At this point in the year, we are in what is considered to be the late-season for taxes. That means you should have already had a conversation with your CPA to figure out how much you owe and how you can lower that. Financial mistakes are costly for your practice. So I compiled a list of key tax planning takeaways from our other podcast episodes.
Start Planning NOW
A lot of dentists fail to plan adequately before their taxes are due. And regardless of your CPA’s skill, you will miss out on significant deductions if you do not know about them going into tax season. True tax planning occurs year-round, and now is the time to start no matter how late to the game you are. By planning ahead of time, you gain access to strategies and tactics that will minimize your taxes. That goes a long way when you are focusing on financial defense.
When it comes to financial offense like marketing or business development, you are not guaranteed results. Tax planning is one of the only processes that guarantee results and more money in your pocket. Our goal is to create a comprehensive tax plan so that you start saving money right away. By taking advantage of tactics like creating a medical reimbursement plan, we can beat the IRS legally by cutting expenses outside of the business as well.
For some reason, tax planning has a stigma. But it is not a shady practice that works great until you get audited. Tax planning means combing through the business for tax-saving opportunities and there is nothing illegal about that. We ask questions before making financial decisions and take advantage of every loophole available. You don’t have to raise red flags or make aggressive moves because all of our methods are IRS approved. All you are doing is capitalizing on opportunities that the government created.
Choose the Right Entity and Retirement Plan
Choosing the right entity and plans can also help you keep more of what you make. I evaluate my clients’ businesses to decide what is the best entity at that time, because picking the wrong one can cost you thousands of dollars per year. And choosing a retirement plan can be just as complex. Even younger dentists in a high bracket come in ahead of the game when they set up a defined benefits plan. So, it is critical to sit down with your CPA and lay all of your options on the table.
I’ve talked a lot about taxes so far, but the biggest concern for small business owners today is healthcare. There are a lot of different plans out there, but almost all medical expenses can be written off from braces to fertility treatments. If those types of expenses are on the horizon, you should consult your CPA to see if there’s anything you can do. It is money you’re going to spend anyway, so if you can write it off, why wouldn’t you?
As we discussed previously, home offices are one of the most misunderstood parts of this process. But they raise a lot fewer red flags than they did even two years ago. As long as you use it occasionally for administrative or management activities you will probably meet the requirement. You can write off a home office athletic facility and that makes anything from a home gym to a pool deductible. And you can deduct travel and vehicle expenses since you are traveling between two offices.
In this solocast episode of The Progressive Dentist Podcast, I summarize the key takeaways of tax planning. Click here to listen to the episode and hear all of the top tips from our other podcast episodes in one place. Please visit me at www.theprogressivedentist.com for more informative, money-saving podcast episodes like this one.