By Justin Pothoven, CPA, Client Advisor
I joined a dental CPA firm because I wanted to do more than just tax returns – I wanted to help business owners succeed. It turns out, dentists seek out dental CPA firms for pretty much the same reason – they want to make good financial decisions and build thriving businesses. It makes perfect sense that practice owners need help with those things. While dentists receive excellent training on all of the clinical aspects of their profession, they receive little or no education about finances or how to run a business. And yet, in addition to being proficient dentists, practice owners are expected to know how to manage employees, understand tax laws, and be knowledgeable about the factors contributing to a profit & loss statement. Some dentists enjoy learning how to run a business, but most would rather be free to focus on the clinical side of their business, which is what they went to school to learn – how to take good care of their patients.
CPA Firms – General vs. Dental
Dental CPA firms are the perfect solution for dentists because they combine industry experience with a thorough understanding of finance, business and tax laws. The problem with general CPA firms is they work with so many different kinds of businesses, they can never achieve expertise in any one industry. They may be competent at completing tax returns, but that’s really just putting numbers in boxes on a form. They do this for a wide variety of businesses, such as an autobody shop, a hair salon, a plumbing parts business, restaurant and more.
By contrast, a good dental CPA firm knows the dental industry inside and out. We apply that knowledge and expertise to help practice owners meet their financial goals and build successful businesses.
I often meet with prospective clients who are curious about what a dental CPA firm offers. They usually come prepared with a lot of questions they haven’t been able to get answered by their current CPA. I’ll answer all their questions and will usually have some questions for them. One of the first things I ask is what business structure they’re using – are they registered as an LLC, a C-Corp, an S-Corp, or something else? Often, they don’t know, but they should because it affects decisions they make, like how they pay themselves. A lot of practice owners are unsure about how they should pay themselves or how much they should be paid. Sometimes I discover they’ve put themselves or their spouse on payroll even though that doesn’t make sense given the circumstances they’re operating under. The good news is we can change that pretty easily and just making a quick fix like that can save a practice owner thousands of dollars, covering the cost of accounting fees.
Like everyone, Dentists ask their friends for advice when they are unsure what to do. When it comes to managing the accounting and financials for a dental practice, the advice is often wrong. That’s because the friend usually has a totally different set of circumstances, so what works for them, isn’t the right approach for you. Maybe the friend has kids, and you don’t. Maybe they have an aggressive strategy for repaying student debt while your priority is retirement savings. Maybe they are a solo practitioner who wants to stay small while you are looking to grow your practice and buy an office building. Unless your circumstances and goals are the same, what makes sense for a colleague, probably isn’t going to be the right choice for you.
The Art of Accounting
One of the things I like about accounting is also what makes it hard – there’s not too many absolutes. A lot comes down to knowing how a particular business operates. Dental CPAs apply their knowledge of the industry to help practice owners build better businesses. When questions come up, like whether it makes sense to buy a new piece of equipment or increase staff, we have the expertise necessary to help our clients make the best decisions possible.
A general CPA firm doesn’t have the industry knowledge to provide that kind of advice. That’s why I chose to work at a dental CPA firm. I can do more than offer clients a competent tax return. I can help them build a healthy business and achieve their financial goals. To me, that’s a lot more satisfying.
If you’re interested in learning more about how a dental CPA firm can help you, give us a call at Engage Advisors. We’ll answer all your questions, and we’ll probably ask a few of our own. Then we’ll be eager to get to work helping you build a thriving practice.