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Nine Questions to Ask When Purchasing a Dental Practice

If you’re at the point in your career when you are ready to purchase a dental practice and don’t know where to start, here are nine questions to ask yourself. The answers to these questions will greatly impact your future as you get ready to make the most important decision of your professional career.

  1. What is the prospective dental practice really worth? Just because a seller is asking for a certain price doesn’t mean that is the value of the practice. Contact a dental CPA right away to have a business valuation done. You could easily overpay for your dental practice without it.
  2. Can you afford the deal? Have a dental CPA calculate future cash flows based on the price of the practice, the financing terms, and your projected salary amongst other things.
  3. Is the seller willing to be a resource for you? They have probably been with the practice for a long time and would be happy to share information and advice with you. The seller also has a patient base they are leaving behind that they don’t want to let down. Make sure they are willing to help you get adjusted and start this new venture as a success.
  4. Are you going to purchase the building the practice is in or rent it out? The seller may own the building and not want to include that in the deal. If that’s the case, be sure you have a lease agreement in place so you can continue to use the building as a dental practice space.
  5. What are you going to do for financing? There are a lot of banks and financing options out there. Be sure to compare interest rates and terms to get the best option available to you. Also keep in mind that it’s important to use a bank that you are comfortable with and know you will be serviced properly. If you want to get really creative, consider asking the seller of his or her practice to finance the deal. The advantage to this option is that the seller will have a vested interest in your success.
  6. What will the purchasing terms be? Again, you have a lot of options here. Are you going to purchase 100 percent of the practice in the first year, or are you going to buy a smaller percentage each year over time. These important factors need to be negotiated. A dental CPA can walk you through your options and what the implications could be on you and your dental practice.
  7. Is the current dentist going to stay onboard?  As part of the deal, you want to define the length of time the former owner is going to stay on to help with transitioning. The last thing you want is a dentist that sells the practice and is out the door the next day never to be seen again.  However, you wouldn’t want a dentist who sells their practice and then sticks around too long.  Find a balance and agree to it. Your patients will be better off, and so will you.
  8. What is the alternative? If you don’t purchase a dental practice from an existing owner, what are your other options? Are there other practices for sale that you would consider? Would you consider starting a practice from scratch? Similarly, look at the seller’s options. Are you the only prospective buyer, or does he or she have other options? The more options you have, the more negotiating power you have.
  9. How is the deal going to be structured to maximize tax savings? How much of the sales price will be allocated toward goodwill and how much will be allocated toward assets? This question will greatly impact your tax liabilities, be sure to have a dental CPA assist you in the negotiations.

You have made the initial decision to purchase your own dental practice, now you have to decide which practice is right for you. Before saying yes, make sure you can answer these nine questions and are happy with your answers.

Contact Our Dental Practice Professionals 

Purchasing a dental practice is a big decision, don’t go at it alone. Contact Rea & Associates. Our team of bright dental CPAs can assist you throughout the process of purchasing a dental practice.

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Is Your Dental Practice in “The Cloud”?

Dental Practice in the CloudI’m sure most of you have heard of the new buzz word, “the Cloud.”  It’s a business application that is accessed online and stores data and software on a remote server. This enables data to be accessed by your dental practice at any time and serves as a backup if anything were to happen.

Dental technology is moving forward and many practice management vendors are now offering cloud-based programming. The programs you’re using currently probably have cloud-based capabilities.  Have you thought about using cloud-based programs in your dental practice? 

Advantages Of Moving To The Cloud

  • You’ll find that the cloud simplifies system maintenance. You won’t have a need for separate back-up files and system updates.
  • You won’t need as many staff members dedicated to updating your files.
  • You won’t need as much IT support to help with system updates.
  • You’ll spend less money on servers and computer equipment.
  • All you’ll need is a computer and a Web browser.
  • The monthly subscription fees will be less than the upgrade and maintenance fees you are currently paying.
  • The initial setup also costs less because the system requires less memory and hardware.
  • Security tends to be stronger when provided by Web-based companies than it is in the dental office.

Considerations Before Moving To The Cloud

  • You will need high speed Internet connection and a reliable Internet provider.
  • Do your homework. Talk to vendors. Ask for demonstrations. All programs are different and some will provide and have interfaces that are more suited to you.
  • Make sure the software is HIPAA compliant.

Cloud computing for dentistry is in the early stages, but vendors are making an investment in programs online and eventually more and more dentists will be moving to this platform. The cloud provides dentists the flexibility and accessibility that they can’t get from their standalone programs. Work can be performed out of the office so the doctors can develop the lifestyle best suited for them.

Moving to new technology can be difficult, but it is not going away. Do your homework and see if it’s time to move your practice management programs to the cloud.

Contact Our Dental Practice Professionals 

Are you unsure about making the switch to the cloud? Contact Rea & Associates. Our team of bright dental CPAs can work with you to determine if making the switch is right for you and your dental practice.

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Rea & Associates, Inc. | Bright Dental CPAs | 7201 Center St, Mentor, Ohio 44060-4858
phone + 440-266-0077