News You Can Use - The Successful Dentist


Updated October 12, 2022

UPCOMING DEADLINES

  • October 17, 2022 – Extended personal tax returns Form 1040 are due
  • October 31, 2022 – Personal Property and Real Estate Taxes are due
  • October 31, 2022 – Unclaimed Property Reporting deadline – for more information visit https://ucp.dor.wa.gov/app/submit-a-report
  • December 1, 2022 – Distribute a notice of eligibility to all eligible employees (for 401k Plans)

RETIREMENT PLAN LIMITS

 

Type

Max Deferral

IF 50+

SIMPLE

$14,000

$17,000

401k

$20,500

$27,000

IRA

$6,000

$7,000

The 2022 maximum total contributions to a defined contribution plan (401k/Profit Sharing, SEP) is $61,000 or $67,500 with an over 50 catch-up contribution.  

 

We encourage our clients to review their retirement plan every few years to be sure they are utilizing the most advantageous plan available. 

YEAR END ITEMS TO BE ON THE LOOK OUT FOR

Reporting of Self-Employed Health Insurance Premiums for S Corporation Shareholders: the total premiums paid must be reported as wages on Form W-2.  We will be in touch early December to be sure you have reported for 2022.

2023 Salary Schedules for S Corporations or Family Members on Payroll: For those whom we provide recommended salary and withholding levels, updated schedules will be sent to you in mid-December.  Be sure to watch for this important document and have it established with your payroll company for the first payroll run in 2023.  (We do not automatically enter this data to your payroll provider so you or your bookkeeper will need to do so).

Depreciation Schedule Clean-Up: Near the end of the year, we will be sending you a copy of your most recent depreciation schedule, which lists all the assets currently in use by your practice.  Reviewing this and letting us know of any assets that are no longer in service – whether sold, scrapped, broken, obsolete, etc. – is key to making sure we capture all depreciation deductions.  If we prepare your annual Personal Property Affidavit, this is also the same schedule that the county uses to assess your personal property taxes.

Deferred payroll taxes

For those who took advantage of the pandemic assistance that allowed some employers to defer 2020 payroll taxes, the time is almost here to pay in all such taxes.  The temporary relief allowed for 50% of the deferred amount to be paid back by December 31, 2021, and the remainder is due on December 31, 2022.  Most payroll companies do not automatically process these payments, so it is up to the employer to make sure these are paid back in full by the final deadline.

HHS Reporting – Round 3

Yet another reminder of the reporting requirements for those who received funds from the HHS Provider Relief Fund.  Round 3 of the reporting is for those who received funds between January 1, 2021, and June 30, 2021.  Most dentists received funds under the program in an earlier period, so this will only apply to a small number of our clients.

Reporting for this window was due by September 30, 2022.  However, if you missed the deadline, there is a process for late reporting, which can be done at: https://www.hrsa.gov/provider-relief/reporting-auditing/late-reporting-requests

The next reporting phase opens on January 1, 2023, but again it would be very rare for any dentists to fall under this window.

ASSET PURCHASES AND TAX DEDUCTIONS

Year-end tax planning is a crucial step in managing your tax bill for 2022 and establishing your safe harbor required tax payments or withholding for 2023.  Many dentists are aware that fixed asset purchases along with accelerated depreciation is a useful tool to reduce your taxable income.  This year it is especially important, as bonus depreciation will no longer be 100% of the asset starting January 1, 2023.  It will reduce to 80% in 2023, 60% in 2024, and continue to reduce another 20% each year.

However, you should also be aware of the “placed in service rule” that applies to dental equipment and other “fixed assets”.  In general, fixed assets are those items expected to last longer than a year in the practice – such as dental equipment, office furniture and fixtures, etc. and cost more than $500 per unit.  To be considered “placed in service” the item must be delivered and placed into a state of readiness.  It is not required the item actually be used; rather, just usable.

Consider Equipment Order Lead Times:  With less than three months left in 2022, if you plan to place equipment in service and deduct its cost this year, you will want to consider ordering as soon as possible.  Documenting placement in service can be done with an installation receipt or photograph that includes the date (computer, cell phone, etc.)

Of course, we would urge caution against buying assets solely for a tax deduction.  Such purchases should only be for items that you know you will need or have been thinking about buying.  Particularly for S Corporation owners, you should also be mindful of your “tax basis” in your practice, which could potentially limit the amount of deductions you can take in a given year.  Your basis increases with taxable income and money put into the company.  It decreases with losses or deductions as well as distributions taken out of the company.  Your basis cannot fall below zero, so if you have losses or large distributions, this could result in some unintended tax consequences.  Ask your account manager if you are unsure of your basis amount.

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Updated: 2/16/2021

Under the CARES Act, employers who received a PPP loan were not eligible for the Employee Retention Tax Credit (ERTC).  This qualification was repealed with the Consolidated Appropriation Act of 2021.  Below is a summary of the key provisions of the credit, reflecting changes made by the new law:

Time period credit is available

  • Qualified wages paid after March 12, 2020, and before July 1, 2021

Eligibility requirements for 2020

  • Applies to wages paid by a business with operations that were either fully or partially suspended by a COVID-19 governmental order and only for wages paid during the period the order is in force;

OR

  • Applies to wages paid during 2020 beginning with the any quarter where gross receipts were less than 50% of gross receipts for the same quarter in 2019, and including each subsequent quarter until after the quarter in which gross receipts are greater than 80% of gross receipts for the same quarter in 2019.

Eligibility requirements for 2021

  • Applies to wages paid by a business with operations that were either fully or partially suspended by a COVID-19 governmental order and only for wages paid during the period the order is in force;

OR

  • Applies to wages paid during the first two quarters of 2021 where gross receipts are less than 80% of gross receipts for the same quarter in 2019 (or 2020 if not in business in 2019).

Amount of credit

  • 2020 – Credit is 50% of qualified wages paid to an employee, plus the cost to continue providing health benefits to the employee.  Annual cap of $5,000 per employee.
  • 2021 – Credit is 70% of qualified wages paid to an employee, plus the cost to continue providing health benefits to the employee.  Quarterly cap of $7,000 per employee for each of the first two quarters of 2021 for a possible $14,000 credit per employee.  The 2021 credit is available even if the employer received the $5,000 credit for wages paid to such employee in 2020.

Size of employer

  • 2020 – A company with 100 or fewer full-time equivalent employees is eligible for the credit, whether or not the employee was working.  A company with more than 100 employees can only take the credit for wages paid to an employee who is not working.
  • 2021 – A company with 500 or fewer full-time equivalent employees is eligible for the credit, whether or not the employee was working. 

PPP loan interplay

  • Employers that received a PPP loan in 2020 are now eligible to take the ERTC, so long as the same wages are not used for both the credit and PPP loan forgiveness.  In other words, if there were wages paid during the PPP loan 24-week period that exceed the amount needed to achieve 100% PPP loan forgiveness, then these additional wages can be used for the ERTC as long as the business otherwise qualifies for the credit.

Kevin manages marketing & business development at Dental Accounting Professionals LLC.

Follow Kevin J. Bray on LinkedIn

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Updated 12/11/2020:

As we have been working through 2020 tax projections with clients, we are seeing many offices have higher taxable income and tax liabilities over 2019 performance, despite the COVID shutdown. This is somewhat counter to expectations and a surprise to some practice owners. The causes for the added income are the PPP funds, the HHS Provider Relief Funds and other grant funds – all adding to taxable income. Tax mitigation with charitable giving, equipment purchases & retirement plans should be part of the conversation today. If your tax advisor is not going through a tax planning exercise now, you may be in for a surprise come April 2021.

We want to give the Washington Academy of General Dentistry a special thanks for all of their hard work during this ongoing pandemic. They went above and beyond during the mandated COVID shutdown this year by providing virtual CE for free to dentists across the country. They dedicated a huge amount of time and resources towards serving the needs of the industry during a time of great uncertainty. The wealth of information the AGD broadcast was invaluable. We participated in that cause to provide insight from our CPA team on the CARES Act, PPP Loans and additional stimulus for dentists. We saw firsthand how much effort the team at the Washington AGD put forth. A round of applause for the AGD team and volunteer colleagues that did a fantastic job. As you know, the WAGD is a non-profit organization. That means your donations to the AGD are tax deductible. The AGD needs our support now more than ever! So please consider a donation to your association and get a bonus tax deduction.

Temporary suspension of limits on charitable contributions in 2020 as part of the CARES Act

If you take the standard deduction on your 2020 tax return (the one that you’ll file in 2021), you can claim a brand new “above-the-line” deduction of up to $300 for cash donations to charity you make this year. Normally, you would have to itemize on Schedule A to get a tax break for charitable donations.

If you itemize deductions on your tax return, you can claim a deduction for your charitable donations. However, the amount you can deduct for cash contributions is generally limited to 60% of your adjusted gross income (AGI). Any cash donations over that amount can be carried over for up to five years and deducted later. The CARES Act lifts the 60% of AGI limit for cash donations made in 2020 (although there’s still a 100% of AGI limit on all charitable contributions). That means itemizers can deduct more of their charitable cash

contributions this year. If your taxable income is higher than expected, consider bunching (pre-paying) some of your 2021 charitable donations into 2020.

Equipment Purchases

The various depreciation rules available to business owners allows for the rapid deduction of capital expenditures for equipment and office remodels by permitting the entire write-off of the capital investment, even if financed. The trigger for the write-off is getting the asset in-service by year-end. If your practice is in need of some equipment upgrades or added technology, make those investments and get the new equipment delivered and installed by year-end for an immediate tax write-off.

Additional Retirement Planning with a Cash-Balance 401k

If you are a high-income practice owner and want to accelerate your retirement saving plans (and save even more on taxes!), this is a strategy to consider. With a traditional 401k/401k profit sharing plan, your contributions are capped at $57,000 (or $63,500 if age 50 or older). With a cash-balance 401k your contribution limit is significantly increased. It’s based on an actuarial calculation, but in many cases an owner can contribute over $150k+ each year. Remember, this is a pre-tax contribution! The deadline to setup a Cash-Balance 401k plan for tax year 2020 has been extended because of COVID. Traditionally you had to have the plan formed by the end of the calendar year. Now you have until the due date of your tax return (including extensions). You also do not have to fund the contributions until the extended due date of your return (September 15th or October 15th, 2021). This allows ample time to plan and set money aside with future cash-flow and get a 2020 tax deduction.

In conclusion, every practice owner should be setting aside time now to act on tax mitigation strategies. This year has proven to be hard for business owners across the country, but especially for non-profits since the traditional fundraising events have been cancelled. Remember to support your local charities & non-profits (including the Washington AGD)!


Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

Follow Kevin J. Bray on LinkedIn

There is more to our profession than “dropping numbers in boxes”

There is more to our profession than “dropping numbers in boxes” and filing tax returns once a year. We are more than your average accountant, CPA, EA or Bookkeeping professional. We pride ourselves in our bench of knowledge, client obsession and proactive approach. We are students of the business of dentistry. Through working with only dentists and staying up-to-date with compliance rules, best business practices and industry trends, we are able to consult with our practice owners and help guide them to greater financial success.

Not all CPA’s are created equal. We focus on business, specifically the business of dentistry. We also work with high net-worth family groups and real estate owners through our affiliated company, Benton Bray PLLC. Through this experience, we are able to bring an extra layer of advisory and estate planning to our engagements. We are fortunate to have curated an awesome team of accounting professionals. We collaborate daily and are always working hard to level up our skills and knowledge base.

We build communication into our engagements and perform a mid-year and year-end tax projection so there are no surprises. We are also available as-needed to additional business advisory meetings. If we also partner with other industry consultants to support our clients.

If you are ready to take your practice to the next level, contact our team to schedule an intro Zoom meeting to discuss.


Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

Follow Kevin J. Bray on LinkedIn

Let’s face it. Did you go to dental school to do bookkeeping?

I would imagine (and hope) your answer is “No.”

Let’s face it. Did you go to dental school to do bookkeeping?

I would imagine the answer is “No.”

You should be focusing your time on the profit generating aspects of your business. Your hourly bill rate is better spent chair-side with patients. Leverage our team to take care of the numbers and compliance headache for you. Let us simplify your accounting workflow process.

And no… you should NOT hand over your bookkeeping to a “trusted” employee. This opens the floodgates to potential fraud & embezzlement and adds an awkward dynamic to the team when one staff member has a window into your financial world. You should keep these details private.

Can you do it yourself? maybe. Can your spouse figure it out the basics of posting expenses? probably. Chances are there will be reconciliation errors or missed fillings… we see this all of the time. We are the problem solvers at the end of the year. Why not chase perfection throughout the year? Having a clean set of bookkeeping records is important to understand the financial health of your business.

I preach this all of the time to business owners. You should surround yourself with experts so you can be on a “Need to Know” basis to have more time to focus on what’s important (being chair-side with patients). Stop the DIY mindset. Leverage is key to exceptional financial results in your business. Leverage our team so you can gain more time back in your day, month and year to focus on leveling up your practice.

Ready to get started? Schedule time with our team to discuss next steps.


Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

Follow Kevin J. Bray on LinkedIn

Originally posted July 3rd, 2017. Updated July 21st, 2020.

Every time we meet with a new practice owner who is in the process of a dental transition or start-up, we ask them who is on their professional team. You should have a go-to team of dental industry professionals working with you toward your business success.

Every successful Dental Transition or Start-Up has a team of professionals behind it:

Buyer-Rep/Dental Practice Consultant
Your Buyer-Rep helps you learn the process of buying a practice and fields initial purchase or start-up opportunities. Your practice consultant is your business coach and helps you identify and implement business improvement initiatives. Your coach offers expertise on best business practices – operating systems and protocols – that drive improved results in the key operating functions of your practice such as scheduling, recall, case presentation, etc.

CPA
Your CPA fills the role as one of your key business advisors, guides you on structuring your taxes to pay no more than required, and handles your tax filings in a manner that keeps you out of trouble with the IRS. Your CPA helps with the cash-flow analysis on a transition and works in tandem with your buyer-rep, attorney and dental banker to help get the deal done. You should engage with an accounting firm like ours to help set up your accounting systems and payroll about two weeks prior to closing. We recommend Gusto: https://gusto.com/partners/invite/dental-accounting-pros

Dental Banker
Your banker coordinates your financing needs for acquisition or start-up funding, real estate purchases, new equipment loans, and operating lines of working capital. Dental bankers are experts at matching loan structures to the funding need, and many times, act as a key business advisor.

Attorney (With Dental Transition or Start-Up Experience)
Your attorney is instrumental in making sure your contracts for acquiring a practice or real estate, employing an associate doctor, adding a partner, leasing a clinic facility and so forth are structured to protect your interests and safeguard your business.

Real Estate Broker
Commercial real estate brokers help negotiate a new lease, renewal or purchase of real estate for your dental practice. Most tenant-rep brokers are paid by the landlord when representing you (the tenant) on a new lease or renewal. They know what lease rates should be and what market concessions you should be getting in the deal. These terms are always changing as market forces change, which is why it’s important to enlist the services of a qualified broker.

Dental Accounting Pros helps with organizing your accounting systems and setting up payroll prior to acquiring or starting up your new practice. We work in collaboration with Benton Bray PLLC to offer tax services, business advisory, and continuing education.

Need help with your transition, start-up or need quality accounting services? Schedule an intro Zoom meeting with our team to discuss next steps.


Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

Follow Kevin J. Bray on LinkedIn