Running a dental practice is an incredibly busy proposition. In addition to ensuring you are providing your patients with the best care possible, there are your financials to consider—including taxes.
The tax code is complex and constantly changing. It’s challenging to navigate all the ins and outs. If you overlook certain dental accounting details, you may cost yourself thousands of dollars. Read on for the best strategies for your dental accounting.
Small businesses have five entities to choose from for tax purposes, but the most common for dentists are an S-Corporation (S-Corp) or a Limited Liability Company (LLC). Each has unique advantages. LLCs are very effective at shielding you and your practice from any liability. S-Corps provide a cap on self-employment taxes but require additional paperwork. Your dental accountant can help you choose the correct business entity for you.
Profit-sharing plans with 401k provisions allow you to contribute up to $66,000 a year plus an additional $7,500 if you’re over 50. Other retirement plans to choose from include a Simple IRA plan or a cash balance plan.
Is one of your minor children looking for a summer or part-time job? When you hire one of your children under 18 to perform necessary work for your business, the IRS lets them claim the standard deduction if they are on your payroll. In addition, you’ll save them money because they won’t have to pay income taxes on their earnings up to $13,850. If you do this, make sure you’re compliant with your state’s labor laws for juvenile workers.
Did you know that you can deduct your state income tax or state sales tax from your income? Take advantage of this law to further reduce your tax burden.
Contributing to a charity is an ideal way to save money on taxes while doing good. This strategy requires some planning. With a donor-advised fund, you can receive the tax deduction the year you fund it. So if you want to contribute $75,000 over three years, you will receive the deduction in that first year and the standard deduction for each of the next two years.
A Section 179 deduction allows you to deduct the cost of certain dental equipment and dental software you have purchased or financed. There are specific deduction limits and spending caps that an experienced dental CPA can explain to you.
At Chaliff + Associates, our dental CPAs have extensive experience with small business tax strategies. We help Memphis area dentists reach their practice goals and protect their business interests. Trusting our dental CPAs with your dental practice accounting can help reduce your tax burden while allowing you to focus on the most important part of your job—your patients! So stop searching for “dental accounting services near me” and give us a call. Contact us today for a free consultation!