THE BAKER HOLTZ GUIDE FOR DENTISTS

Transcription

1

2 THE BAKER HOLTZ GUIDE FOR DENTISTS TABLE OF CONTENTS STRATEGIC PLANNING PLANNING FOR THE FUTURE PURCHASING NEW EQUIPMENT PRICING CASH MANAGEMENT REDUCING FRAUD RISK TAXATION CHOOSING A BUSINESS ENTITY MAXIMIZING TAX SAVINGS FINANCIAL STATEMENTS SOFTWARE UNDERSTANDING FINANCIAL STATEMENTS QUESTIONS? BAKER HOLTZ CAN HELP CALL US AT TO SEE HOW WE CAN HELP YOUR DENTAL PRACTICE GROW. ABOUT BAKER HOLTZ Originally formed in 1979, Baker Holtz focuses on the needs of closely-held businesses, their owners, and others seeking trusted advisors in financial and tax matters. We understand our clients need for a trusted advisor relationship that helps meet the unique demands and challenges they face. Our ability to do this starts with having talented people in place who have the skills and training to deliver professional advice and superior service. 2

3 STRATEGIC PLANNING PLANNING FOR THE FUTURE When starting your own practice, set goals and devise a road map to achieve those goals. Think about the direction of the practice for now and for the future. Do you want to expand the practice (new patients, more dentists)? Have you thought about upgrading your equipment? What is your succession plan? Your exit strategy? Before you work with one patient, plan how you want your practice to grow in the future. Check back in on this road map and benchmark your plan against your current needs. Having a plan for the future can help you see opportunities before it s too late. PURCHASING NEW EQUIPMENT One way to distinguish your dental practice from your competition is to use the latest advances in dental technology. These expenditures may involve a significant cash outlay by the practice or additional financing from your financial institution. The more reliable the information that you present to your bank, the smoother the financing process will be. Work with your CPA firm to develop financial documents that give banks a snapshot of the state of your practice before you begin to seek out capital investments. Baker Holtz has experience in all facets of bank financing. We work with a network of lenders to make sure our clients can grow their business. Through our dependable and consistent review process, we produce high-quality financial statements that allow banks to feel confident in financing our clients. 3

4 PRICING From the beginning, position your practice as one driven by value rather than one driven by price. Don t try to compete on price with competitors in your area. Your practice is unique and offers value that others cannot. What makes your practice special? What do your customers value that they cannot find anywhere else? Make those high points your competitive advantage, and leave the pricing battles to your competitors. Some patients will comparison shop solely based on price. These are not your patients. Long lasting patients those that allow a practice to successfully grow comparison shop on value. BAKER HOLTZ VALUE BASED PRICING When your patients come in for a cleaning or filling, they expect that you ll work with them until their dental needs are met. You won t be watching the clock as you work and bill them for the time they spend in the chair. By nature, CPA firms that bill you at an hourly rate force you to try to limit the time that you spend talking to your CPA. Every minute spent with them is another charge on the invoice. Is this how you want your patients to feel? Neither do we. What if your accounting firm provided solutions instead of time sheets and billable hours? What if they listened to your needs and created a package of services specifically for you? And, most importantly, what if that package was a flat, value based price that you could budget for immediately? Baker Holtz is built on placing the needs of the client first. Our experts match your needs with our expertise so that you can achieve your goals and enjoy success in your industry. We deliver a personalized service package for one flat price. Unlike other firms that record and measure hours and minutes spent, we measure what matters to our clients results. Contact us today to see how we can help you succeed. 4

5 CASH MANAGEMENT Cash flow statements are vital to a dental practice. They help you reduce overhead by identifying low-value items that pull away your cash every month. At the same time, they can also allow you to see what facets of your practice require more investment. Every month, prepare a cash flow statement detailing where cash came in and where cash left the business. Better yet, have your CPA prepare it for you! For many dental practices, the frequency of collections between low patient co-payments and large insurance reimbursements can have a negative effect on a practice s ability to pay vendors bills, payroll checks, or finance a large asset acquisition. The peace-of-mind that comes with not having to worry about day-to-day cash transactions can add value to any practice. You should work with your CPA to create accurate cash flow projections and proper budgeting techniques to help manage the inand-outs of daily cash receipts and payments. Baker Holtz works with our dental clients to create a budget that allows for a consistent cash flow to cover even those unexpected expenses that can arise. Patients can be unpredictable with their payments. We work to create flexible cash flow projections that are useful for any size practice. REDUCING FRAUD RISK Reduce your risk of embezzlement from day one. Start by separating the moneyhandling responsibilities among the members of your team. Two employees should handle payments one should collect the payments and the other should manage the daily deposits. By dividing the financial responsibilities, you ll decrease the risk of fraud. Have your bank statements mailed to your home, and actually read them. Ask questions if there are any suspicious or unexpected items. This is your business take preventative action against embezzlement. 5

6 TAXATION CHOOSING A BUSINESS ENTITY Having an entity structure that matches the practice s goals and operations is an incredibly important building block of a successful practice. Sole-proprietorships, partnerships, limited liability companies, and corporations all have different levels of restrictive rules and regulations. However, these different structures also offer a wide variety of significant tax benefits for the owners of the practice. Work with your CPA to determine the correct entity structure that aligns with the goals of your practice. Not every dental practice is the same. You need to choose the entity structure that is right for you. MAXIMIZING TAX SAVINGS There are many ways that your dental practice can work to lower your tax burden. Before employing any of these strategies, however, be sure to meet with your CPA to ensure that you re making the correct choices for you and your business. Below are two strategies that our dental clients have found useful. Maximize Retirement Plan Contributions: By saving for the future now, you can minimize your taxable income. Delay Patient Billings: If your practice operates as a cash basis taxpayer, consider delaying patient billings until after the new year and accelerating payment of vendor invoices. ARE YOUR TAXES INCREASING? Be aware that your income taxes could be increasing significantly. On January 1, 2013, individual income tax rates on ordinary income will increase from a maximum of 35% to a maximum of 39.6%. The rate on capital gains will increase from 15% to 20%. The qualified dividend rate will increase from 15% to a maximum of 39.6%. Finally, high-income earners may be subject to a 3.8% surtax on investment income and a 0.9% increase in Medicare taxes on employee income. Plan for this increase especially if your practice is taxed as an S Corporation or a Limited Liability Company (LLC). 6

7 FINANCIAL STATEMENTS SOFTWARE When starting a practice, the implementation of an accounting software system such as QuickBooks or Peachtree can add efficiency and organization to any operation. The ability to properly record daily transactions and produce reliable reports can aid greatly in making the correct managerial decisions and place your practice at the forefront of the dental industry. UNDERSTANDING FINANCIAL STATEMENTS Understanding financial statements is perhaps the most important part of running your own dental practice. Your financial statements allow you to receive an unbiased overview of the financial health of your company. The following is a description of the typical financial statements your practice should generate. The Balance Sheet: This is the financial position of the company at a point in time. It reflects assets (what you have), liabilities (what you owe) and equity (what you have invested in the business and the accumulated profits (or losses) over time). Total assets must equal the sum of the liabilities and equity. Assets generally include cash, accounts receivable, prepaid expenses, property and equipment, and goodwill. Liabilities may include accounts payable, credit card debt, accrued expenses, and longterm debt. The Income Statement: This statement shows the income or loss that a company incurred over a period of time. It is often used to compare financial results from one period to the next. Over time, your income statement can be a valuable tool to see how your practice is changing. You can use the income statement to track expenses and gains from the growth of your practice at a glance. The Cash Flow Statement: As mentioned before, this is vital to a dental practice. It can help you reduce overhead by identifying low-value items that are pulling away your cash every month. Cash flow statements can also allow you to see what facets of your practice deserve more investment. 7

8 Baker Holtz CPAs & Advisors bakerholtz.com M EET T HE B AKER H OLTZ D ENTAL T EAM Steven D. Struck CPA, MST, CSEP Phillip J. Malnar Sara A. Knoper CPA, MST CPA, MSA Q UESTIONS? B AKER H OLTZ CAN HELP We work with dental professionals as a partner in your practice. We have the experience to help you anticipate changes in your practice, and the expertise to help you adapt. We want to be a partner in your success. C ALL US AT TO SEE HOW WE CAN HELP YOUR DENTAL PRACTICE GROW. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. The Baker Holtz Guide For Dentists 8