Blog Articles

Six Best Tips for Year-Round Tax Planning Strategies from CPAs for Dental Practices

Wednesday, July 05, 2017

As a dental practice owner, it’s important to stay up-to-date on best tax practices to ensure you’re taking advantage of all available opportunities and benefits outlined in the U.S. tax code. Each of the following tips can help you legally minimize taxes and fall within the letter of the law, statutes and IRS code.
  1. Build a more profitable practice by planning ahead. Following your annual filing, it’s imperative to look ahead to the upcoming tax year to identify both problems and solutions to your tax strategy. By examining areas of opportunity, you’ll be able to develop and put in place a strategy to pay the least amount of taxes while also improving profitability. 
  2. Select the right business entity to minimize taxes. Contact your CPA to determine the payroll tax savings available from electing Subchapter S Corporation status for your practice. Doctors are able to significantly reduce payroll taxes (including the 3.8% Medicare payroll tax on rents and personal investment income) by taking a lower salary, with the remaining profit distributed as a dividend (not subject to payroll taxes). S status can also reduce income and payroll taxes on their practice sale, and lower IRS audit risk and exposure. 
  3. Increase business deductions by having your practice reimburse you for all business expenses paid personally. Business travel, meals and entertainment, business use of automobiles, dues and subscriptions, advertising and promotion, continuing education, tax planning fees and health insurance premiums that are paid with personal funds should be reimbursed with business funds to ensure all business deductions are reported on tax returns. 
  4. Determine which retirement plan is best for your practice. When investing in a retirement plan for your business, it’s important to consider your budget. Ask yourself questions such as how much you’d like to contribute annually, your total budget and how much of your total contribution is for you. For business owners looking for flexibility, profit sharing plans may be a top retirement plan option to consider. 
  5. Consider adding family members to your payroll. By hiring family members such as your spouse or children over the age of six, you can increase your tax savings while minimizing payroll taxes. For your spouse, a minimum salary of $3,000 can qualify the spouse for minimum Social Security benefits, the Child Care Credit and fully deductible practice travel and fringe benefits. Additionally, by employing your children, you can take advantage of IRS-sanctioned tax savings while also helping the child earn money for college or other expenses. 
  6. Evaluate your charitable contributions. Businesses can increase charitable contribution deductions through the donation of property such as stocks, bonds, artwork or real estate in place of financial donations. The full market value of the gift is tax-deductible as a charitable contribution if held for at least 12 months and the gain is not subject to income tax.

Las Vegas
8906 Spanish Ridge Ave.
Suite 100
Las Vegas, NV 89148

Salt Lake City
11339 South 700 East
Suite 200
Sandy, UT 84070

Connect With Us