Keeping more of your money is important to you, obviously. That’s why you listen to the Progressive Dentist Podcast. I’m here to try to help you keep more of your money and give less of it to Uncle Sam. But there are many expensive mistakes you might be making (and not even realizing it!) that could be costing you money, and unfortunately, you can’t be sure your tax advisor is finding you every possible tax break.
That’s why I decided to do a short solo episode of the show for you. I want to go through just a few of the incredibly expensive mistakes many practice owners make so that you can avoid these same costly errors. This episode is short, sweet and to the point, because I want to make certain you have carefully applied each of the points I make during the podcast to your own practice, to see if you’re leaving unnecessary money on the table. You may be surprised just how much you’re paying in taxes that you could be keeping for yourself.
Failure To Plan
The biggest mistake that practice owners make is a failure to plan. If you aren’t thinking about your taxes until April of each year, you are definitely paying too much. You should be having conversations with your CPA throughout the year to review your options before making any major financial decisions, because if you wait until it’s time to file your taxes then you’ve potentially missed opportunities to structure things differently in a way that could have saved you money. Instead of thinking about your taxes only when it’s time to file, you and your CPA should be proactively looking for deductions, breaks, and other opportunities to save money all year long.
Fear of Audits and Choosing the Wrong Business Entity
Everyone hates the word “audit”. But being overly paranoid about your chances of being audited can cause you to make expensive mistakes in how you utilize the breaks available to you. An audit isn’t the end of the world, as long as you document everything you do. If the tax code says something is legal, take advantage of it and document exactly how and when you did it. Do that and you have little to fear from an audit.
Another expensive mistake is operating your business out of the wrong financial entity. There are C corporations and S corporations, partnerships, and sole proprietorships, and each of these structures operates differently under the tax code, and each can vary in how it works based upon the state you’re in. An S corporation is a common structure, but it may not be the right structure for your business. That’s why it’s important to decide with an attorney and tax professional’s help which structure is the best one for your business. Even if you’ve already set up your business, it may not be too late to change structures, so you should consult your tax pro to see if there is a better entity available to you and if your current structure can be changed.
These are basic tips, but they can save you thousands or even tens of thousands of dollars each year, so I hope you’ll take the time to speak with your professionals and see if there are things you can do to further minimize your tax burden. And, as always, I encourage you to visit www.theprogressivedentist.com for more informative podcast episodes like this one.