Life and Dentistry Podcast: Tax Tips for Dentists

For potential tax breaks and benefits as far as that goes, I don’t know if you’d be able to answer this question or not? Can you tell me, let’s say I was going to go out and look at purchasing a $250,000 practice. It’s got a lot of growth potential, it doesn’t cost as much, versus a $900,000 practice, it’s a bigger practice, somebody told me recently that for tax purposes, and for other financial reasons, it’s more beneficial to purchase a practice that is worth a lot more, than buying one that’s worth a lot less and building it up. Do you have any insight on that as far as taxes go or anything?

Amortization

I think you’d have to run the numbers. See where it works, because obviously, cash flow is nice. If you’re buying a practice with a lot of cash flow. As far as tax breaks, you’re going to write off (amortize) what we call goodwill , over 15 years. You’re not going to get a huge deduction, that’s going to make big difference in your taxable income. But you’re probably going to have a much bigger loan.

Then when you look at the smaller practice, where you’ll probably have a much smaller loan, and then you can see, maybe the small practice, the equipment is probably not worth that much, maybe the bigger practice the equipment is worth a lot more. You have to kind of run the numbers. I don’t think anyone can really make that blanket statement, that one is necessarily more efficient than the other. And you want somebody that’s going to go through that with you. Because it’s a relationship. It should be a long term relationship.

Finding your Professional Team

So how do you find good people to bring as part of that team to have that relationship with? That you can trust, and that are qualified?

If you’re working with somebody, and you have a relationship with that person, are they communicating with you, are they willing to communicate with you? Are they coming to you with ideas sharing with you tax breaks that are available to you? I ask when was the last time your tax guy came to you with an idea to save you taxes. If he’s not being proactive, he’s just putting the right numbers in the right boxes, he’s recording history versus helping you make history, maybe you want to look someplace else.

Where Do You Find Them?

Referrals, podcasts, people typically don’t go into the old yellow pages and pull an accountant out of there. YouTube, Linkedin, there’s a lot of people out there that you can get a feel for how they operate. You can see what’s going on. The Internet’s a wonderful thing.

Yes it is.

Do you see the benefit in finding a CPA that is local versus just finding somebody online, somebody you can actually go meet face to face?

Just from my experience, we deal with people across the country, sometimes it’s actually more efficient to have these kind of meetings, than somebody getting in their car and traveling an hour, sit down and have a meeting. You can do these much more frequently, and they can be much shorter. We typically schedule meetings once a month. I couldn’t do that if I had to drive someplace and have a meeting. But you have to do what you’re comfortable with. If you really feel you need that guy sitting across from you, then you should find somebody where you can have that guy sitting across from you.