conference is deductible and you’d be surprised how

many people don’t really realize that. I’ll get the question if we go to this. Can we write this off.

I know I live in my world, so for me it’s a no brainer of course, but people

don’t know. They’ve never been told. But yes those things are deductible.

  1. So how about how about kids. So this comes back to my kids question what if your kids are

on their payroll say they’re 11 and above just kind of like your comfort level is and they’re

coming on vacation with you or they’re coming across the country with you you’re going to a

seminar.

Is is any part of their travel considered deductible?

More than likely no. Unless they’re doing work while they are traveling. And you’d want to

Definitely make sure you have that documented. Any time you deal with kids you want

to document it. But I’ll give you a real no brainer. With Kids.  And that goes back to when my

kids were younger and they went to a private high school. So I think at the time say it was $600 a

month  tuition. So they worked for me. They got paid $600 a month. That money went into their

bank account.

I got a deduction for it. Of course it was salary and then every month the school debited there

account for the $600. So basically their tuition became tax deductible for me. Now they were

doing work and it was documented but it’s just taking the extra step to do document those

things and it becomes a deductible expense. And you know when you’re a successful dentist then

you’re up to close to 50 percent in total taxes and that becomes a large savings.

Listen to the full episode here.

Request a free copy of my latest book !0 Biggest Tax Mistakes that Cost Business Owners Thousands.

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