You got into dentistry to help patients. Yet, you may find yourself wearing many different hats, from human resources to payroll to IT. The same can be said for the staff you employ at your practice. The person hired to be the office manager is also the accountant and the marketer ... the list goes on.
As your practice grows, it's important to know what you and your staff are good at and what you should be focusing your time and energy on. It's also good to identify the other areas where you can bring in help.
Accounting & Finance
The financial side of your dental practice can be complex and time consuming, but it's important to get right, or it can result in big headaches and potential fines. Here are a few things to consider in relation to your practice's finances:
While accounting software may seem intuitive, it is very easy to make an error that snowballs and turns into a big mess in the end. It's important to understand your needs and what you're attempting to track to find the best solution for your practice.
Some questions to ask include:
- What items do I need to track for tax return preparation?
- What types of product lines, departments, programs, etc. should I be tracking for profitability?
- What sales tax jurisdiction do I need to track for sales tax reporting?
- What types of metrics am I using to measure success? Can I track those?
- How does this system handle payments? Will it give me the ability to invoice?
By taking the time to think through your full accounting process, you can select a software that not only best suits your needs but will also help you do business more efficiently.
Want to learn more about the basics of accounting and what you need to consider?
The accounting software isn't the only thing you need to get right. Just like there are multiple types of dental practices, there are multiple types of accounting professionals. Often, professionals will hire the same person to do bookkeeping and taxes or believe their office manager can also serve in a CFO capacity. While this may seem efficient and cost effective, the product is only as good as the person that specializes in that trade.
There are several different types of accounting professionals to consider, and each will have a unique and vital impact on your practice.
What's the difference between a CFO, Controller and Bookkeeper?
In addition to accounting professionals, there are also specialized experts to consider who can focus on specific areas of your practice. These include forensic auditors and fraud experts, buy/sell advisor who can help you grow or sell your practice and financial advisors.
From a tax perspective, there are many opportunities for business owners, but also traps for the unsuspecting regarding unreasonable compensation IRS audits, suspended losses from a lack of basis and paying more federal and state income taxes than necessary, to name a few. While you do not have to be a finance, tax or retirement plan expert, it is important to have a team of advisors working on your behalf.
You want to work with an advisor that is familiar with the dental industry and also aware of strategies to reduce your tax liability while minimizing the chances of an IRS or state audit. Audits can have a large financial impact on dental practices, so staying ahead of these risks can significantly benefit your finances in the long run. A few potential strategies to reduce your tax liability include:
- Accelerated depreciation via bonus depreciation or Section 179 election.
- Cost segregation studies to maximize depreciation if you purchase or build a building for your practice.
- Income minimization to capture the temporary 20% Qualified Business Income deduction.
- Employment of family members within the business to reduce overall family tax burden.
- Retirement plan options to reduce taxable income while increasing net worth.
- Health Savings Accounts to decrease tax burden while building wealth.
- Home office deduction and deductions related to your vehicle usage.
- Income deferral and expense acceleration strategies.
Your advisor relationship is a long-term relationship that can help you maximize and achieve your goals. The relationship should focus on open communication throughout the year to help you take advantage of planning opportunities and benefit from available credits and deductions.
You've spent a lot of time on your practice. Along the way, you've made some strategic hires to help you grow and scale. If you have people on your team, you'll need to consider human resources. For starters, it's the law. There are several legal ramifications surrounding HR, from disciplinary action to hiring to termination.
Furthermore, it's about the well-being of your employees. Often, dental staff can work long hours or wear multiple hats. They also carry around a lot of knowledge about the way things are done. What would happen if you lost one key individual? How would that affect your bottom line?
It can cost anywhere between 30 to 50% of an employee's salary to onboard a new employee.
Other areas in which HR can help your practice include background checks, recruiting new employees, training and more.
Technology & Systems
In an age of technology, it's important that you have the right systems in place. A great system can help you run your practice efficiently and drive results. A bad system, on the other hand, can be detrimental to your business.
Here are some questions to consider when it comes to your technology needs:
- Do you use multiple systems to track various practice projects?
- Do your systems talk to one another?
- Do you trust the information being reported from your system?
- Can you see your data in real time? Can you use it to make business decisions?
- Is your technology able to scale with your practice?
These are just a few of the questions to consider as you look through your technology needs. Not sure if your technology really is working for you? There are experts who can help assess your systems and processes to ensure you're performing at your very best.
The moral of the story
As a dental practice owner, there are many hats you have to wear. But what if you could take one, or multiple, off and concentrate on what you do best? The first step is to take a serious look at your practice, your overarching goals and your needs. Then, take an honest look at what you need help with and what positions would help you get to the next level.
Utilize your time and talents to help grow your practice, and bring in the experts to help make your dream a reality.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.