2021 Tax planning Tips for Dentists and Dental Practices

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2021 Tax planning Tips for Dentists and Dental Practices

Tax planning for Dentists and Dental Practices

Tax planning for Dentists and Dental Practices

Dentists and Dental practices have unique opportunities when it comes to tax planning. Not every accountant understands the amount of time, energy and compliance it takes just to operate a dental practice these days, especially with Covid-19 protocols. At Interactive Accountants, we pride ourselves on helping our Dentist clients take advantage of every tax reduction allowed by law. Here are a few of our top suggestions:

Implement a Retirement Plan

Retirement planning is number one: When deciding how you want to live the rest of your life, think about your actual state and your retirement goals. Depending on the retirement plan you selected, you may have to pay taxes on your retirement funds now, when you are retired, or a mix of both.

Most dental practices can be run with minimal staff and therefore may allow for a more robust profit-sharing plan for ownership. If this is the case, especially when the non-owner team is much younger than ownership, you may want to consider a 401k plan attached with a cash balance plan. You can also look at a defined benefit plan or SEP-IRA plan. At Interactive Accountants, we work with you and your financial advisor to structure the most tax advantaged plan for ownership.

Choose the Right Business Entity

Are you an S-Corp yet? Not every dental practice may be a candidate for an S-Corp election, but this tax election can be made for corporations, PA’s, LLC’s and PLLC’s and is an excellent way to mitigate some FICA taxes, which are 15.3%. While the IRS does look at reasonable compensation practices and a portion of your earnings will be subject to FICA, the S-Corp election still allows Doctor’s to earn a portion of their practices income and not pay FICA taxes on that.

Use of your children's images in marketing materials

Are you using your children’s likeness or images in marketing materials? Do they perhaps work for you? Did you know you can pay your child a royalty for using their likeness or image in marketing materials? You can also pay them for performing clerical tasks at your Dental Practice. Each child now gets a $10,000 standard deduction and this is a great way to save on taxes.

Tax Planning Solution for Dentists and Dental Practices

And another is ….well you’re just going to have to contact us if you want to learn more! We have plenty more ideas for our Dentist clients to take advantage of tax deductions that save you money! Here you can learn more about our Healthcare Accounting solutions.

If you are a Doctor, you need a CPA firm that truly understands what you’re working with, and that firm is Interactive Accountants. So give us a call or schedule a free consultation with our owner Matthew Shiebler, CPA. He’s been practicing accounting for over 25 years now and is a business owner, just like you!