Dental Practices: How to Avoid an IRS Audit

Most taxpayers will never have to worry about receiving an IRS audit, except for the one percent that do. However, if you’re a dental practice owner and earn a high income, you’re at a greater risk of getting audited by the IRS. Below are the steps you should take now to reduce your IRS auditing risk. Continue reading

Dentist Opening New Practice Needs Bookkeeping Advice

A dentist who was about to open their first dental office approached Only for Dentists for advice. Their original plan was to do all of their monthly accounting and then hire a CPA for the annual returns. They were getting close to their opening date and their anxiety was growing, wondering if it was really worth it to save a little money. They were quoted by a firm for $300 monthly retainer to do everything for them, but weren’t sure if that was reasonable or not.

This is a very exciting time in a dentist’s career. Bassim Michael, dental CPA and founder of Only for Dentists, had the following suggestions for this new dentist. He recommended that if the dentist has the time, is willing to learn how to use QuickBooks and makes sure it is set up correctly, then it is completely fine to try it himself. Investing the time in set up and training from the beginning can help save a lot of time and heartache down the road. Once the file is set up, a CPA should review the file on a quarterly basis to make sure that the books are maintained correctly and to get proper advice and planning. From our experience, if the QuickBooks file is not set up correctly, clean ups could be more costly than if the practice had outsourced that function.

Dealing with a dental CPA can add special value, since their financial and tax knowledge is tailored to a practice’s specific needs.

Please contact us if you need help with your start-up practice’s financials.

Key Tax Provisions of the “Fiscal Cliff”

The bill that congress passed and the president promised he will sign to avoid the dramatic rise in income tax rates AKA as the fiscal cliff will raise taxes on the nation’s highest earners while extending and making permanent most of the Bush era tax cuts. Here is a summary of key tax provisions:

  1. Tax rates for single individuals making $400,000 and married couples making $450,000 will be increased to 39.6% indexed for inflation.
  2. For those taxpayers in the 39.6% bracket, long-term capital gains and qualified dividend tax rates will rise from 15% to 20%.
  3. For all other taxpayers, the Bush tax cuts from 2001 and 2003 will be made permanent.
  4. Phaseouts for itemized deductions and personal exemptions will be reinstated for couples making over $300,000 and single taxpayers making $250,000.
  5. Fixes AMT patch for 2012 and adjusts the exemption amounts permanently.
  6. Code Section 179 asset expensing will be extended at $500,000 for 2013.
  7. Extends 50% bonus depreciation through 2013.
  8. Estate tax rates will rise to 40% but the exemption amount will remain at $5 million per spouse adjusted for inflation.
In addition to the above changes, the new legislation also extends through 2013 the following individual tax benefits: relief from cancellation of debt income for principal residences, deduction for mortgage insurance premiums as interest, election to deduct state and local sales taxes in lieu of income taxes, above the line deduction for qualified education expenses, tax-free distributions from IRA accounts for charitable purposes.

If you have questions about this topic, please feel free to contact us via email or phone, 559-436-8907.