By: Bruce Bryen
As a dentist, when you are ready to file your first substantial tax return, it is best to find a dental CPA who can prepare the personal tax return but can also be the first advisor that you use for your future in the dental profession.
As a young dentist, it’s probable you know little about taxes or the business side of dentistry in general, it is good timing to not just discuss the taxes with the preparer but also to take the time to talk about some long-range planning and the help that the dental CPA can give.
Importance of Working with a Dental CPA
Finding the right dental CPA is very important since many young dentists don’t realize the significance of the difference between a dental CPA and a general business CPA.
Such as their knowledge of the financial side of dental practices or the input needed to make decisions about acquisitions.
It may be too late when you realize the difference – because a potential dental practice acquisition may be on the table and the general business CPA proves his or her lack of dental knowledge when the contract for the transition is being negotiated.
General Business CPA vs Dental CPA
What are some of the differences that the general business CPA and the dental CPA come up against?
Besides the most significant matter that differentiates the dental profession from the general business community, which is goodwill, there are other major issues such as:
- Rules of the State Your Practice is Operating
- Annual Licensing Requirements to Maintain Your License
Goodwill is the most important and valuable asset a dental practice has.
Unlike a general business, for instance, an auto parts store, where a recent high school graduate is probably able to stand behind a counter and find an auto part for a customer. There is little goodwill in that store since the customer is asking for anyone to help find the auto part.
The dentist has patients specifically asking for them. This creates a lot of personal goodwill as well as enterprise goodwill for the dental practice since a patient has gone to the trouble to enroll in that dentist’s practice.
Practice Ownership in State
Knowing who is allowed to be the owner of the dental practice, based on the rules of each state may hold back the dentist from acquiring what they are ready to purchase for lack of financing.
The dentist may have thought that they need an investor available to be a partial owner and may find out from the non-dental CPA that the “investor,” can not be an owner since he or she is not a licensed dentist.
This setback should teach the dentist something about who their advisor should be. The investor may have scheduled to have funds available from a lender for their investment and may threaten a lawsuit since they probably had to pay the bank, an attorney, and his or her own CPA for the advice to get to this point.
The Advent of the DSO
With the recent popularity of the DSO for dentists, solo practitioners are joining these groups and prospering greatly with the well-run DSOs.
This new concept is the salvation of a lot of dental practices owned and operated by older dentists as well as by younger dentists who just can’t tolerate the onerous amount of administrative work involved with the practice.
Many younger dentists love the clinical side of dentistry but don’t have time for the administrative side of the practice.
They are very happy to farm out the administrative work to a DSO type of dental practice even though their compensation may be lower than the traditional dentist who worked both sides.
In fact, many of the younger dental school graduates have forgone the ability to go to work for a solo practitioner or a small group of dentists and have gone to work immediately for the DSO.
They will earn a reasonable amount of compensation and a lot of time off since little or no administrative work is involved for them. This is their trade-off in life, lesser compensation but still pretty reasonable, more time off and the number of headaches from administration will be at a minimum.
For those who still want to learn it all, the graduates can be involved with the administrative side of the dental practice and learn more about the DSOs. They can join the DSO with the understanding that they will be a clinical and administrative dentist and will be in the hierarchy of the DSO since they may be near the opening of the DSO or at least close to the formation.
It’s not so difficult to see that there are many options available for the recent dental school graduate.
It really comes down to how hard the graduate wants to work and what they want to concentrate on as their career starts to progress.
There is a trade-off between lifestyle and time off for compensation and learning the many facets of the dental profession.
Since dentistry is one of the fastest-growing professions, any choice seems like a good one. From owning your own practice to being a member of a DSO, the recent graduate has a long and prosperous career looking at them as time passes.
Photo by Nataliya Vaitkevich