06 Sep Start Prepping for 2017 Taxes: Deduction Opportunities Every Dental Professional Needs to Know About
By: Erik Neilson
Ah, taxes. They’re enough to cause a great deal of anxiety for dental practices of all shapes and sizes, especially when crunch time arrives. It may not be April, the time to focus on 2017 taxes for your practice will be here before you know it. One area where many practices suffer when it comes to tax preparation is deductions, which can actually make all the difference in the world when it comes to your tax bill.
It might seem early to start thinking about the coming tax season, but now is actually the perfect time to start tracking things that could lead to potential tax breaks. Here are a handful of deduction opportunities that every dental professional needs to know about, all of which can help to lower your bill for 2017 taxes.
1. Rethink Your Business Entity
If there’s one major reason why dental practices miss out on the chance to save on their taxes each year, it’s because they aren’t operating under the right business entity. This is a common issue due primarily to the fact that choosing the right entity to operate under can actually be very challenging and confusing. Most dental practices are listed as “C” corporations, though it may be more beneficial to operate as an “S” corporation, which can help to cut down on taxable income. For best results, work with a reputable accountant to determine which type of business entity is right for your practice.
2. Start Making Big Investments
One of the biggest concerns that practice managers face themselves with is sticking to a tight budget. After all, dental equipment is costly to say the very least, but what if this was actually a good thing? With Section 179, the IRS has actually made it very simple to write off a certain amount of costs for equipment purchased each year, which is especially lucrative if you haven’t had to borrow money to make these purchases. You’ll want to be careful with the purchases you make, but don’t just assume that you can’t afford it when doing so may actually help to reduce your tax bill next April.
3. Don’t Overlook Smaller Expenditures
While large investments typically take center stage when it comes to tax deductions, this should never overlook the importance of writing off smaller expenditures. You may not realize it, but a great deal of purchases that are necessary for day-to-day operations can be considered deduction material. Take, for example, uniforms for your employees, coffee for the break room and every other small detail you can conjure up that is necessary for operating at peak capacity. As these are all going toward supporting the success of your practice, the vast majority of smaller expenses will qualify as tax write-offs.
4. Accelerate Your Deductions
Believe it or not, one of the smartest decisions you can make before 2017 comes to a close when it comes to finding valuable deductions is to spend as much money as possible on certain business needs. 2018 will be here before you know it, and you’re no doubt going to incur costs for supplies, labs etc. If you can get these out of the way before the new year sets in, however, you’ll be able to take advantage of tax deductions that come as a result of the overall costs. It’s the kind of thing that many people simply don’t think about, yet it can make all the difference in the world when it comes to your tax bill.
5. Consider the Disabled Access Tax Credit
If you haven’t heard of what’s called the “Disabled Access Tax Credit,” you can rest assured that you’re not alone. This being said, it’s one of the best ways to help cut your tax bill down, and one that you may be overlooking entirely. This is a credit to the tune of $5,000, which can be utilized toward costs incurred for building expansions like new hallways, ramps that can be used for wheelchair access, handicapped bathrooms and even things like new carpeting or a newly paved parking lot. Chances are you’ve already incorporated one or more of these features into your practice, in which case you’d be missing out by not claiming this credit.
Dealing with taxes can be a tricky scenario for dental practices, but it doesn’t have to be if you learn how to take advantage of common deductions such as those mentioned above. Take the right steps and start early—you’ll no doubt thank yourself for putting in the effort.
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