Maximizing value of your dental practice with tax strategies
On an episode of Oral Health Group’s Brush Up on Business, David Chong Yen, an accountant, certified financial planner and tax specialist, provided dental professionals with tips as tax season approaches.
Mr. Yen explained that dentists can increase their cash inflows, improve their own clinical skills and reduce spending to enhance their practice’s cash flow and value. For instance, hiring dental specialists to perform treatment currently being referred out of the clinic can help capture billings cash. Further, contacting their dental supplier can aid dentists in identifying which supplies can be substituted for more cost-effective alternatives.
Dentists were also encouraged to decrease their personal and professional tax bills by capitalizing on tax planning strategies that are often overlooked. Adding family members as shareholders of the dental practice could help save on taxes by allowing dentists to multiply the lifetime capital gains exemption. However, Mr. Yen urged dentists to ensure that their family members own a specific type of share to qualify for the exemption. Additionally, family members who are shareholders of the practice and perform 20 hours or more work each week on the company’s behalf can receive dividends. By breaking up the practice’s income, tax payments will, in effect, be lowered.
Mr. Yen emphasized that these tips — in addition to having a premises lease with renewal options and no demolition clause for the next 12 years — may be most critical for dentists planning to sell their practices, since the last three years of statements will provide the basis for the practice’s sale.
Read more: Oral Health Group
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