Purchasing a Dental Practice: What to Know

Deciding where to buy, how to do it, and what kind of dental practice to purchase is an important step in the career of a dentist. There are many essential decisions to make and key factors to examine as you search for the perfect dental practice that meets all of your needs.

Take your Time

Dentists must not rush into a purchase, and need to manage their expectations, understanding that the process will take some time. There is no need to hurry through important steps and be impatient. Buying the right dental practice for you matters more than closing a deal quickly when the first opportunity presents itself.

Deciding on Location

Think on where you’d like to live. You’ll end up being a big part of this community, so you’ll want to make sure it’s a good fit. Dentists who involve themselves in community events and organizations are usually successful as they are meeting people and networking all the while. And ensuring a shorter commute could also pay off. When you can avoid the long commute, those hours you might have spent on the road can be paid forward and spent instead with family and friends.

What sort of community is the right fit for you and your family? Intercity or rural–what’s best for your family? These choices will dictate how many competitors will be in close proximity. Other issues are whether or not your spouse needs to find work, and the quality of the school system in the area.

Choose the Ideal Practice for You

Consider: size and type, Are you interested in specialized dentistry practice, or a generalized dental practice. Who is your competition and is there room for your particular niche? You’ll want to lay down a business plan that is thorough.

Seek a Valuation

Seek the counsel of a certified public accountant prior to purchase. They can find out how much other dentists have paid for similar practices. This will help ensure you are within the means of your projected income.

Establish a Support Net

Trying to save money by being completely self-sufficient is a poor decision when you plan on purchasing a dental practice. Trusted advisors can save you plenty of trouble. Here are some people you might want to have on your side:

• A CPA or accountant with experience helping dentistry practices and other small businesses on how to stay compliant and reduce their tax burden. You will need a CPA who can help you set up tax strategies. You will want a certified public accountant to advise you on the best entity structure for your small business (S-Corp, C-Corp, LLC, PLLC, Sole Proprietorship).
• A Bookkeeper who has familiarity in a bookkeeping system such as Quickbooks. A certified Quickbooks ProAdvisor means they are certified by Quickbooks as skilled with the bookkeeping program.
• An attorney at law to protect your interests and review documents.
• A consultant for your new dental practice will likely prove valuable in helping you achieve goals.
• From the start, establish a relationship with a bank. Getting prequalified helps you keep perspective on how to put in a good offer and how much you can afford.
• An insurance representative will assess the value of your business and evaluate risk to see how much coverage you will need.
• It is smart to seek the help of a mentor that has experienced similar circumstance to those you’ll face.
• A marketing pro that knows online marketing.

Purchasing your first dentistry practice is a big step in the career of any DDS. Be prepared and fully understand the process you face on your way to becoming a business owner.

Tax CPA John Huddleston has a law degree and masters in tax law from the University of Washington School of Law. He has been a guest tax expert on the radio. He advises small businesses in the Seattle Bellevue Tacoma & Everett area on various tax and accounting issues. His firm, Huddleston Tax CPAs, also provides tax preparation service, quickbooks consulting, business valuation, general accounting and bookkeeping service. Profile information on CPA John Huddleston and the CPAs employed by Huddleston Tax CPAs is available at CPA tax accountant profile. Seattle CPA John Huddleston is a frequent publisher of tax saving ideas.

Effective Accounting Practices for Startups

Startups: Accounting Practices

Figure out the accounting procedures that you will use at the very start. Have a bookkeeping method that is forward thinking, so that you’re business growth doesn’t have to wait while you refigure your accounting methods

Selecting a bookkeeping Software Package

In beginning your company you may use a simple spreadsheet to keep pace with your business expenses and income. At some point, though, you might want to think about adopting a small-business accounting software package like QuckBooks or Sage Peachtree to manage your company’s financial transactions. As a new start-up grows, the paperwork involved between paying expenses and collecting income can prove too tedious without the help of a accurate and reliable financial database. A good accounting software package will also help make tax preparation easier, keeping payroll, and inventory record keeping.

Anticipate your accounting needs. There are packages that are specialized for project accounting, and there is accounting software that caters to real property/real estate (like fixed income accounting). Specialized bookkeeping software is often times more costly than the more generic software packages which are excellent for sales of goods, but if you have an idea of where your business is headed, you could select the ideal accounting software at the very beginning can save time and money in the future.

Which Accounting Method to Choose

Big corporations are required to adhere to the GAAP, or the Generally Accepted Accounting Principles. Small Businesses, alternately, can exercise more independence in how they track financial records. When you are a startup owner, you may prefer the cash method of accounting,

Some more advanced methods of accounting, such as the accrual method of accounting, may better serve you as your business grows. The accrual method of accounting records expenses and income upon invoice, rather than waiting for cash to change hands. This bookkeeping method provides you a more expansive insight into you finances.

As far as taxes are concerned, if you sell, purchase, or produce merchandise, there are rules as to when you need to use the accrual method of accounting.

Creating a Budget

You’ll also want to make certain that the accounting software you choose allows you to design a budget.

Compare your performance

And you want to choose an accounting software that allows you to compare the current year financial statement with those of the previous year. This should help you set goals, gain insight, and see trends.

For example, if your revenue increased by 10-percent in 2011 over that from 2010, but, at the same time, your expenses increased by 30-percent, this might suggest there’s some inefficiency in your business model. Are you investing in assets with the greatest return on investment? Or, did you forget to provide some invoices? On the other hand, if your revenue increased by 30-percent for 2011 over that from 2010, but your expenses only increased by 10 percent, this suggests that your business model could be hyper-efficient. Make certain all expenses recorded? Were some revenue items duplicated? Or did you truly manage to increase your return on investment? It is important to determine the causes behind these trends in order to establish an accurate picture of your business’s performance and to make reasoned financial decisions.

Thanks for reading, and here are a few more resources you might find useful:

Seattle Business Valuation
Seattle Tax Debt Relief
Seattle Offer in Compromise

Form 433-B of Book 656: Offer In Compromise

Booklet 656 form 433b is necessary for those business owners that have businesses that are any other entity than sole proprietorships. This form is used to calculate the minimum offer you can make the IRS when pursuing an offer in compromise, unless you are able to provide evidence otherwise.

Section 1: This section requests basic information, such as your EIN, the identity of partners, officers, and LLC members.

Section 2: In section 2, you are to provide business asset information, including: bank accounts, investment accounts, and notes receivable. Also, here you’ll provide information regarding vehicles, equipment, and real estate.

Section 3: In section 3 you are to provide information regarding your business income, such as average gross monthly income (supported by documentation).

Section Four is where you will relay the specifics of business expenses. This would be details such as, your average gross monthly expenses of the most recent period 6 — 12 months (all documented). Now, if you will provide a profit and loss report for the period, you can give an average amount here.

Calculating the offer

If you plan to pay off the offer amount within a period of 5 months, follow the formula below to calculate.

[Business income in excess of expenses x 48] Total available assets

If you choose to pay the offer beyond a five-month period, your base minimum offer increases to the following amount:

[Business income in excess of expenses x 60] Total assets available

decide on, your minimum contribution amount must exceed zero.

The sixth section

In section 6, you can expect to give information like whether or not your business has filed bankruptcy before, and whether or not your company has whatever other affiliations that may owe money to your company. In this section, you will also be asked to share details on whether you’ve unloaded assets at a discount in the past ten years.

Visit the OIC Guide at:
Mercer Island CPA
Shoreline, CPA
Sea Tac CPA

Travel Expenses

Deductions on Business Travel Expenses

It is necessary to plan business trips in an effort to maximize your write-offs. Akin to other costs of doing business, you can claim deductions for any business travel expenditures you personally incur in servicing your customers.

As a self-employed business owner, you may claim deductions only for your traveling costs if the business travel expenses would be defined as ordinary in nature and requisite for servicing the customers. Business travel expenses you might typify extravagant, will not be eligible for the tax deduction. Although not an absolute guarantee, these subsequent types of travel expenses are generally deductible:

Transportation costs incurred in travelling from your home to the client site. Fuel and the various other auto expenses incurred in working at the client’s location. hotel and meal expenses. Dry cleaning and laundry costs incurred during business travel.

Additionally, you cannot incur tax deductible travel expenses for reasons which are personal, but instead you must incur them in providing your services to clients. There is no hard and fast rule of when a travel expense is related to business. However, because of this guideline, you are not able to claim deduction for the cost of your everyday trip between your home and the workplace. This is viewed as a personal expense.

Deductible travel expenses demand that you travel more than a few miles from your main business location to meet a client. This will generally mean you must leave the city where you usually conduct business or, for small towns, you will have to leave the general surrounding area. You must commute for such a length of time that you are away from your tax home for more than a normal day of work. Usually, this means that you’ve travelled for such a long period of time that you must rest or even stay through the night.

You are able to deduct for business travel expenses incurred while temporarily servicing clients away from your tax home. However, if you provide services at a client location for an indefinite period of time or for over a year, you can’t claim the deduction.Maintaining exact records is key. Establish this practice to ensure easier tax prep, and support all travel expense deductions you claim on your return.

More info on travel expense deductions can be found at www.irs.gov (Travel, Entertainment, Gift and Car Expenses).
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