View Padgett President Roger Harris' congressional testimony on the impact of the Corporate Transparency Act and the BOI reporting requirements here.
Like most busy dentists, you’re probably focused on caring for your patients, contributing to the growth of your practice and managing your own finances. Your federal, state, and local tax responsibilities? Those may not be top of mind until filing time rolls around.
Fair enough, but implementing year-round tax-saving strategies can help you avoid negative — and often surprising — tax consequences such as unnecessarily high tax bills and costly penalties. And that’s good for both your practice’s financial well-being and your own.
Effective tax planning for dentists and dental practices, along with tax compliance, is critical.
Whether a solo dental practitioner or part of a practice, you’ll benefit from engaging an outside tax professional who understands the specific issues associated with tax planning for dentists.
Padgett is here to help. We specialize in providing high-quality tax planning for dental care providers of all types, including general, family and pediatric dentists; orthodontists; periodontists; endodontists; oral and maxillofacial surgeons; and cosmetic dentists.
The tax professionals at Padgett bring extensive experience and expertise to dentists and dental practices, including help with:
Preparing tax returns and IRS forms
Naturally, come tax time, we can prepare federal, state, multistate, and local returns — whether for you or your practice (or both). But we also provide a broad array of other tax services for dentists that can help you year-round with a variety of other filing requirements.
Let us assist you with tasks such as processing Forms 1099 for any independent contractors you engage; filing a Schedule K-1 if your practice is structured as a partnership, LLC or S corporation; submitting estimated tax payments, if necessary; and complying with your federal and state payroll tax requirements.
Planning long-term tax strategies all year round
When it comes to taxes, procrastination can be costly. Minimizing tax liability generally isn’t something you can do at the last minute when filing your tax return. To reduce taxable income, and successfully claim all the deductions and credits you’re entitled to, you’ve got to plan ahead.
Of course, we recognize that tax planning for dentists isn’t easy when you’re managing the care of your patients, keeping up with the latest dental research, and perhaps running your practice. So don’t go it alone — we can work with you throughout the year to refine your recordkeeping and tax accounting so that you’re able to take advantage of every available tax break.
In addition, just like dentistry, tax rules, regulations and the law itself exist in a near-constant state of change. Why worry? As professionals providing small business tax services, we stay on top of all the latest legislative developments and IRS guidance, as well as changes at the state and local levels, so you can stay focused on your patients and practice. When tax-related risks or opportunities arise, you’ll be the first to know!
Assisting with a tax audit
Unfortunately, dentists and dental practices aren’t immune to tax audits — whether at the hands of the IRS or another taxing authority. We’ll do everything in our power to minimize your likelihood of being audited, but, if it comes to pass, we can guide you through the process and help minimize negative outcomes.
Properly allocating dental practice start-up expenses
Maybe you’re a dentist who’s ready to begin running a business. If you’re launching a new practice, you may incur several types of “pre-opening expenses.” These expenses are incurred during the period before the new practice is up and running and earning revenue.
Special federal income tax rules apply to different types of costs, and special tax return elections may be necessary to get the best treatment for your practice’s expenditures. Our tax services for dentists include specialized advice for start-ups, so you can get the most favorable tax treatment.
Choosing or changing business structure
Whether launching a new practice or operating an existing one, your choice of business structure has serious tax implications. It may even lead you to suffer unexpected negative tax consequences.
As part of our tax advice for dentists, we can assist you in evaluating the pluses and minuses of sole proprietorships, partnerships, limited liability companies, S corporations, C corporations, or professional corporations, professional limited liability companies, or professional associations so you make the most advantageous choice. If a change is in order, we’ll be there to guide you through the process.
Welcoming new practice partners
If a dental practice is structured as a partnership, a Section 754 election may be a tax-smart move when a new dentist buys into the business. Under the Internal Revenue Code, a Section 754 election allows a partnership to adjust the basis (value) of the property within a partnership when a triggering event occurs.
This often-complex strategy deals with the tax basis of a partner’s share of the practice’s appreciated assets. As part of our wide-ranging tax advice for dentists, we can determine whether such a move would be beneficial and, if so, assist you in making the election.
Preparing for your retirement, and helping employees with theirs
Many Americans intend to work longer into their lives, and some studies show that dentists are no exception. In fact, one study in particular shows that many dentists expect to keep practicing medicine well beyond the average retirement age.
Although many dentists intend to retire relatively later in life, that doesn’t change the importance of careful retirement planning — particularly when it comes to the tax impact. You’ll likely have a large nest egg to enjoy; it would be a shame to unnecessarily lose a substantial percentage of it to taxes.
One of the the ADA’s recommendations for planning for life after retirement is: “Build a budget so that you understand how much money you will need to live your preferred lifestyle long after you retire.” They’re right, but any effective budget must account for taxes. We can help!
Of course, your practice’s staff members also no doubt want to save for retirement in a tax-savvy manner.We can advise you on the tax benefits associated with the various retirement plan options available to dental practices.
Managing buyout and succession planning issues
Addressing the issue of retirement also brings to mind the challenge of partner buyouts and succession planning. If you’re one of multiple owners of a dental practice, you may have to make payments to owners who retire or leave the practice for other reasons (including because of disability or death) to liquidate their ownership interests.
A buy-sell agreement drafted by your lawyer can spell out how ownership interests will be transferred when an owner departs. The structure of the buyout can have major tax implications. We can advise on the tax consequences of various options so you can factor them into your structure choice.
If you’re a solo practitioner, you’ll have other succession planning issues. Maybe you want to gift or sell ownership of your practice to a child or other family member who’s also a dentist. Or you might choose to sell to another practitioner, a corporate practice or another healthcare entity. Perhaps you want to execute a planned liquidation to help fund your retirement. There will be a tax impact to any route you take. Let us be your co-pilot.
At Padgett, we understand the complex Internal Revenue Code inside and out. Tax law is constantly evolving with new legislation, regulations, IRS guidance, and inflation-adjusted changes. We stay on top of these developments as well as proposed tax law changes in Washington in order to help our clients plan for the best possible outcomes in the future.
Whether you need small business tax services for your dental practice, tax strategies for yourself as a high-net-worth individual, or other tax assistance, we’re here to help. (We also offer extensive accounting services for dentists to provide for your other financial management needs.)
Padgett Advisors takes the worry out of daunting IRS and state tax responsibilities with our tax services for dentists and dental practices so that you can concentrate on your patients, your practice and your own financial security. Contact us today to discuss how we can help with tax planning and compliance for you and your dental practice.
