Guide Your Dental Practice with an Employee Handbook

Whether you have just purchased your first practice or are a seasoned dental practice owner, you know that your success is dependent on the professionalism of your employees. Your employees are on the front line of your business every day. Not only are they expected to work with patients, they must work well with each other and let you know if any issues arise. But what should you do if you are confronted with a problem? Well, if you have an employee handbook, then you have a great resource at your fingertips.

The DNA Of Your Dental Practice’s Employee Handbook

There are many reasons to have an employee handbook. An employee handbook is a central location for your dental practice’s rules, regulations and benefits. So what exactly should you include in yours?

  • Your practice’s mission statement
  • Job descriptions for employees
  • Scheduling – the hours required for each job and your policy on tardiness
  • Benefits and eligibility
  • Vacation and sick time benefits
  • Performance evaluations
  • Technology and the use of the Internet and cell phones in the office
  • Patient relations policies
  • Safety procedures
  • Anti-harassment and discrimination policies

An Employee Handbook Is Essential To Your Dental Practice

The employee handbook is an essential line of communication between you and your employees as it defines your expectations. If you have an employee handbook you should review it annually and update it for any changes. The handbook should be given to your employees along with an acknowledgement form that states they have read it and agree to abide by your rules and regulations. Finally, be sure to include the acknowledgement form in their employment file.

Keep your office running smoothly and avoid potential problems. When you develop your own employee handbook, you define how you want your office to run.

Contact Our Dental Practice Professionals

Need more information about how an employee handbook can work for your dental practice? Contact Rea & Associates. Our team of bright dental CPAs can help you plan your employee handbook and help ensure you’ve got all of the right components.

By Dan Bialek, CPA (Mentor office)

 

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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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What is the Ohio Small Business Tax Deduction?

Ohio Small Business Tax DeductionAre you familiar with the Ohio Small Business Tax Deduction? If so, your tax savings were probably nice this tax season. If you’re not familiar with it, keep reading. For those who qualify, you could still see some tax savings for the taxes you just filed.

What You Need to Know About the Ohio Small Business Tax Deduction

  • What is the Ohio Small Business Deduction?

Simply put, it’s a deduction available for small businesses that operate in Ohio – this could be your dental practice!  More specifically, it benefits the owners of a pass through business entity.  Owners can exclude 50 percent of their business profit up to $250,000.This deduction could eliminate up to $125,000 in otherwise taxed Ohio income.

  • Does my dental practice qualify as a small business? 

If you receive a K-1 form as an owner of your dental practice or you file as a schedule C taxpayer, then Ohio considers your business a small business and you qualify for the deduction.

  • How does it work?

The credit is taken at the individual level, not the corporate level. So you take the deduction on your individual income tax return by filing form IT SBD. The credit is 50 percent of your business profit minus a few items that Ohio doesn’t let you double dip. Some examples are your deduction for 50 percent self-employment tax or your deduction for self-employed health insurance.

The credit is only available for owners of Ohio-sourced companies. So if you operate only partially in Ohio, then an allocation is needed to determine how much of a credit is available in the state. This allocation is based on the location of your sales, property, rent and wages.

  • What if I zero out (or significantly reduce) my dental practice profits through bonuses? 

Good news, that’s not a problem if you are a 20 percent or greater owner in your dental practice. The law allows you to include compensation or guaranteed payments in the calculation of the credit.  

  • What if I own the building that my dental practice operates in? 

Good news here too, as you can also include the rental profit from the building into the Ohio Small Business Deduction, as long as the rent was received in the ordinary course of trade or business.

  • How much can you save?

It all depends on your circumstances, but it could be upwards of $6,500 per year in tax savings.

  • When did the law take effect?

The law was passed in late 2013, but was made retroactive for the entire year. As of now, this law currently stands for 2014 as well.

  • What’s the catch?

More good news, there really isn’t one! Ohio is encouraging investment inside the state, and this is one of the ways it is doing just that. In a way to offset some of these tax hits, Ohio raised its sales tax by 0.25 percent last year.

  • What if my tax return has been filed and I didn’t get this tax credit?

It’s not too late to amend your return if you qualify for the credit. Contact a Dental CPA at Rea & Associates immediately to work on getting your money back.

Contact Our Dental Practice Professionals

Need more information about the Ohio Small Business Tax Deduction and how it applies to your dental practice?  Contact Rea & Associates. Our team of bright dental CPAs can help you understand it and determine if it applies to you.

Understanding Ohio Local Tax Obligations

Local Tax PuzzleYou may feel like your dental practice has to pay taxes left and right, up and down and inside and out. Whether it’s federal, state, payroll, real estate, unemployment, commercial activity, sales, use or any other tax out there – your tax liability can really add up. And local taxes make up a nice piece of your tax pie.

If you own a dental practice in Ohio, your practice is responsible for paying your local taxing agencies, which may include multiple taxing authorities. Ohio is one of the few states in the country that assesses local taxes.

Here’s a look at the various local taxes you and your practice will owe local Ohio municipalities. 

Individual Local Taxes

Not only do your employees remit taxes to the city in which your dental practice is located, so do you if you receive a paycheck. But local tax payments can be rather complex. You see, if you or your employees work at multiple locations, wages need to be allocated based on the time spent in each office. If one of the locations is in a township or another non-taxable location, this allocation becomes even more important so you don’t pay more taxes than you have to.

After you and your employees have paid all of your city taxes based on where you work, you will then reconcile this on your local tax return and possibly pay additional taxes to the city in which you live. Most, but not all, local taxing agencies give you credit for taxes paid where you work. This is good because you don’t have to pay 100 percent taxes to both the city where you live the one where you work. Each residence city tax credit is different based on their own tax rules, so be sure you are getting the credit that you deserve. 

Local Taxes for Your Practice

City taxes are also paid on your dental practice’s profit. If you have profit at the end of the year, the city in which your practice is located may assess taxes. And for those dentists with more than one location, profit will need to be allocated based on four factors:

  • Sales
  • Property
  • Rent
  • Payroll

In order to properly allocate taxes, it is important that you are able to track each of these categories by location.

Any net loss will be allocated based on these same factors and will likely be carried forward. Most cities allow losses to be carried forward for five years, but this also varies by local taxing agency.

Local Tax Enforcement on the Rise

Most cities in Ohio are handled by the Regional Income Tax Agency (RITA) or the Central Collection Agency (CCA), but some cities and villages assess and collect the taxes themselves. In the past five years, the local taxing agencies have become very aggressive with sending tax notices at any chance they get. 

Contact Our Dental Practice Professionals

If you receive a tax notice, be sure to contact Rea & Associates before paying the balance. Our team of bright dental CPAs will review your taxes to ensure payment is actually due. Oftentimes it may just require additional documentation in lieu of payment. You pay enough taxes as it is, so don’t get stuck paying more than you need to our local taxing agencies.

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What To Consider When Purchasing A Dental Practice

Purchasing a Dental PracticeCongratulations! You’re at a point in your dental career where you’ve decided to purchase a dental practice. This is a big, exciting step for you, but you may also find it a bit daunting and overwhelming. And that’s very understandable. You may have a lot running through your mind, but take a step back and consider first things first.

Setting Dental Practice Goals

Before you even start to look at dental practices to purchase, you should sit down and list out goals. What do you envision for your dental practice? What do you want your dental practice to become? Here’s a list of some items to consider when setting your goals:

  • What size of practice do you want? Do you want a large client base, or a small client base?
  • How much revenue do you want/need to bring in?
  • What kind of patient demographics do you want to serve?
  • How large of staff would you like to start out with?
  • Where do you want your dental practice to be located?
  • Do you want state-of-the-art equipment in your practice, or would you settle for less modern equipment?
  • How flexible do you want your schedule to be?
  • How long do you plan to own your practice?

Once you have a clear vision and understanding of what you want your dental practice to look like, you’ll have a better idea of what you need to consider as you select your dental practice.

Three Key Considerations When Purchasing a Dental Practice

Of course, you want to find a practice that is successful, thriving and has long-lasting vitality. But there are a few other areas you should consider as well. Consider the following:

1.) What is the dental practice’s profit margin?

You may be asking yourself, “What is profit margin?” It’s probably not something your professors covered in dental school. Profit margin is a way you can measure the profitability of a company. In this instance, you should figure out what the practice’s net profit divided by its revenue is, and multiply by 100 to get a percentage. This calculation will provide you with the practice’s profit margin. The better the profit margin a practice has, the better you’ll be able to manage the practice’s debt and provide for you and your family.

2.) Where is the dental practice located?

If a dental practice is in the middle of nowhere, but your goal is to have a large client base, you might not want to consider purchasing it. Likewise, you might not want to purchase a dental practice located in the heart of a thriving metropolis if you want a small client base. A good way to get a solid picture of a dental practice’s location is to have a demographic study conducted. This will provide you with statistics that you can use when comparing multiple dental practices.

3.) What is the size of the patient base?

If your goal is to maintain a large client base at your dental practice, then purchasing a dental practice with a small client base might not be the best approach. At the heart of this consideration is the amount of revenue you need to bring in. The smaller a client base, the less revenue you will bring in. Depending on your revenue goals, the size of the patient base can be critical.

Dental Practice Business Help 

Purchasing a dental practice is a huge undertaking, and can be quite a challenge. It can also be a very rewarding experience. Don’t go it alone. Contact Rea & Associates. Our team of Dental CPAs has helped many clients in purchasing dental practices, and we’d love to help you realize your dreams of owning your own practice.

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