Purchasing a Dental Practice: What to Know
Deciding where to buy, how to handle it, and what kind of dental practice to purchase is a crucially important step in the career of a dentist. There are many essential decisions to make and key factors to examine as you search for the perfect dental practice that meets all of your needs.
Research Research Research
Dentists must not rush into a purchase, and need to manage their expectations, understanding that the process will take some time. There is no need to hurry through important steps and be impatient. Buying the right dental practice for you matters more than closing a deal quickly when the first opportunity presents itself.
Location Location Location
Decide on where you would like to live. You’ll end up being a big part of this community, so you’ll want to make sure it’s a good fit. Dentists who involve themselves in community events and organizations are usually successful as they are meeting people and networking all the while. And shortening your community wouldn’t hurt either. When you can avoid the long commute, those hours you might have spent on the road can be paid forward and spent instead with family and friends.
What sort of community is the right fit for you and your family? Do you like the suburbs, or do you want to live in more of a rural community? These choices will dictate how many competitors will be in close proximity. Other issues are whether or not your spouse needs to find work, and the quality of the school system in the area.
Deciding on the Ideal Practice for You
Lay out a working business plan. What size of dental practice do you anticipate? And do be careful to leave room for growth. Do you want to practice general dentistry or do you prefer an expensive practice that focuses on cosmetic dentistry? Do you prefer a five-day-a-week schedule with a long client list? Or do you want a smaller practice, with a slower pace, that will allow you to work fewer hours? Naturally, these decisions will affect your finances and may dictate your level of day-to-day stress too.
Seek a Valuation
Have the business appraised with the help of a certified public accountant or valuation specialist. And prefer a professional that has experience with dental practices. This way you’ll gain a better perspective.
Enlist Support
Just as your business cannot operate without the support of patrons, you’ll never realize your full-potential without the aid of experienced professionals. You’ll have to rely on the expertise of others as your patrons will have to rely on you. Trusted advisors can save you plenty of trouble. Here are some people you might want to have on your side:
- A CPA or accountant with experience advising dentistry practices and other small businesses on remaining tax compliant and reducing tax burdens. You should seek an accountant who can help you develop tax strategies. You will need a cpa to advise you on the best entity structure for your small business (S corporation, C corporation, limited liability company (LLC), professional limited liability company (PLLC), sole proprietor).
- A Bookkeeper that is already well-versed in a small business accounting system like Quickbooks. A certified Quickbooks ProAdvisor means they are certified by by Intuit as knowledgeable with the Quickbooks program.
- Legal counsel to protect your interests and review documents.
- A consultant also may well prove useful in the long run, helping you save money and avoid headaches.
- Right at the beginning, you should establish a relationship with a bank. Getting prequalified, and ready to finance, will help you gain a handle on how to put in a good offer and how much you can afford.
- An insurance representative will assess the value of your business and evaluate risk to see exactly how much coverage you’ll need.
- It never hurts to seek the aid of a mentor or business confidant of some kind, perhaps a veteran dentist who once went through the same process you’re going through now.
- A marketing pro that knows online marketing.
Build a team. Do your research. Dumb luck most likely will not get you there.
Tax CPA John Huddleston is the author of the Self-employment Tax Guide which is a free resource for small business owners and the self employed for tax saving strategies and tax filing requirements. Mr. Huddleston has a law degree and masters in tax law from the University of Washington School of Law. He has been a guest tax expert on the radio. He advises small businesses in the Seattle Bellevue Tacoma & Everett area on various tax and accounting issues. His firm, Huddleston Tax CPAs, also provides tax preparation service, quickbooks consulting, business valuation, general accounting and bookkeeping service. Profile information on CPA John Huddleston and the CPAs employed by Huddleston Tax CPAs is available at the profile tab. Seattle CPA John Huddleston is a frequent publisher of tax saving ideas.
Form 656: Offer in Compromise
Preparing Form 656 and Supporting Documentation in Pursuing an Offer of Compromise of Owed Taxes
An Offer in Compromise (OIC) is a tax debt settlement offer from the Internal revenue service to taxpayers, both individuals and businesses, who are unable to manage their tax debt. There are certain strict criteria that determine eligibility to file for the OIC and if you meet these requirements, you are required to complete Form 656 and submit a whole host of supporting documents to be considered for the offer.
Preparing Form 656 OIC
There are two circumstances in which you’ll meet the requirements to file Form 656. In the first, you’re making a case that paying the full amount of owed taxes will create economic hardship. In the second, you are make the case that there is doubt as to collectiblity.
If you meet the above criteria, here are some considerations for when you begin to complete the Form 656:
• Each person submitting the offer should provide social security numbers.
• You will need to provide the names of both the persons if you are applying for a joint offer for joint liabilities. When you jointly owe a liability and both your partner and you are submitting for an offer, then do so on Form 656, just one form. Now you might owe a liability, such as employment taxes for yourself and hold other liabilities, such as income taxes, with another person. If you are the sole submitter of this form, then you will want to list all liabilities on one of Form 656. In case both of you want to submit this application, then you have to include all tax liabilities on your Form 656 and the other person must show only the joint tax liability on their Form 656.
• You have to supply the appropriate information In each field of the form.
• You’ll need to give the employer identification numbers of all businesses, except corporate concerns, that you own, either wholly or partly.
• If your claim to an Offer in Compromise is based on a Doubt as to Collectability, you need to also furnish a completed Form 433A if you are an individual taxpayer and Form 433B if you are a business taxpayer.
• If your claim to an OIC is based on Effective Tax Administration, then apart from submitting a Form 433A or 433B, you also need to fill out the information in the “Explanation of Circumstances” field. You might include supplementary relevant information on attached sheets together with your social security and employer identification numbers.
• While providing the total amount of your offer, you don’t include a sum that the Internal revenue service owes to you or any of the amounts that you have already paid in taxes.
• All persons submitting the offer should sign the form and give the date. They will also include the titles and names of authorized corporate officers, trustees, Powers of Attorney, and executors where requested.
• Ensure that you mention the name and if it is possible, the address of the Offer in Compromise preparer.
• You may want the IRS to get in touch with a family member, a friend, or some other acquaintance to discuss your case so as to understand your situation better. In that case, you will need to tick the “Yes” box for the “Third Party Designee” field. Additionally, if you want your attorney, CPA, or an enrolled agent to represent your case, you have to complete the 2848 Form and submit it along with your offer. to increase the chances of your offer being accepted. And after you have compiled all the documents for submission, be sure you make hard copies or electronic copies for your personal records. In addition to these documents, you may also submit documents that you think will corroborate your claim for this offer.
Pay Attention to the Details
The application process for an Offer of compromise is complicated. Make sure to spend enough time on Form 656 and provide all supporting documents to increase your chances of gaining approval on the offer.
Startups & Accounting Practices
Best Accounting Practices for Startup Business
When developing a startup business it is very important to think of the bookkeeping groundwork you will set in place at the very beginning of things.
How to Choose a Software Package
Eventually your business could outgrow Excel Spreadsheets, and you’ll have to decide which small business accounting software is most appropriate for you. You may as well anticipate this. That is you might as well plan for success. If you are forward-thinking in your bookkeeping methods, you will not be caught trying to make a difficult transfer of your books from a disorganized bookkeeping method to a new bookkeeping platform.
Certain bookkeeping packages work best for real estate/real property, and there is bookkeeping software that works great for project accounting. While generalized accounting software packages are typically less expensive, and the industry-specific bookkeeping software is often more costly, but industry-specific accounting software could very well save you time and money in time.
Choosing your Method of Accounting
Large corporations will have to follow GAAP, or the Generally Accepted Accounting Principles. Small Businesses, on the other hand, have more liberties in how they track financial records. As the owner of a small business, you might prefer the cash method of accounting,
Some more advanced methods of accounting, such as the accrual method of accounting, may better serve you as your business grows. The accrual method of accounting records expenses and income upon invoice, rather than waiting for cash to change hands. This bookkeeping method provides you a more expansive insight into you finances.
As far as taxes are concerned, if you produce, purchase, or sell merchandise, there are rules as to when you should use the accrual method of accounting.
How to Establish a Budget
A number of the small business bookkeeping software packages allow you to set up a budget, based either on the past year’s records or from scratch. Establishing a budget is imperative since it will establish the standards of performance for your business. Then in time, you should compare your businesses’ performance against the budgeted amounts and then explain the differences. This will convey to you whether or no you can expect to meet your year’s sales goals. This can help you keep your business profitable.
Measuring Your Success
Finally, most small business accounting software packages will permit you to compare your small business’s current-year financial statements to those of the previous years. This anaylsis will help you to see trends in your business. It also provides insight on how you can add to its success.
It is wise to get to the bottom of trends in order to have an accurate picture of your business’s performance and to make wise financial decisions. For example, if your revenue increased by 30-percent for 2011 over that from 2010, but your expenses only increased by 10 percent, this suggests that your business model could be hyper-efficient. Were some revenue items duplicated? Or, if your revenue increased by 10-percent in 2011 over that from 2010, but, to do so, your expenses increased by 30-percent, this suggests some inefficiency in your model. Are you investing in assets with the greatest return on investment? Or, did you forget to record invoices for some services provided during the year?
Offer in Compromise 433b
Form 433-B
If you are ready to attempt offers of compromise with the Internal revenue service, then you’ll need to provide Form 656, Offer in Compromise. When you own a business which is not a sole proprietorship (that is to say, you do not need to report income from this business on Form 1040, Schedule C, Profit or Loss From Business), you must also submit the form 433b, collection information statement for businesses, which is provided in the 656 booklet. Form 433-B will determine the lowest offer you will be able to submit to the irs as a compromise to your outstanding tax debt based on your business expenses, income, assets, and future earning potential. The Internal Revenue Service will only permit offers below this minimum amount if you present evidence of deserving special circumstances.
How to complete form 433b of the 656
Section 1: This section requests basic information, like your EIN, the identity of partners, officers, and LLC members.
Section 2: In section 2, you are to provide business asset information, including: bank accounts, investment accounts, and notes receivable. Also, here you’ll provide information regarding vehicles, equipment, and real estate.
Section 3: In section 3 you are to provide information regarding your business income, such as average gross monthly income (supported by documents).
Section 4: This portion of the 433b aims to find out the business expenses. This form seeks average gross monthly business expenses corroborated by documents from the recent 6-12 months. Yet, again, if you go ahead and supply a profit and loss report for this period, you can relay an average expense amount determined through these data instead.
If you plan to pay off the offer amount within a period of 5 months, follow the formula below.
- [ 48 x Business income in excess of expenses] Total available assets
If you choose to pay the offer beyond a five month period, your base minimum offer increases to the following amount:
- [Business income in excess of expenses x 60] Total assets available
In section 6
In portion 6, you’ll give details for example whether or not your company has filed bankruptcy before, and whether or not your company has whatever other affiliations that might owe money to your company. In this section, you will also be requested to share specifics on whether you’ve unloaded assets at a discount in the past ten years.
You can see more of our offers of compromise guide at
Travel Expense Deductions
It’s imperative for you to plan business trips so that you can gain the maximum deduction. Similar to other costs of doing business, you are able to claim deductions for some business travel costs that you personally incur in order to service clients.
Expenditure that might be considered lavish do not be approved for deduction. You can only deduct business travel expenses if the costs are ordinary in nature and necessary for servicing the customer. Consider the following types of travel expenses are usually deductible:
- Transportation costs incurred while travelling from your personal home to the client site.
- Dry cleaning and laundry expenses occurred during business travel.
- Fuel and other automotive costs you pay while working at the client’s location.
- Meals and hotel costs.
Note also, you cannot incur tax deductible travel expenses for reasons which are personal, but instead you must incur these travel expenses in the process of imparting your services to clients. There isn’t a hard and fast rule on when a travel costs are related to business. And now, as a result of this particular rule, you cannot claim deductions for the expense of your everyday commute between your personal home and the place of work. This is thought of as a personal expense.
You will have to travel a considerable distance to claim a deduction for your travel expenses. During the trip, you have to depart your main worksite. And, you need to travel more than a short distance from your office building to meet with a client. This most often means that you have to travel outside the city where your office is or, for smaller towns, the general greater area. You must also travel for such a amount of time that you’re away from your tax home for longer than an ordinary work day. In general, this will mean that you’ve travelled far enough that you’ll have to pause for a rest or possibly stay overnight.
Do keep in mind, you can’t stay away from your tax home for too long a period, or you might lose the business travel deductions. You can write-off travel expenses while temporarily working away from your tax home. But, when you provide services at a client site for an undetermined period of time, you possibly might not be permitted to claim a travel expenses business deduction. This normally means that you may stay at a customer site and claim business travel expense tax deductions for no more than twelve months. When you can realistically anticipate you will work there for for a period over a year, however, you may no longer claim tax deductions for future expenses of travelling to that worksite.Finally, successfully claiming the travel expense deduction requires recordkeeping. To verify your deduction, you should keep all relevant receipts. And it is helpful to use a log, notebook, or other type of written record to track your expenses.
Additional info on travel expenses and deductions are at www.irs.gov (Travel, Entertainment, Gift and Car Expenses).
Self-Employed and Charity Contributions
Tax Deductible Charitable Contributions and the Small Business
Another chapter in our Self-Employed Tax Guide.
Your business could certainly present first-class characteristics and acquire a tax write-off in one swift movement. Let’s review charitable donations even more.
Goods and servicesA contribution to a second-hand store like Value Village in excess of $250, ought to qualify as a substantial contribution. By obtaining a receipt from the not-for-profit organization you are going to have the supporting documents to acknowledge the receipt of goods and as a result rationalize a tax break. In the event that your small business has a surplus of a product, you could opt to donate the exess merchandise. By doing so, you will then acquire a tax benefit, you’ll clear room for new supply, and demonstrate (that is if you publicize) that your organizations is a giving organization that helps provide for those in need.
Another example would be for services which you deliver to the public. This is an excellent way to perform community service and acquire a tax deduction as well. The United Way and organization like this often have events where low income and indigent folks come to receive, on a large scale, services that they couldn’t afford or have access to. Your small business’s service would classify as a charitable contribution at fair market value and the organization will give you a receipt indicating the value of these services for tax purposes. On your side, this receipt not to mention any of the supplies utilized would be considered write-offs. Please make note that these events foster such a sizable crowd of people that by way of referrals and direct exposure your business could be seen by numerous individuals. Donating scrap materials from finished goods product is another working example. This might be unused fabric. Fair market value rules again apply. To assess the fair market value, think at what price an item may gain in a quick sale.
Cash Contributions
In agreement with internal revenue service regs, a receipt is wanted for any single charitable contribution more than $250 to be able to claim the deduction. This variety of contribution is popular and is easy to maintain. One approach is planned giving. This can be established monthly, quarterly, or annually depending upon your preference. As a small business owner, this is a helpful way to plan your annual charitable deduction and maintain your cashflow reserves, arriving a foreseeable results. These are a few instances of how your business could benefit the community, improve the public’s perception , and acquire a tax break too. Do remember whenever possible, consult your accountant for tips on the Schedule C form as restrictions apply to these kinds of write-offs. The above material can be discovered in PUB 526 and the guidelines for disclosures in Publication 1771.
Form 433a in Offer in Compromise Process
When you initially put in your Offer in Compromise request, you will also present form 433-A. This form is actually what the Irs will use in ascertaining just whether or not you will qualify for an OIC. The 433-A form details disposable income and equity in assets. If it is discovered that you will not be able to pay your tax debt in its entirety, you may well be able to proceed with the OIC appeal.
Personal Information and Employment Information
In Section 1, you are going to provide personal details about your family and yourself. If you are married, information pertaining to your partener should additionally need to be disclosed.
Section 2: In this area, present employer information about yourself plus your husband or wife. In cases where you’re owner of the company, put down “Self” in Section 2, part 4a and then mark the length of time you have been self-employed. You’ll then give the remainder of your self-employment information on another a part of Form 433-A.
Section 3: Other Financial Information
Here you disclose specifics related to any legal proceedings or potential changes in income.
Line 6: If you are implimented in any court action, either as a pursuer or the pursuee, provide the docket details within this line. Do not provide proceedings that have not ended up filed by the court, even if you aim to registering a suit.
In line 8, you are to provide information regarding any expected fall or rise in your income. Best leave unwritten list any abatements that are just only at the point of hypothetics. For instance, if you convey that you’ll be gaining an increase in earnings, the irs might count this in weighing your eligibility for an offer in compromise package, and if the raise never comes to pass, well then you have just been weighed inappropriately. Examples of worth relaying expected increases to disclose are: written in pen notice of a salary increase, newly signed income contracts, hard copy proof of court awards.
Section 4: Personal Asset Information
In section 4, you’ll be requested to recount details about any equity property that you own, account for personal cash–including bank account, credit cards, and real estate specifics, and life insurance policy specifics.
Line 11: Tell of cash you at the moment have in hand on this line. As the total cash you have may fluctuate on a daily basis, report the average amount you usually have in pocket. This will permit you to impart a more genuine description.
Lines 12a and 12b: Use these blanks to list any checking/savings accounts you own. If you exhast the space, give any accounts in addition on an attached piece of paper and fix it to your 433-A. You must provide bank statements to the Irs for each one of the accounts In line 12a & 12b: you will use these lines to disclose savings and checking account details. If you have over two accounts, provide details correlating with the remaining accounts on a page . You will also provide hard copy bank statements for these accounts.The Internal Revenue Service can make sure your entries are the same as your supporting documents.
Then in 13a through 13d, you are going to provide information regarding investments such as stocks, bonds, and retirement accounts. Also provide information about 401ks.
Lines 14a and 14b: List the available credit you have available on any credit card you have got.
Lines 15a through 15g: Life insurance policies with cash value are reported in line number 15. However, do not include any term life policy particulars. The Internal Revenue Service is solely occupied with whole life plans you may have. Whole life insurance plans have cash dollar value and you could have the possibility to borrow on the value, while term life policies have no cash value or borrowing options.
Line 16: Document any assets which you’ve transferred, gave or sold to any individual or business for less than full valuation within the past 10 years. In order to find out if you’ve dropped assets to avoid paying your debts, the IRS asks these questions.
Lines 17a through 17c: Document any real estate you own in these lines. Now if you don’t possess any real estate, you will have to report your home address, as well as the name and address of your landlord. In lines 18a through 18c: offer any transportation assets you possess. This list will have to include, vehicles such as motorcycles and watercrafts and trailers and campers. If any are secured by a loan, you’ll want to reveal those notes in this blank. Look on the web for a tool to establish fair market value.
For lines 19a and 19b, provide the type and calculated sale price of personal effects you own. This includes: furnishings, household goods, charms and jewlrey and collectibles and memorabilia. You are not to report the initially purchased at pricing as the current worth. The price that you should provide will instead reflect a pricing you might set in a garage sale. The Internal Revenue Service will allow a personal exemption at $7,900 for items in this category.
Expense Statement and Monthly Income
On page 4 of the form, is where you are going to find the monthly income and expense statement. Here you should deliver a list of your monthly income and expenses that is cumulative. And if you’re self-employed as a sole proprietor, fill out pages 5 & 6 previous to filling out the statement of income and expenses within page 4.
Income: In this the section for income, tell of gross income – the amount you make in advance of when taxes and other deductions are pulled from your pay checks. Use the aid in the bottom margin directly below the statement form to help you figure out your current monthly gross income based on your pay period. If you collect rental income or you are self-employed, report your net income. Your net income equates to revenue gained subtracted by operation expenses.
Expenses: In this area, write regular monthly expenses (including taxes and deductions withheld.) Note there are collection standards, these are set amounts they could allow for expenses such as food and shelter.God see the irs.gov web-site for full listings related to collection standards.
Pages number 5 and 6: Self-Employment
The self-employed will provide business asset information, including: equiptment, accounts receivable information, and revenue sources. You’ll also report the number of employees you have on your payroll. Submitting Form 433-A
After you’ve went through and completed the 433-A, you’ll want to make certain to enclose docs that back up the statements you have set therein. Common docs include recent bank statements and paystubs, up to date billing statements, and monthly statements and payoff balance information on loan accounts.
You could see more of the Offer In Compromise Guide, go to: Seattle Offer in Compromise
