Tax reduction is the result of comprehensive planning. All too often, doctors will make a financial decision primarily for the purpose of reducing taxes. But the tax tail should never wag the dog.
For example, taking 100% section 179 deductions in the year of purchasing new equipment. This will, undoubtedly reduce your tax bill for the current year. If your primary focus is immediate tax minimization, then taking a full 179 deduction would make the most sense. However, there are two reasons why this may not be beneficial, and it depends on context:
1. You’re already in a lower tax bracket this year relative to future years. Therefore, the tax benefit from claiming the 179 deduction is diminished since you’re ALREADY in the lower tax brackets.
2. You financed the purchase and will be paying debt over five years. By taking 100% of the depreciation today through a 179 deduction, you receive virtually no deduction during the years of making the loan payments. This can cause a financial squeeze if you don’t properly manage your cash flows. Any cash outflow that doesn’t provide a tax deduction hurts!
Bottom Line: Good tax planning is couched in a comprehensive understanding of your financial situation.
By understanding your cash flow, your projected level of income, your marginal tax brackets, your 401K goals, your tax basis, and the current tax law, one can tax plan in a much broader, more meaningful way. And since taxes are a significant erosion on wealth accumulation, this level of tax planning is critical
Wes knows what's best for dental practices. He's been doing this for a long time and he sees lots of practices. He can tell me how our practice is doing, and what we can do to increase our productivity. With past CPA's, there were no ideas. It was all coming from me, saying "I think I can do better, but I don't know how." I come in to meet with Wes and he says "You CAN do better, and I know how."
PracticeCFO is in hundreds of dental offices around the country. They know what numbers should look like. They know what percentages of payroll, rent and supplies should be, and they will hold you accountable to those numbers, which will really help you stick to your plan and your path of growth and savings. That is invaluable
Whenever something comes up, whether it's building or practice related and we weren't sure where the numbers would go, PracticeCFO has been instrumental in helping us figure that out. I can't say enough of how important that is - that it goes beyond that initial partnership. They make sure this business marriage works.
When I go home from work, I don't spend a whole lot of time stressing about what my books look like, or how much I owe in taxes. By using PracticeCFO, the burden of keeping track of a lot of the big financial numbers and metrics are taken off my plate.
PracticeCFO helped me develop a plan for the future. I have colleagues that work with other accountants that don't have a plan - they just look at the numbers of the practice and that's it. There's no plan for 10, 20 years from now. But with PracticeCFO, you get that. PracticeCFO makes you feel like you're they're only client.
(In reference to his practice sale) What could've been super stressful, wasn't! When picking John and Wes, it was from word of mouth recommendations and other people's experiences from the past that really did it for me. And it turns out that those recommendations were right on the line.
Wes knows the business side of dentistry. His comprehensive plan will organize your personal and professional finances so you can focus on taking care of patients. Massive ROI.
I can’t say enough good things about everyone at PracticeCFO. Everyone on the team is professional, organized, knowledgeable, helpful and kind. They also respond to emails and phone calls immediately and are always happy to help. They have helped me navigate year-to-year as a business owner. PracticeCFO gives me peace of mind that my business is in good hands.
I love Practice CFO! They have helped me obtain a practice and maintain a practice. They are incredible people who are on top of everything and make owning and running the business portion of a practice easy. They couldn’t be better for my business and my sanity. They have every detail of the business and taxes taken care of where all I have to do is show up and follow their easy steps to success!
Practice CFO has the best tools I’ve seen for personal tax and financial planning in addition to top-tier corporate tax and accounting services. I have been very pleased with the level of quality service. They manage my monthly bookkeeping and accounts payable. It is a great system and saves me a ton of time, and it allows us to have monthly financial statements within a week of month end.