Attract Top Talent With These Tax-Free Tactics

Offering fringe benefits to your employees can set you apart from your competitors when looking to hire new dental assistants and staff.

Offering fringe benefits to your employees can set you apart from your competitors when looking to hire new dental assistants and staff.

Competition is fierce when it comes to attracting and retaining the top talent for your dental practice and it seems as though dental professionals have no choice by to get creative when it comes to providing their dental staff with a comprehensive benefit package. We’ve seen other companies successfully deploy the tactic of providing their teams with fringe benefits, especially those businesses within the technology sector; and maybe it’s time for practice owners throughout the dental industry to consider this approach.

Read Also: Ten Tips For Growing Your Dental Practice

Have you been considering new ways to increase the quality and quantity of your practice’s talent pool? Fringe benefits like free food, massages, fitness centers and game rooms not only help your practice stand out among other practices in the area, they can be implemented without increasing your tax liability. The following is an overview of Publication 15-B, the Employer’s Tax Guide to Fringe Benefits, which is a helpful tool for owners of dental practices who are looking to learn more about the treatment various kinds of fringe benefits will receive at tax time.

What Is A Fringe Benefit?

Generally speaking, a fringe benefit is a form of payment given to a person in exchange for the performance of services. This benefit can be provided by you (the practice owner) to any person (not necessarily a member of your staff) who is performing services for your office, which means independent contractors and partners, for example, are also eligible to receive fringe benefits.    

Are Fringe Benefits Taxable?

All fringe benefits provided by your business are taxable and must be included in your recipients pay unless the law specifically excludes it. Further guidance on how to determine the taxable inclusion amounts is found in Publication 15-B. That being said, cash, cash equivalents and gift cards are generally considered taxable and are not included on the exclusion list below.

What Types Of Fringe Benefits Are Specifically Excluded And Non-Taxable?

(This is not an extensive list.) 

  • Achievement Awards – Your staff likes being recognized for their length of service or safety achievements. While recognition/awards that take the form cash, cash equivalents and gift certificates are taxable, practice owners can reward the dental practice’s team with tangible personal property under this exclusion. Note: Depending on the type of the award, dollar limits may apply.
  • Athletic Facilities – If you maintain an on-site athletic facility that is exclusively used by your office’s staff, your staff’s spouses and their dependent children, the value of this benefit is not required to be included in your staff’s wages.
  • De Minimis Fringe Benefits – A de Minimis fringe benefits are “perks” that are considered to have very little value – so much so that accounting for a benefit of this size would be considered unreasonable or administratively impractical. Common examples of de Minimis fringe benefits include:
    • Occasional personal use of company copying machine
    • Holiday gifts, with a low market value
    • Occasional tickets to the theater or a sporting event
    • Occasional parties and picnics for your practice’s staff and their guests
  • Employee Discounts – This fringe benefit, while subject to limitations, implies that an employer can offer employees a discount for property or services, as long as it is provided to patients as well.
  • Employer-Provided Cell Phones – Many dental professionals provide cell phones for non-compensatory business reasons. Personal use of an employer provided cell phone is excludable from an staff member’s income.
  • Meals
    • De Minimis meals – Coffee, donuts, soft drinks and meals that help to enable your staff to work for longer periods of time are not taxable. Just remember to know your audience – too much sugar is bad for the teeth!
    • Meals on your business premises – Meals that are provided to you team on your practice’s property, which are made available for convenience (facts and circumstances), are excludable. 

NOTE: Expect to see more IRS guidance forthcoming regarding meals as they fine tune the “employer’s convenience” guidance. With all the attention Google and Facebook have garnered for their employee meals the IRS has made meal fringe benefits a priority initiative.

Email a Bright Dental CPA to learn more about what tactics are available to help you attract the talent you need while helping you keep your tax bill down. 

Check out these articles for more tips and tax strategies to help you save extra money at tax time! 

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Dental Tax Preparation To Do’s

As we approach the deadline to file corporate tax returns, you’re probably gathering information to give to your dental CPA. Do you have a list that you always use to help remember what to send? Or do you submit a QuickBooks file and let your CPA deal with everything? Whatever the case may be, here are some tax preparation steps you should take before meeting with your dental CPA.

1) Value your investment. Before you send your documents to your tax preparer, consider the value you get from him or her. Are they asking questions? Are they engaged year-round? Are they responsive? Do they know the dental industry? If you answered “no” to any of those questions, you might want to consider looking elsewhere instead of getting stuck in the “same as last year” routine.

2) Fast in … fast out. The sooner you get the information to your dental CPA, the sooner you will get your return completed. This oftentimes means a tax refund could be in your pocket a lot sooner. Don’t let the IRS hold your money when you could be earning interest on it. Why wait? Get your information in now!   

3) Categorize expenses properly in QuickBooks. Rather than just submitting a QuickBooks file and taking a back seat to everything, be sure you’re categorizing expenses properly, so your CPA can take full advantage of all available tax deductions. Did you know you can fully deduct meals and entertainment expenses that are used for the office? So the next time you have a staff meeting with lunch, be sure not to code this to the traditional meals and entertainment line item. By creating a new category in QuickBooks, your CPA will take the full deduction for the expense, which ultimately puts more money in your pocket. 

4) The forgotten deductions can add up. 

  • Are you paying city taxes on corporate profit?
  • Are you taking mileage or actual auto expense deductions?
  • Do you manufacture your own crowns?
  • Do you entertain referral sources or other business connections on the golf course or at a restaurant?
  • Do you pay for any business expenses personally instead of through the corporate bank account?

If the answer was “yes” to any of those questions, consult with your tax advisor to make sure you are taking full advantage of the tax deductions available for these expenses.

5) Schedule a meeting with your dental CPA.  Instead of getting your completed tax return in the mail and filing it away, try something different this year. Have your accountant walk you through the tax return and also discuss other business issues or concerns you may have.  After all, your accountant should be one of your most trusted business advisors.

Contact Our Dental Practice Professionals

Tax season is upon us. Don’t wait until the last moment to file your corporate tax return. Contact Rea & Associates. Our team of bright dental CPAs can help you get your taxes filed smoothly and ensure you are not missing any deductions for your dental practice.

Ohio Reverses Position on Invisalign

New Ohio Tax Rules InvisalignOhio dentists who use Invisalign invisible braces need to comply with new sales tax procedures. Your practice may need to update tax, accounting and billing procedures to comply with the change. See how your practice might be impacted.

The Ohio Department of Taxation recently changed its position on the sales/use tax treatment of the invisible braces product, Invisalign. This change may have a significant impact on every dentist in Ohio.

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How Sales & Use Taxes Apply to Ohio Dental Practices

dental practice valuation

Sales Tax

As a provider of personal services, a dentist’s services are expressly exempt from sales tax. However, if your practice sells tangible personal property to patients such as mouthwash, whiteners and toothbrushes, or purchases products such as Invisalign or similar products, you must collect sales tax on these items.

To make matters worse, dentists can be consumers of tangible personal property and services as well. Your practice is responsible for paying sales tax on purchases of supplies and equipment as well as items that are consumed when rendering your services, such as crowns, braces, brackets and implants. If the vendor you purchased these items from did not charge sales tax, you must pay use tax to the Ohio Department of Taxation.

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