We’ve been busy!

07/09/2020 06:00:00 AM

Have you been missing us? No worries, we’re still here and we’ve been busy! Not only are we preparing mountains of tax returns while still keeping up with all things related to Covid-19, we’ve been participating in conversations about reopening dental practices and practice management in general. Check out the latest blog brought to you by our friends at Surety Dental Solutions, written by our favorite practice management consultant, Dr. Sharon Tiger. Also listen to the latest edition of The Art of Dental Finance Podcast with Art Wiederman featuring both Sharon and Robert. You won’t be sorry you tuned in! 

Special Emailed Information

05/26/2020 3:47PM

If you are an Edwards & Associates client, you should have received special emailed information today from info@eandassociates.com

Please let us know if you did not receive this email by writing to the email address listed above, include your first and last name and your proper email address.

Thank you!

 

New NOL Rules – Monday, April 20, 2020 9:20AM

Have we heard about the new NOL rules?  We have, actually.  And we’ve tucked that knowledge away for when and if it might apply to you.  But it seems some companies are using the change in NOL rules as an opportunity to offer their services to help you recover your last 5 years of taxes paid.  That promise is right up there with “settle your taxes for pennies on the dollar.”  Sound too good to be true?  That’s because in most cases, it is. 

There is a chance that the new NOL provision will be helpful for some of you.  But the reality is, that can’t be ascertained until the year is over.  Yes, your income is down, your profits are nonexistent, and you’re looking for ways to be made whole.  For that reason, it is enticing to think the IRS might owe you taxes back.  But when your practice reopens and you try to pack in all those missed appointments along with your normal patient load, your revenues are expected to rise to at least normal levels, if not higher.  By the end of the year, if you have recovered these losses at least to the point of break-even, you will not have an NOL to utilize.  For this reason, it’s premature to really be thinking about NOLs.  But when the year is over, if you have an NOL, we will certainly advise you the best way to utilize it. 

But let’s talk NOL logistics for a moment.  Carrying back an NOL to 5 years ago requires complex extra documents and a fair amount of fighting with the IRS.  If the NOL isn’t large, it’s rarely worth it.  It will take months for the IRS to accept the NOL after they send back additional requests for information or forms, which can’t be proactively submitted because they never ask for the same thing twice because they never do the calculation the same way twice.  These NOL rules are actually not new at all.  They were in place previously (though with a typical 3 year carryback provision) and were only recently eliminated and now reenacted.  We suspect they were previously eliminated for same reason we rarely recommend them…it’s a broken process.

$AVE BIG DOLLARS


Authored by Evan Reynolds, President of Dental Space Advisors

How To $AVE BIG DOLLARS When You Renew Your Office Lease

Most dental professionals are searching for ways to cut their overhead cost, however, many largely ignore the valuable opportunity to materially reduce one of their largest operational costs. This opportunity comes in the form of an office lease renewal which usually only comes around every five or ten years. Most dentists wait until there are only a few months or even weeks left on their lease to start discussions regarding lease renewal terms. This procrastination results in the landlord possessing all of the advantage as they know you have no intention of going anywhere else. The building owner will usually offer the busy dentist a “preferred renewal rate” and that generally ends the negotiations. The dentist never really had a chance in this one-sided scenario however it is very common for the vast majority of dental tenants. The biggest problem is that most dentists do exactly the opposite of what they should do when they are renewing their lease and in the process forego significant savings. A dentist that leases 2,000 square feet can easily forfeit $20,000 to $40,000 over the term of a typical dental lease by failing to effectively negotiate their lease renewal.

The key objective for a building owner is to maximize rental income and your goal is to minimize rental cost as much as reasonably possible. So how do you go about effectively negotiating your lease renewal? The short answer is that you approach it as if you were absolutely going to move your practice to a new location. It is important that you convince the landlord that you have serious, viable relocation alternatives and that there is a real possibility that you will move. Every communication with the landlord must reinforce the premise that you are diligently evaluating the alternatives in the market. This may include relocating to a new lease space or perhaps purchasing an office condominium. The landlord needs to know as early as possible that you are considering other options and that they have something to lose. It is often costly for a landlord to re-lease a space as it much more preferable to renew an existing tenant. They will have a vacancy for a period of time after you leave and will have to spend money on refurbishment and leasing commissions.

The objective is to maximize your negotiating leverage and this can be a challenge for most dental tenants. Dentists are at a huge disadvantage in the world of commercial real estate. They often have to sink large dollars into their space for build-out and are usually hesitant to move due to potential patient confusion (not to mention the hassle of moving itself). The building owner views a dental tenant as being largely captive. They are aware of the tendency for dentists to stay where they are for long periods of time. The average dental tenant stays in one location for about 18 years.

You may think that this strategy requires too much time and effort, however, you should hire a commercial real estate broker (at least nine months prior to lease expiration) that specializes in working with dental tenants to manage the process and lead negotiations. Very little of your time is required if the process is managed appropriately by an experienced broker. The best part is that the broker exclusively represents your interests and is paid by the building owner. Landlords much prefer to negotiate directly with the tenant and might discourage you from having representation. The fact is that your broker’s commission is a small fraction of the overall savings that can be generated by effective representation (the landlord’s broker typically gets a greater fee if the tenant does not haverepresentation). Hiring a broker also reinforces the idea to the building owner that you are serious about evaluating other alternatives.

In addition to the cost savings that can be captured during a lease renewal, there are other aspects of your lease that can be improved. You can potentially eliminate a personal guarantee that was required in the original lease (important when selling a practice), get your security deposit refunded or change other terms of the lease that need improvement.

Effectively negotiating the renewal of your lease can save you significant dollars and the opportunity only comes around a few times during your career. Make sure that you take advantage of this opportunity and put more money in your pocket instead of the building owner.

IRS Disaster Relief: What you need to know

Disaster Relief for Hurricanes Irma, Harvey and Maria Victims

Hurricane season has hopefully seen its climax in the Northern Hemisphere for 2017. The IRS is offering tax relief for victims of Hurricanes Harvey and Irma, and has extended that relief to victims of Hurricane Maria. In general, the IRS said it is now providing relief to individuals and businesses anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, along with parts of Texas. The relief postpones various tax deadlines, giving individual and business taxpayers until January 31, 2018 to file any returns and pay any taxes due.

Those eligible for the extra time include:

  • Individual filers whose tax-filing extension runs out on October 16, 2017. Because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.
  • Business filers, such as calendar-year partnerships, whose extensions ran out on September 15, 2017.
  • Quarterly estimated tax payments due on September 15, 2017 and January 16, 2018.
  • Quarterly payroll and excise tax returns due on October 31, 2017.
  • Calendar-year tax-exempt organizations whose 2016 extensions run out on November 15, 2017.

See the disaster relief page on the IRS website (https://www.irs.gov/newsroom/tax-relief-in-disaster-situations) for details about the other kinds of tax relief furnished by the IRS in response to the recent hurricanes. The IRS said it is continuing to closely monitor the aftermath of the various storms, and more updates for taxpayers and tax professionals will be posted to IRS.gov.

Besides additional time to file and pay, the IRS provides other special assistance to disaster-area taxpayers, including:

  • Special relief helps employer-sponsored leave-based donation programs that aid hurricane victims. Under these programs, employees can decide to forgo their vacation, sick or personal leave in exchange for cash payments the employer makes, before January 1, 2019, to charities offering relief. Donated leave isn’t included in the employee’s income, and employers can deduct these cash payments to charity as a business expense.
  • 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to hurricane victims and members of their families. Under this broad-based relief, a retirement plan can allow a hurricane victim to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or dependent who lived or worked in the disaster area. Hardship withdrawals must be made by January 31, 2018.
  • The IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. See the disaster relief page for the time periods that apply to each jurisdiction.
  • Individuals and businesses who have suffered uninsured or unreimbursed disaster-related losses can opt to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016).
  • The IRS is waiving the typical fees and expediting requests for copies of previously filed tax returns for disaster area taxpayers. The relief can be particularly helpful to anyone whose copies of these documents were lost or destroyed by the hurricane.
  • If disaster-area taxpayers are contacted by the IRS on a collection or examination matter, they should be sure to explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case. ~ Jennifer Johnson

Protect Your Identity

Identity Theft protection is a hot topic in today’s world. Here are a few tips to help protect yourself and your identity.

  1. Keep your personal information secure at home and in the workplace. Best practice is to shred documents that contain personal information before disposal.
  2. Protect your computer with firewalls and antivirus software. Check out www.onguardonline.gov for tips on Internet fraud prevention.
  3. Create strong passwords. This is no fun for anyone due to the need for so many passwords these days. So best practice is that you do not store your passwords on a shared computer.
  4. Set online account setting to send a text or email to alert you if an attempt is made to log in to your account from an unrecognized computer or change a password.
  5. When processing a financial transaction online check the beginning of the web address for “https” (Hypertext Transfer Protocol Secure). An “https” address versus just an “http” address verifies the website and means that nearly all information is encrypted between the website and the user.
  6. Check your credit reports annually. A free annual credit reports is available from each of the three major credit reporting agencies from a jointly operated site at AnnualCreditReport.com. A fourth agency, Innovis, also offers a free report every 12 months.

Madison Poe

2017 Filing Requirement Changes and Contribution Limit Updates

KEY Filing Requirement Changes and Contribution Limit Updates for 2017:

The list below describes changes to tax rules for 2017 that you will find important, so read and enjoy……

    • Filing Deadline Changes for Partnership Returns – Partnership returns are now due 2 ½ months after year-end, which is March 15th, for calendar year firms. A six-month extension can be requested for those needing more time. If you were a client on 3/15/17, we have automatically filed an extension or prepared a tax return for filing on your behalf.
    • Filing Deadline Changes for Regular Corporations – Regular corporation returns are now due 3 ½ months after year-end, which is April 15th, for calendar year firms. A five-month extension can be requested for those needing more time. The deadline for S corporations has not changed.
    • Filing Deadline Changes for Owners of Foreign Accounts – Returns for owners of foreign accounts are now due April 15th, up from the prior deadline of June 30th.   A six-month extension can be requested for those needing more time.
    • 2017 Standard Mileage Rate – The standard mileage rate for business driving is 53 ½ cents per mile.
    • 2017 Depreciation Limit – For 2017, $510,000 of business assets can be expensed. This amount phases out dollar for dollar once over $2,030,000 of assets are put into service during the year.
    • 2017 Social Security Amounts to Note – The Social Security wage base is $127,200 in 2017. The amount needed to qualify for coverage is $1,300 per quarter or $5,200 for the year.
    • 2017 HSA Contribution Limit – The limit on deductible HSA contributions in 2017 is $3,400 for self-only coverage & $6,750 for family coverage. Individuals born before 1963 can contribute an additional $1,000.   Minimum policy deductibles stay the same at $1,300 for singles & $2,600 for families. Taxpayers age 50 & older can make catch-up contributions of $1,000.
    • 2017 Retirement Plan Contribution Limits – The 401(k) contribution limit is $18,000. Taxpayers born before 1968 can contribute an additional $6,000. These amounts apply to 403(b) & 457 plans as well. The contribution limit for SIMPLE plans is $12,500 & taxpayers age 50 or older can contribute an additional $3,000. The limit for defined contribution plans is $54,000.   Retirement plan contributions can be based on up to $270,000 of salary.
    • 2017 Gift Tax Amount to Note – The gift tax exclusion amount is $14,000 per done.

New Option for Treating Cavities

Silver Diamine Fluoride: Cavity Treatment

At our Fall ADCPA (Academy of Dental CPAs) meeting we learned of the wonders of a new cavity treatment called silver diamine fluoride…SDF from one of our knowledgeable members. If you are a pediatric dentist you may already be in the know as this is touted as the latest and greatest thing for treating cavities in baby teeth. No drilling, no anesthesia, no pain. Just a drop is needed for the treatment, so although the service will not be a big ticket item, the margins are fabulous. Not to mention, parents will be ecstatic and tell their friends. But the uses could extend beyond children to the elderly and others, and even to adult molars hidden from view. Do your research. There are pros and cons. But definitely check it out!

http://www.elevateoralcare.com/dentist/AdvantageArrest

New Vehicle

“Now, personally, I like a car with some sort of character.” Richard Hammond

In any profession, it’s best to lead by example. If the car that you’ve had for years (you know – the trusty one that got you through dental school and has seen better days) is making you cringe instead of smile, it may be time to consider purchasing a new vehicle. If this sounds like you, and you are in the market for a new car, below are a few general tips and notes to help out.

  • Purchase or lease the vehicle under your personal name
  • Get the car insured in your personal namePrint
  • Make the car payments with business funds
  • Pay for any auto-related expenses with business funds. This includes:
    • Insurance
    • Tires
    • Maintenance & repairs
    • Gas & oil
    • Tolls & Parking
    • Registration fees
    • Licenses
  • Keep a mileage log; this is the most accurate way to give your accountant the information needed to split the expenses into business-use miles and personal-use miles. Keeping track of actual miles is also an important way to provide hard evidence to the IRS in the case of an audit. Automobile expense is one of the items that the IRS is extremely particular about, so it is important to have this information available.

The good news regarding mileage is that the days of keeping a paper mileage log are long gone. There are several great apps available to help you easily keep track of miles, and are worth checking out. Here are a few suggestions.

Hiring Tips

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Whether it’s your first employee or the addition of staff to facilitate the needs of your growing practice, you want to make sure that you have your new hire complete the correct documents that you are required to keep on file.

Each employee you hire is required to fill out these important government documents for you. To ensure completion of these documents, provide the forms to the new hire at the very start of employment and have them fill out the forms before they begin any work.

 

  1. Form I-9 (Employment Eligibility Verification) – confirms the employee’s citizenship or eligibility to work in the United States. https://www.uscis.gov/i-9-central
  2. Form W-4 (Employee’s Withholding Certificate) – gathers basis payroll tax information and asks the employee how much federal income tax to withhold from their pay. https://www.irs.gov/pub/irs-pdf/fw4.pdf
  3. State Withholding Tax Forms (if applicable) – you can find your state here by clicking on this link http://www.bls.gov/jobs/statetax.htm 

    The following is a list of documents that you are required to provide to new hires.

  4. U.S. Department of Labor Notice regarding the Health Insurance Marketplace – follow the link to the DOL site and choose which model notice applies. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/notice-of-coverage-options
  5. Notice of Workers’ Compensation Coverage – you must notify new hires whether or not your company carries workers’ compensation insurance. *Notice of Non-Coverage can be downloaded here: http://www.tdi.texas.gov/forms/dwc/notice5.pdf *Notice of Coverage can be downloaded here: http://www.tdi.texas.gov/forms/dwc/notice6.pdf
  6. Consent for Background Checks – if you have not already done so prior to hiring. These are typically performed prior to making a hiring decision, but that is not always the case.   http://www.twc.state.tx.us/news/efte/authorization_for_background_check.html

Interesting items to note regarding Temporary Employees and the infamous “Working Interview”:

  • Temporary Employees that are hired directly by your practice are considered employees of the practice for all intents and purposes and are able to file unemployment claims once the work relationship has ended.
  • Consider hiring Temporary Employees through a temporary service. By doing so, the temporary service is the employer and they will handle any unemployment claims filed by these employees.
  • A “Working Interview” is considered to be an “interview” where the worker performs actual work for the company. This form of work for the company IS deemed “on the job” training or part of orientation to the company and IS viewed as work time. The worker expects to be compensated for this time and the company is expected to pay the worker at least a minimum wage for this time, obtain the required new-hire government documents (as listed above-Form I-9, Form W-4, etc.) and report the wages paid to the IRS and applicable State entities. The short story to this is….Working Interviews should be given a paycheck which is run through the company’s payroll system and has the appropriate payroll taxes withheld from it.

Jennifer Johnson

CANDIDATES’ TAX PLANS, WHAT YOU SHOULD KNOW

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With elections around the corner, paying attention to the candidates’ tax plans is crucial. Clinton wants upper-income Americans to pay more, while Trump seeks across-the-board tax cuts.   Per The Kiplinger Tax Letter, some highlights of both candidates’ plans are:

CLINTON

    1. Raise in capital gains rates for individuals in the 39.6% bracket who sell assets they have owned for six years or less. Taking into account the 3.8% surtax on net investment income, these folks would pay tax at a 43.4% rate on gains from assets held two years or less. The rate would drop incrementally to 23.8% (the rate currently) for assets held more than six years.
    2. Surcharge on taxpayers with AGIs over $5 million.
    3. Payroll tax hikes by increasing the wage ceiling on the 6.2% Social Security tax.
    4. Cap of 28% on the value of itemized deductions (except charitable contributions).
    5. 30% minimum tax on millionaires.
    6. Restrictions on those taxpayers with large balances in their retirement plans or IRAs.
    7. Doubling of the child tax credit to $2,000 for each child up to age four.
    8. New caregiver credit of up to $1,200 to provide relief to people who help care for elderly parents or grandparents.

TRUMP

    1. Reduce individual tax rates into three tax brackets: 12%, 25%, and 33%. For married couples, the 12% rate runs to $75,000, the 25% one tops out at $225,000 and the 33% rate kicks in after that. These thresholds are cut in half for single filers.
    2. 15% business rate.
    3. Standard deductions would go up to $30,000 for joint filers and $15,000 for singles.
    4. No more personal exemptions or head-of-household filing status.
    5. Capital gains tax would stay as is.
    6. Elimination of the 0.9% and 3.8% Affordable Care Act surtaxes.
    7. Elimination of alternate minimum tax, as well as estate and gift tax.
    8. Expansion of dependent care breaks for working and stay-at-home parents and creation of tax-favored savings accounts for child development and elder care expenses.
    9. Itemization would be capped at $200,000 for couples and $100,000 for singles.

The most noticeable disagreement between the two candidates is over the Affordable Care Act (aka Obamacare):

CLINTON

  1. Increase premium tax credits.
  2. Refundable tax credit up to $2,500 to insured individuals, $5,000 for families for individuals whose out-of-pockets expenses exceed 5% of income.

TRUMP

  1. Ditch the plan completely.
  2. Give individuals an above-the-line deduction for premiums that they pay and not subjecting the write-offs to an adjusted-gross-income threshold.
  3. Rely more on HSAs to help individuals pay for coverage

Giving

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In the spirit of giving during the holiday season, Edwards & Associates, PC will be donating to charities that are important to us and to our valued clients.  Won’t you join us and experience the gift of giving by donating to one of the following worthy causes:

Texas Scottish Rite Hospital for Children
http://www.tsrhc.org/

Oral Cancer Cause
http://oralcancercause.org/about-oral-cancer-cause/

America’s Tooth Fairy
http://www.ncohf.org/

“No one is useless in this world who lightens the burdens of another.”  ― Charles Dickens

Gratitude

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During this Season of Thanksgiving, we at Edwards & Associates, PC want to acknowledge our clients
for their patronage and referrals.  We are  sincerely appreciative and would like to take this opportunity to
also wish all of you a wonderful, warm and Happy Thanksgiving  with your families and loved ones.

179 Limits Raised

Were you one of the many small business owners anxiously awaiting an increase on Section 179 and other tax extenders? If so, then I have great news for you! Last night, by a vote of 76 to 16, Congress finally passed a bill to extend many of the expired tax provisions. Please note that unfortunately, they only passed them for 2014 meaning they will be retroactive to Jan. 1 and will expire again Dec. 31.

In order for these to become law, the President must also sign the bill (H.R. 5771 “The Tax Extenders Bill”) but that is expected to occur later this week.

Here are a few highlights of tax deductions you may be able to now take advantage of for 2014:

Section 179 Equipment Tax Deduction: this has been increased from only $25,000 to $500,000

State and Local Sales Tax Deduction: if you itemize your taxes, you will now be able to take a tax deduction for these taxes. This is especially helpful if you live in a state that does not have an
income tax

Home Mortgage Insurance Premiums Deduction: if you itemize your taxes, you will be allowed to take a tax deduction for PMI

Tax Free IRA Withdrawals for Charity: anyone over 70 ½ will be allowed to donate up to $100,000 from his or her traditional IRA, without incurring taxes, if the money is distributed directly to an eligible charity

Tuition Deduction for Education: even if you do not itemize your taxes, you will be able to deduct up to $4,000 spent on qualified tuition, fees, and related expenses for post-secondary
education

Tax Free Savings for Disabled Individuals: this is attached to the extender bill and is called the Achieving a Better Life Experience (ABLE) Act. With this Act, those who were disabled prior to age 26 will be able to contribute up to $14,000 a year, tax free, into an ABLE account. Not only that, but this provision will also apply to their family and friends!

KPIs (Key Production Indicators) and What You Need to Know

Recently I ran across the following article in Dentistry IQ written by Roger P. Levin, DDS.  How are you recording and tracking your “big data?” – Robert T. Edwards, CPA

You’ve probably heard the term “big data,” which refers to all of the electronic activity tracked by businesses today. With the various software programs that are available to administer scheduling, accounting, inventory, payroll, and more, dental practices now generate their own big data.

How can dentists take advantage of this information to monitor and increase practice development? The secret is to know which numbers actually indicate growth or decline – the Key Production Indicators™ (KPIs).

For general dental practices, following the metrics listed here will provide a solid picture of how their practice measures up:

1. Production: What are the daily, weekly, monthly, and annual production figures? These provide the big picture of how a practice is doing.

2. Collections: What percentage of fees charged are actually paid? If a practice isn’t collecting 98%, your policies and scripts may need to be adjusted.

3. Profit: What is the practice’s total revenue after operating expenses are subtracted?

4. Overhead: Is overhead 59% or less of total income? If not, doctors should examine expenses to see what can be reduced.

5. New patients: How many new patients are coming in each month and each year? This indicator should be increasing 10% to 15% annually.

6. Fee-for-service vs. insurance production: What is the ratio? Can it be adjusted one way or another to the practice’s benefit?

7. Case acceptance: How do patients respond to treatment recommendations? Are at least 90% of case presentations accepted?

8. Doctor production vs. hygiene production: Does the dentist generate at least 75% of production, and the hygiene department the other 25%?

9. Percentage of hygiene patients scheduled: Are 98% of the practice’s patients scheduled for their next appointment at all times?

10. Cancellation and no-show rates: Is the rate 1% or less? If not, the practice may suffer from unproductive gaps in the schedule.

Of course, recording the numbers is only the first step in making headway. KPIs must not only be recorded but also analyzed each week. A quick review should take two to five minutes. Over time, consistent evaluation of KPIs makes it possible for the doctor to rapidly identify performance gaps and make corrections to marketing, expenses, systems, scripts, and other policies as needed. The next step is to create goals, share them with the team, and monitor progress toward meeting them.

 

Happy Thanksgiving!

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During this season of gratitude, we want to take time to thank our amazing clients.
We realize that without the patronage of each and every one of you,
we would not be as successful as we are today.
We look forward to continue working and growing with you in the coming years.

Wishing you and yours a very safe and Happy Thanksgiving! 

Robert Edwards and The Edwards & Associates, PC Staff

“IRS” scams still running rampant. Continue your diligence!

A very helpful client notified us today of his recent interactions with the “IRS.”  He was left a voicemail by a person claiming to be an IRS agent.  Knowing that this is not a normal method of communication by the IRS, he returned the call with suspicion.  He was greeted by the “agent” with scare tactics about legal action against him and talk of attorneys, etc.  Wisely, he promptly hung up.The IRS will always notify you of a new issue or potential issue by mail, and only mail.  Once you have established a relationship with an agent on a particular issue, you may then be contacted by phone for updates, etc, but even then it is rare.  If ever you are unsure, you can call the IRS main number and inquire about your account.

Please be aware, however, that there are also scams that simply want you to return their bogus call because you are charged exorbitant fees for calling that particular phone number.  Be wary of returning any suspicious calls to the IRS for that reason.  Again, when in doubt you can call the IRS main number and inquire about your account.

Our best,

Edwards & Associates, PC

 

Section 179 Limits For 2014

The first year deduction limit for equipment purchases under IRS Code Section 179 is $25,000 for 2014.  This is a substantial reduction from the $500,000 limit imposed for the year 2013.  To make matters even worse for clients planning on starting new practices this year, bonus depreciation, which allowed the immediate deduction of 50% of the cost of new equipment purchases, is not available at all for 2014.  Furthermore, previously eligible leasehold improvements no longer qualify to be deducted under Code Section 179.  Unless or until our dysfunctional Congress gets its act together and decides to replace these incentives for start-up businesses, it will increase the after tax cost of entry into private practice.  For more information, call our office and we will be glad to discuss this and other issues that you should take into consideration when deciding whether or when to start a practice. 

Ten Common Mistakes Young Dentists Make and What They Can Do to Avoid Them

10. Trying to pay off student loans or other debt too fast.

  • Goal should be creating savings, not “getting out of debt.”
  • Taxes higher if no debt.
  • Principal reduction of debt is not deductible.

9. Doing their own accounting.

  • Spend your “free” time doing things you enjoy, not learning accounting.
  • Makes income tax preparation easier and less expensive because records are more reliable.
  • Cost is less than half the fee for a crown.

8. Not keeping business and personal financial transactions separate.

  • Makes income tax preparation more difficult.
  • Exposure to potential IRS adjustments in the event of an audit.

7. Doing their own payroll, including making payroll tax deposits.

  • Mistakes are costly.
  • Penalties can run 15% of taxes deposited late.
  • Outside services specialize in payroll and are not expensive.

6. Hiring friends or family or other inexperienced people to work in the dental practice.

  • Hurts practice to have inexperienced staff dealing with patients, especially front desk.
  • Hurts practice to have inexperienced staff dealing with filing insurance claims for patients.

5. Putting off setting up a retirement plan until out of debt.

  • Review different types of plans and establish one as soon as you start working.
  • Can retire in 20 years if save consistently.

4. Focusing too much on interest rates and not monthly payment when borrowing money.

  • Focus should be on cash flow, monthly payment.
  • Longer term loans are better for creating savings and lowering taxes

3. Not setting up the proper type of business entity.

  • Partially depends on ownership of real estate.

2. Not setting up their business entity early enough.

  • Why incorporate? And when?
  • Current school of thought is to set up a business entity as soon as you start working.
  • Can begin funding a retirement plan.
  • Can deduct certain costs against the income generated from dentistry services.

1. Not setting up your “team” soon enough.

  • Attorney to review office lease, contracts, employment agreements, entity formation, etc.
  • CPA financial advisor to advise on setting up business entities, retirement plans, arrange financing and to review contracts from a tax perspective.

The deadline is Tuesday, October 15th. Please be aware: Monday, October 14th, is a USPS holiday in observance of Columbus Day!

For those of you who have already filed your 2012 tax returns, CONGRATULATIONS!

For those of you who still need to get that handled, the deadline is Tuesday, October 15th. Please be aware, however, that, Monday, October 14th, is a USPS holiday in observance of Columbus Day which means there are only 4 mailing days remaining. FedEx and UPS are qualified alternative shipping methods for any returns not being mailed to a PO Box. Returns sent by FedEx and UPS must be sent using overnight or 2 day service.

Our best,

Edwards & Associates, PC