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Surprised By Low Cash Flow And High Taxable Income?

Work with a dental CPA so that you don’t get caught in a cash flow pinch.

Over the years, I’ve experienced many instances where dental clients are surprised when they realize they have a lower cash flow, but high taxable income. What most clients don’t understand is that this is usually the result of taking substantial tax write-offs for equipment that are financed over several years.

Large tax write-offs are great, especially when you haven’t yet spent the cash. But it’s important for you to be prepared for the opposite: No tax expense, but cash is still being spent to pay down debt.

On an annual basis, one thing I do with all my dental clients is show cash flow calculations and projected taxable income calculations next to each other in an Excel spreadsheet. This immediately highlights the differences. I also find it valuable to show a 5 to 10 year comparison of depreciation expense to principal payments on debt. These two exercises help my clients understand where their money is going and helps them better strategize their next financial steps.


If you’re looking to maximize your effectiveness in managing these areas, reach out to a CPA who specializes in working with dental practices. They can help you evaluate your cash flow and taxable income and plan for the future. Email the Bright Dental CPAs at Rea & Associates to learn more.

Make Your Financial Statement Work For You

Best practices for formatting financial statements

Did you know that there’s no “right way” to format or present your practice’s financial statement? It’s true, there are several approaches that dentists can take when crafting a financial statement. What’s most important is that the statement is meaningful to you and is easy to understand and analyze.

That’s where many dentists find it helpful (and critical) to have a CPA who specializes in advising dental practices. It can be difficult for some dentists to determine what is most important to them on a financial statement. Oftentimes, dentists tend to have a financial statement that is backward looking. It tells you the history of your practice’s performance. A CPA focused on working with dentists can help you develop a financial statement that creates best practices discussions and enables you to look forward.

Financial Statement Reporting Possibilities 

Curious to know what are some commonly used items on dental practice financial statements? Here’s a quick list of some reporting possibilities:

  • Show only cash collections as revenue or show production with offsets for contract adjustments, write-offs, and changes in accounts receivable. The “offsets” essentially are changing the production accrual basis revenue to cash basis.
  • List the cost of goods sold, which could include dental supplies, lab expense and hygiene wages.
  • Show percentage of revenue for each expense.
  • Include an expected range or benchmark percentage in the expense description.
  • Group together common expenses, such as staff expenses, facility costs, doctor expenses, etc.

Creating Discussions To Further Develop And Build Your Practice

After you create a financial statement that suits your practice needs, you’ll have a document that can help you identify areas for improvement and areas that are performing well. Your dental CPA can help create discussions addressing these areas. Here are just some of the discussions that could come from formatting your financial statement in a way that works for your practice:

  • Trend analysis (for example: is your revenue stagnant or decreasing and are your staff expenses increasing?)
  • Employee benefits
  • Retirement plan strategies
  • Insurance coverages
  • Planning for future significant cash outlays/equipment purchases
  • Facility lease renewals
  • Collections on patient receivables
  • Marketing initiatives
  • Preparing to sell your practice

If you know that your financial statement could use a tune-up or a second set of eyes, don’t hesitate to contact your financial advisor for advice. Email the Bright Dental CPAs at Rea & Associates to learn more.

Should You Stay Or Should You Go?

Considerations For Dental Professionals Considering Office Relocation

Dental Office Relocation - Dental Practice Advisors

Is it time to move your dental practice to a larger space? Here are a few things to consider before you make the move.

Is your dental practice getting too big for its current location? Then an office move may be in order. But of course these things take time. It’s never easy for a business to just up and move at a moment’s notice. There are a ton of logistical considerations to address even before you start loading the moving truck. This is why you should consider the long-term potential of your chosen location.

  • Does the office get good traffic?
  • Is it easy to find?
  • Will your staff and patients be safe?

Once you are sure the space meets these essential characteristics, you can then assess the property’s other qualities.

Read Also: Office Relocation Made Easy – And Affordable

Choose The Right Office Location

Healthcare professionals need their office space to accommodate unique structural needs while providing a comforting atmosphere to patients. Not every location will be up to the challenge. A real estate broker who specializes in helping healthcare professionals can eliminate inadequate properties immediately – meaning you won’t have to waste your time walking through countless buildings that, for one reason or another, are unable to accommodate your practice. Instead, you will be free to serve your patients and manage your existing office responsibilities.

Finally, unless you are moving to a space that was already being used as a dentist office, you are likely going to have to pay for the space to be converted to fit your needs. Be sure to carefully consider the cost associated with remodeling a particular location and whether or not the move actually makes sense once the dust settles. Look to your financial advisor for help. Only after considering your practice’s financial stability, can you finally determine if relocating your dental practice is the right decision at this point in your career.

Reasons to stay put

If all of these considerations seem daunting or after crunching the numbers you and your team conclude that it’s not necessarily in your best interest to relocate your office at this time, you can still put your relationship with your real estate broker to good use.

Think about it, the last thing the owner of the property you are currently using wants is to have to go out and find a new tenant. From hiring their own real estate broker to market the property, negotiating terms of the new agreement and allowing any new tenant the time they need to build out the space, if you moved your practice elsewhere, they would likely be taking a pretty large financial hit. If you time it out right (about a year in advance), your real estate broker can help you negotiate a better deal on your lease. And the best part is that working with a real estate broker shouldn’t cost you a dime.

Assemble Your Team

Want to make your move as easy and stress-free as possible, assemble your team of professional advisors early to make sure you are armed and ready to make an offer if an opportunity presents itself. In addition to the usual players, your CPA, banker, lawyer, a real estate professional, etc. Contact the Bright Dental team at Rea & Associates and find out what you dental advisory team should look like and how each member should be able to help you grow your practice.

By Ryan Dumermuth, CPA, CFP (Mentor office)

Need help growing your dental practice?
These articles could give you some great ideas:

Revenue Growth Does Not Equal Practice Growth

Your Practice’s Free Valuation Could Come At A Hefty Price

Do You Need A Dental CPA When Buying A Dental Practice?

What Could A Cybercriminal Do To Your Dental Practice

You’re probably familiar with the term Ransomware and the financial toll it’s been taking on companies world-wide. One lesson that we continue to learn time and time again is that nobody is immune to this cyber threat – not even your dental practice.

Instances of cybercrime have reached an all-time high and ensuring that your practice has the procedures in place to guard against an army of determined fraudsters is more important than ever. But before you can implement effective controls, you must have a clear understanding of what it is that threatens your practice.

Know Your Enemy

Ransomware is the infection of a computer which immediately encrypts all recognizable file types. Once your network is infected, a screen will appear on your monitor, conveying the hacker’s demand: pay a ransom in exchange for your practice’s data to be “decrypted” and released or lose it all. The hackers then set the clock, making it clear that if the ransom is not paid before the deadline, your practice’s data will be destroyed.

4 Tips To Help Prevent A Ransomware Attack

To protect your business against Ransomware and other similar threats, I recommend following these best practices:

  1. Train office staff to identify phishing emails.

Numerous vendors can provide your dental practice with phishing tests and video training to help educate your office’s staff about phishing emails and ways to identify possible scams. The goal is to change the mindset of those within your practice when it comes to opening attachments and clicking on hyperlinks.

  1. Set your staff’s Microsoft Active Directory rights.

It’s unlikely that all your employees will need full-access to your practice’s entire database to do their jobs effectively. One way to protect your data is to only grant access to the databases each employee needs to do perform their job duties. This way, if an attack does occur, the damage can be isolated.

  1. Consider implementing programs such as Microsoft “AppLocker.”

When you implement programs like AppLocker, you require users to be assigned access to the programs they need to utilize. Again, this helps to isolate the threat which can help minimize the impact of an attack on your dental practice.

  1. Implement a Disaster Recovery (DR) Plan.

Some research indicates that only about 35 percent of small- to medium-sized businesses have a working and comprehensive disaster recovery plan. Is your dental practice included in this statistic? Business owners like you are learning time and time again just how important it is to have a plan in place to protect your business when crisis strikes. A DR plan, complete with regular plan testing and offsite backup data, will help prepare you for unforeseen events which, under current circumstances, could prove to be catastrophic.

Want to learn more? Email the Bright Dental CPAs for more information about protecting your dental practice from cybercrime.

By Brian Garland (Dublin office) 

Check out these related posts to help keep your dental practice safe:

Is Your Dental Practice Prepared For An IT Disaster?

Is Your Dental Practice in “The Cloud”?

Fraudulent Credit Card Transactions Will Become Your Practice’s Problem On Oct. 1

How Are You Celebrating Your Dental Assistants This Week?

Celebrate Dental Assistants | HR Tips | Bright Dental CPAs

It’s Dental Assistants Recognition Week, which means that its your chance show your appreciation to the hard-working men and women who help your dental practice run so well!

We hope you are as excited as we are to celebrate Dental Assistants Recognition Week! This is your chance show your appreciation to the hard-working men and women who help your dental practice run so well! But just in case you need some help letting them know how grateful you are for all the work they do, we’ve provided you with a few suggestions to help point you in the right direction. After all, these men and women not only engage with your patients every day, the skills and experience they bring to your office has been critical to your success – and we think that’s cause for celebration!

  1. Attract Top Talent With These Tax-Free Tactics The first step in appreciating your dental assistants is finding top talent. Here are some tips on how your dental practice can attract top talent and keep them!
  2. Guide Your Dental Practice with an Employee Handbook An employee handbook is a central location for your dental practice’s rules, regulations and benefits. It is a great resource for all your employees to understand their expectations in your dental practice. Read to learn how an employee handbook could be the thing missing from your dental practice.
  3. Are Your Employees Aware of the Benefits? Working at your dental practice has a lot more benefits than a paycheck for your employees. Sometimes those additional benefits are forgotten or overlooked. Take the time to show or remind your team what they are getting besides a paycheck every other week.
  4. A 401(k) Plan and Your Dental Practice Do you offer your dental employees a 401(k) plan? This is a great “benefit” for employees, as many have retirement on their minds. Here are some of the rules with having a 401(k) plan at your dental practice.
  5. Should I Hire My Spouse To Work In My Dental Practice? As with most things, the answer with the question: “Should I hire my spouse to work in my dental practice,” isn’t an easy one to answer. Hopefully this list will provide you with some unbiased advice to help you come to a conclusion that makes sense for your unique situation.

So, how are you planning to recognize your dental assistants this week – and beyond?

Don’t forget, you can always email the Bright Dental CPAs at Rea & Associates for management assistance throughout every phase of your dental practice lifecycle.

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