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Depreciating Dental Equipment for Tax Purposes: What’s Required?

meH3YJR-Z0RopbmPwJc4DfMLDWoo85XWja0IeEI52kMDepreciation is a very complex element of the tax code. It’s best you don’t try to tackle it on your own.

From time to time, you may buy a piece of equipment for your dental practice. This can be anything from a small computer found at the front desk to a large CEREC machine in an exam room. You don’t plan to retire this equipment after using it for a year. Rather, it will be used over a period of years, so you’ll want to depreciate it for tax purposes.

What do you need in order to depreciate a piece of equipment? First, you must own it. If you rent a piece of equipment, you cannot take a depreciation deduction for it. (However, there is a deduction available for rental payments that is recorded on your Schedule C, on another line.)

Second, you have to use it in your dental practice. You can’t claim depreciation on the family computer that you only use in your business part of the time. You can take some depreciation, but the amount you can record in depreciation will be reduced by the percentage you use the computer for personal tasks.

Third, the equipment must have a determinable useful life, which must be longer than one year. In other words, you have to know how long you should be able to use the equipment. The IRS establishes guidelines that determine the expected life of specific pieces of equipment. If you don’t anticipate using it for longer than a year, you should deduct it as another type of expense for the current year.

Finally, you will also need to know the depreciable basis of the property. This is a fancy term for a complicated concept. It’s calculated by taking the amount you paid for the equipment and any parts added to it (to make it run better or last longer), less any casualty losses and any depreciation you had recorded in a prior year.

There will be times when you can’t take depreciation on a piece of equipment. For example, if you bought some equipment and started using it in your dental practice, but then decided it wasn’t what you needed and got rid of it, you can’t take depreciation on it. Or if you made the purchase to upgrade another piece of equipment, or added an addition to your home for a home office, you cannot deduct depreciation for it. You could, however, take depreciation on the value of the upgraded piece of equipment.

There are other issues involved in calculating depreciation. This is a very complex area of the IRS tax code, and we don’t expect you to understand it fully. So if you’re planning a major purchase of equipment for your dental practice, let us help you determine the best way to claim it for tax purposes.

The Benefits of Accepting eCheck Payments for Small Businesses

Small businesses can benefit from accepting eCheck payments in many ways. It’s a good idea to explore the potential value it can bring to your dental practice before dismissing the idea or missing out on something that can add value to your practice for patients, while simultaneously helping your practice become more efficient and productive.

Increased Security

Whether your dental practice handles high dollar checks or multiple checks for small amounts of money each and every week, the need for security is vitally important to protect the financial state of your business, as well as the personal and identifying financial information of your patients.

Electronic checks provide one of the most secure means for accepting payments on the planet today. Your information and that of your customers is protected with 256-bit encryption, public key cryptography and countless other security measures designed to give you and your customers peace of mind.

Greater Efficiency

Small businesses today are always looking for ways to become more efficient. How about the efficiency of eliminating the entire step of delivering checks to the bank day after day? How much time will that save over the course of a year? More importantly, how can your business benefit from faster access to the cash proceeds from customer payments?

Other Benefits of Accepting eChecks in Your Business

Some of the other benefits you might want to keep in mind as you decide whether or not accepting electronic checks or ACH (automated clearing house) payments is the best course of action for your dental practice include the following:

  1. Eliminate paper waste of thousands of checks each year thereby helping to preserve the environment
  2. No need to store checks while waiting delivery to the bank
  3. Offering expanded payment options to customers
  4. Fewer instances of fraud
  5. Lower processing costs
  6. Greater flexibility when selling products from brick and mortar businesses on the World Wide Web

Businesses really appreciate the fact that they no longer need to wait for consumers to actually write checks and mail them in or find themselves at the mercy of a postal service – a process that sometimes results in lost checks in the mail. On the flip side, consumers appreciate the fact that they no longer have to worry with keeping up with bills or making payments on time. Everything is automated for them.

As you can see there are quite a few reasons to take a good, long look at electronic payments and how they can possibly benefit your dental practice as you move your business forward.

Can I Use Email for Communicating with My Dental Accountant?

In the electronic age, it’s easier for many small dental practice owners to conduct business through electronic means of communication, email in particular. While it may be tempting to conduct as much of your business through email as possible, there are inherent risks in doing so.

The biggest risk is significant. That is, the risk that your private, personal and financial information could fall into the wrong hands. If you’re using an accountant for your family taxes, for example, email makes personally identifying information not only about yourself and your spouse vulnerable, but your children too.

What Kind of Information is Available?

  • Social Security Numbers
  • Addresses
  • Dates of Birth
  • Banking Information
  • And more

This information is highly valuable to hackers and identity thieves who will pay premium prices to get their hands on it. They’re not afraid to break a few laws to get that information either.

How Can You Enjoy the Convenience of Email without the Risks?

The Gramm-Leach-Bliley (GLB) Act, protects the non-public personal information (NPI) of consumers. The act provides the Federal Trade Commission with the responsibility of implementing the law. Under that authority, the FTC has created the following rules.

  • Safeguards Rule - As an important rule, it requires the secure transmission, receipt and storage of data containing any NPI at all times that includes passwords, encryption and physical protection. The email platform used should have 256-bit encryption. A 256-bit encryption is more powerful than a 126-bit encryption to protect sensitive information and files communicated through email. Further protection should be afforded in the form of a written information security plan.
  • Privacy Rule – This rule requires businesses to provide privacy statements to anyone engaging with their appraisers directly. The statement must include how NPI is gathered, shared and secured as well as methods consumers might use in order to opt out of that information being shared with outside parties. Emails that contain personal or financial information between yourself and your accountant should always be encrypted in order to safeguard that sensitive information under the GLB Act.

What Does this Mean for Convenience?

One popular and effective method dental practices and other businesses are turning to in order to comply with the rules of standing law, as well as further laws that are anticipated, is through the use of secured client portals.

These portals serve as alternatives to email that hold sensitive client information in a secure online storage area. With portals, accountants can upload information to the portal, which then sends an email to the client letting you know that you have new information waiting for you. You then log in with your password and retrieve the information.

The risks involved in email communications today are simply too big for such vital information. Take precautions to use 256-bit encryption when transmitting sensitive information and files to your dental accountant or use the accountant’s secure portal. Keep this in mind and avoid those risks completely.

What is a Socially Conscious Business?

In the 21st century, dental practices need to understand and incorporate the concept of socially conscious business practices in order to flourish and succeed. Today’s consumer is better informed, more aware and more than willing to put their spending dollars where their conscious is making it imperative that a business show its willingness to promote social conscious business practices as well. In order to do this, dental practices must first understand what being a socially conscious business entails.

Historically, businesses were viewed as secretive, aloof, egocentric conglomerates that were concerned with nothing more than the bottom line. Social changes that took place during the middle to latter part of the 20th century caused even the average consumer to start questioning that business model. People began to realize that true social change must occur at all levels of society – including the corporate level.

From that thinking came a call for transparency in corporate America. Consumers started to care how businesses were run, who they employed and what they did to better their community. That standard of transparency that consumers came to expect continued into the 21st century. In fact, consumers expect even more today. Simply being forthcoming about how your dental practice operates is not enough – today’s consumer wants to see that your practice has a social conscious as well.

Being a socially conscious business does not mean that you need to be a not-for-profit organization.

On the contrary, a socially conscious dental practice is most definitely a for-profit business; however, it is also a business that indirectly promotes and facilitates positive social concepts and changes. This can be accomplished in a variety of ways such as hiring disadvantaged workers, utilizing environmentally conscious materials, donating a share of profits to a worthwhile cause or participating in local organizations that positively impact the community.

Although there is no “one plan fits all” when it comes to turning your dental practice into a socially conscious business, there are some common steps you may be able to take to move your practice in that direction, such as:

  1. Create a philanthropic foundation or trust and designate a percentage of your profits to it.
  2. Spend a day figuring out where your practice can use environmentally friendly materials or supplies and make the change.
  3. Focus on the family by offering flexible scheduling, job sharing or work from home opportunities.
  4. Provide volunteers for an important community project.
  5. Offer employees incentives for living healthy.

With a little creative thought, you can turn your own dental practice into a socially conscious business that promotes positive change and that also appeals to today’s conscientious consumer.

What are Asset Protection Services?

Asset protection services exist to help place your dental practice’s assets in a position where they are all but untouchable by those you do not wish to have access to them. In the world you live in, one that’s rich with dangers and potential financial pitfalls, protecting your dental practice’s assets and wealth is more important than you may realize – whether you have a large sum of assets or not.

What Risks Impact Your Assets?

Most people are surprised to learn about the wide range of risks they face when it comes to securing and protecting assets. These risks include:

  • Unemployment
  • Disability
  • Death
  • Age
  • Health
  • Divorce
  • Retirement
  • Layoffs
  • Injury
  • Medical Expenses
  • Litigation
  • Judgments
  • Legal Expenses

The list goes on and on. There are hundreds of risks, large and small, that place your practice’s assets at risk every day. That’s why it’s so important to consult with a financial planner or dental accountant that has experience providing asset protection services.

How Can You Protect Your Assets Through Asset Protection Services?

First and foremost, consider using asset protection services from a professional experienced in protecting wealth and assets. Asset protection services involve a blend of financial planning and insurance using specialists such as dental CPAs, attorneys, estate planners, insurance experts, financial planners and/or asset protection specialists.

Careful financial planning is the most important thing you can do to protect your practice’s assets now, and in the future. This is putting your head together with a professional who specializes in asset protection services, developing a plan to manage your existing assets, accumulate future assets, minimize risks and sustain growth over time. Important tools in your arsenal for your goals of financial growth and asset protection include insurance, proper planning and attention to detail.

Insurance

There are many types of insurance products on the market today. There is insurance coverage that protects your dental practice’s assets themselves. There is also insurance coverage that protects you from liability in the event that someone is injured by or on one of your assets. There’s even insurance to cover liability related to professional dental services you offer. In other words, there’s a type of insurance for many different contingencies and you should carefully consider which types of insurance serve to best protect your assets today and in the future. Having adequate insurance, however, is an asset protecting contingency that must be covered. Other insurance to consider includes medical insurance, loss of income insurance, life insurance and disability insurance.

Financial Planning

Financial planning includes components designed to reduce your risks, increase the value of your assets and sustain growth as time goes by. It involves estate planning, wealth protection, tax minimization strategies and wealth recommendations to maximize return. It’s important to work with qualified financial planners with specific experience in asset protection services for this critical task.

You want to know that your future is protected and assured. One way to increase that likelihood is by taking steps today to protect your dental practice’s assets and wealth for the long term by considering the use of asset-protection professionals. Life takes unexpected turns all the time. You can rest much easier knowing that you’re covered for most of the contingencies that could ever come your way.

Business Risks with BYOD Workplaces

Creating a BYOD workplace for your dental practice offers some distinct advantages to business in the form of improved employee productivity and engagement. These are not small benefits in today’s workplace.

Unfortunately, it brings its own share of risks to the table as well. These are just a few of the risks you should consider carefully before making the move to a BYOD workplace as they may have a significant impact on your dental practice.

What Could Go Wrong?

Just as you’d be wary of employees who come to work sick with viruses, you should also be wary of employee devices that may be infected with viruses you can’t see. While most software looks for bad things on the outside of the network, it is still vulnerable to dangers within. BYOD policies make it all too easy for employees to unknowingly expose the entire work network to viruses, malware, and more.

Other risks include:

  • Theft of Device
  • Loaning of Device
  • Inadequate Device Security
  • Information Remaining on Devices when Employee Upgrades (or passed along to children)

If these devices fall into malicious hands, the consequences could be devastating for your dental practice in terms of negative financial repercussions and beyond-repair brand reputation damage. This may be particularly detrimental for businesses, like those in the medical, insurance, and financial industries, where a sensitive and personal information data breach could cause undue harm, including identity theft, to the parties involved.

Preventing a Worst Case Scenario

While not all dental practices can accommodate BYOD policies in the workplace, those that do, must have a set of standards for making the transition as seamless and low-risk as possible.

  • Create standards and policies that establish and define how the intellectual property of the business is to be accessed and treated on these devices.
  • Create a plan of action, in writing, for handling the loss, theft, passing, or elimination of employee devices.
  • Audit the program frequently to make sure it’s working in the best interest of the practice.
  • Finally, understand that all businesses aren’t cut out for this specific work perk. Some businesses, such as legal entities, financial services business, medical firms, and insurance firms face huge legal liability risks when bringing mobile phones into the midst.

Before you decide to embrace the benefits of a BYOD workplace solution, make sure you fully expose the risks they represent for your dental practice.

 

Tablet Safety 101 – Making Your Tablet Safer for Public Use

People are relying on tablet devices in their dental practices more and more every day. You use them for work and some for play. Tablets provide users with many of the benefits a laptop delivers, but in a format that’s even easier to take on the go. But, is your practice’s information safe when you use your tablet?

As with most things in life, there are things you can do to make your tablet a safer choice to use for your dental practice or pleasure while on the go.

  • Install anti-virus software for your tablet device. You should only use trusted anti-virus names for this though as some savvy hackers have taken to creating fake anti-virus programs that actually install viruses on your devices.
  • Be cautious when installing apps. Apps are notorious for not safeguarding your privacy.
  • Enable capabilities to remotely wipe your device if it stolen and notify your provider (if applicable) right away if you have not installed those capabilities.
  • Don’t click on advertisements on your tablet. Many ads automatically download viruses onto your device without your notice.
  • Lock your screen when you’re not using your device.
  • Don’t store log-in data on your tablet device. This makes it too easy for people who “find” your tablet to access your passwords, private, and financial information. The harder you make it for them to do, the less likely it becomes that they’ll go to the effort.
  • Backup your data routinely. Some people do this daily. Depending on how often you use your tablet and what kind of data is stored on your tablet, this is a wise move to make.

The Dangers of Public Wi-Fi

Public Wi-Fi connections present very specific dangers to your tablet device. Many hackers disguise themselves as legitimate Wi-Fi connections and hang out in hot spots hoping someone will choose their connection to attempt a logging on. Once you’re connected to their device, bad things can happen. Look for secure Wi-Fi connections and be cautious when using public Wi-Fi.

It’s best to avoid it whenever possible though – especially when using your tablet for your dental practice or personal financial matters. Tablet devices are somewhat risky to use – especially for personal and financial information like reviewing tax returns or balancing your checkbook in public. However, the steps above will make your tablet safer for limited use in public.

Tax Audit Red Flag – Exaggerated Charitable Donations

For the average person, there’s nothing more terrifying than the thought of getting an IRS audit. For some people, it ranks right up there with fears of dentists, flying, and clowns.

This installment of tax audit red flags focuses on charitable donations. No, this is not to say you shouldn’t give to charity. It’s just to remind you that if you aren’t careful in your giving, you could be bringing a little undesired attention upon yourself by the IRS.  Continue reading

What Is the Marriage Penalty?

If you are recently married, you’ll have to contend with a few more issues besides your spouse’s snoring! You’ll also have to deal with new tax choices, including decisions concerning how to file your taxes and whether you will file “married filing jointly” or “married filing separately”.

Combining two spousal income often equates to a higher household taxable income, than it obviously would have if you remained single. In a number of cases, this means more taxes you’ll have to pay, in part, due to the “marriage penalty tax”.

The marriage penalty is caused by our progressive tax structure, which puts the taxpayer in a higher tax bracket as their earnings increase.

Whenever both working spouses have to pay a higher combined, or “joint” tax rate on the identical income than they would be paying had they each been single, that’s generally when the marriage penalty kicks in.

Filing as married filing separately will also vary depending on whether you live in a community or separate property state.

The good news is that not all married couples have to deal with the marriage penalty. In some cases, some married couples pay less taxes together than when they were both single.

If you have any questions about the marriage penalty, please contact Bassim Michael at bmichael@bmichaelcpa.com.