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Florida Dental Convention

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DAA Booth - FL Dental 2Join us this week at the Florida Dental Convention.  The show starts today, June 22nd and runs until June 24th at Gaylord Palms Resort.

Over 7,000 dentists are expected to attend.  Stop by and visit us at booth # 1205.

The Dental Accounting Association is a collaborative group of CPA Firms throughout the United States.  Our members provide tax reduction, dental benchmarking and profit coaching services to dentists.  Each firm avoids hourly billing at all costs and provides their services on a fixed fee basis to avoid any billing surprises.

 

Dental Accounting Assoc Heading to FL Dental Convention

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Z - FL Dental ConvThe Dental Accounting Association is making final plans for our trip to the Florida Dental Convention on June 22-24th at Gaylord Palms Resort.

If you are planning to attend, visit booth # 1205. Our booth will be staffed by Peter Freuler and Mark Sizemore.

Peter J Freuler, CPA is Orlando based and services dental practices throughout Central and South Florida.  Mark Sizemore is owner of Sizemore & Associates in Jacksonville.  Sizemore and Associates services dental practices throughout North Florida, Panhandle and Southeast Georgia.

Dental Accounting Assoc members strive to minimize taxes legally and provide dental practices of all types with dental benchmarking and profit coaching.  Each firm avoids hourly billing at all costs.  Our members provide a fixed fee that is understood upfront.

The Florida Dental Convention is expecting over 7,000 dentists to attend.

 

Why Dentists Should NEVER Negotiate Their Own Lease

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Z - Lease NegotiationLearn why dentists should never, ever negotiate their own leases or lease renewals.  The same concept applies to doctors, veterinarians, and medical care professionals.

Property management companies share information just like dentists do in study clubs.  As based on this shared learning, property management operators often insert clauses into your lease agreements that can become time bombs when it comes time to sell the practice.  Hiring an expert like CARR Healthcare Realty avoids this issue.  And, this service is provided at no extra cost to the dentist.  No extra cost at all.

Z - Dan Van EpsWebinar – How Office Leases Impact the Value of Dental Practice

Presenter – Dan Van Eps, Chief Brokerage Officer at CARR Healthcare Realty

Cost – No cost to Dental Accounting Assoc members

Date – June 28th

Dental School Debt – Averages Over $260K

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In dental school you’re taught all you need to become a successful dentist—but what you don’t learn is how to effectively handle your dental school debt.

According to a recent survey of dental school seniors by the American Student Dental Association, the typical dental school graduate enters the profession with a student loan burden topping $260,000. That’s $70,000 more than the average med school grad, according to the Association of American Medical Colleges. Right when dentists are ready to hit go on their careers, the reality of repayment presents a hurdle.

Z - Student loan debtThe good news, of course, is that you’ve picked the right profession when it comes to ROEd—the “return on education” you should reap down the road. As a dentist you can expect to earn nearly $7 million over the course of your career, even after repaying all your student loans. So sure, your education was ridiculously expensive—but you’ll likely make that money back, and more.

Still, first things first. At this stage of the game, it’s important to have a plan in place for paying down your debt as efficiently as possible. Getting your finances in order early is especially critical if you anticipate borrowing more money down the road, whether to open your own practice or even to buy a house. Here’s a review of the various student loan payment options available—and how to know which one makes the most sense for you.

Student loan refinancing

For many dental school grads, consolidating a number of student loans into a single loan, and then refinancing the balance at a lower interest rate is the best choice. Consolidation makes it easier to manage your finances: You’ll get one bill each month from a single lender, instead of several bills for varying amounts that are based on different rates.

Z - RefinancingThere are other benefits to loan refinancing, too. Depending on how you structure your loan, the lower interest rate might allow you to pay back your debt faster—and save a substantial amount of money over the life of the loan. You could also choose a term that lowers your monthly payments, leaving more money in your pocket to be used for other things, including building an emergency fund, preparing for your first child, and investing for retirement.

One decision you’ll have to make if you refinance is whether your new loan should have a fixed or variable rate. With a fixed-rate loan, the interest rate stays the same for the life of the loan—which means you’ll pay the same monthly amount until your loan is paid off. With a variable-rate loan, the interest rate you pay on your loan will depend on the rate banks charge to borrow from one another. That rate changes month to month, so you can expect that your payments will change each month too. Borrowers who take out variable-rate loans often start out at a lower rate than they would have with a fixed-rate loan, but they can’t be certain that rate won’t rise in the future.

Income-driven repayment plans and loan forgiveness

If you have federal student loans and your credit history prevents you from refinancing, an alternative is to apply for an income-driven repayment plan. The federal government offers four such plans, each with its own eligibility requirements, but they all set your monthly loan payment at an amount deemed affordable based on your income.

If you qualify for the so-called Income-Based Repayment Plan (IBR Plan), for example, your monthly payment will be limited to 10% or 15% of your discretionary income, depending on the date you first borrowed for school. The repayment period for this plan—and the three others—ranges between 20 and 25 years, and any remaining loan balance after that term is up is automatically forgiven.

That sounds great, until you consider this: There’s a chance you’ll pay back your loan in full before those 25 years are up. In addition, the interest you’ll pay over the life of that loan may be higher than it would have been had you refinanced over a shorter term. And, even if you do have a remaining balance when the plan ends, the forgiven amount may be considered taxable income under Internal Revenue Service (IRS) rules. The math might work out in your favor, but it’s worth a close look before you commit.

There is another path to dental school loan forgiveness—if you start your career at an eligible nonprofit or public service agency. Work for a local, state, tribal, or federal government organization, or for a nonprofit organization offering public-sector services, and you may be eligible for loan forgiveness after just 10 years in an income-driven repayment plan. Even better, you won’t owe federal taxes on your remaining balance. There are also a number of national (including military) and state loan-repayment assistance programs that reward dentists for providing service to certain segments of the population. The Indian Health Service Loan Repayment Program, for example, offers dentists who serve American Indian communities $20,000 per year toward the repayment of school loans.

The choice is yours

Should you consider refinancing, remember this: SoFi members who refinance their student loans save an average of more than $22,000. Add to that the fact that when you refinance with SoFi there are no origination fees and no prepayment penalties, you could potentially be saving quite a bit of money.

No matter how you decide to tackle your dental school debt, remember you’re only at the beginning of your career. Before long, your student loans will be a thing of the past—just a hurdle you had to clear so you could follow your dreams.

Save Thousands on Student Loan Debt 

If this article motivates you to proceed and save thousands, here is a $500 off incentive to refinance with SoFi as well.

 

Source:  This article was written by SoFi and permission granted to reprint.  

 

 

Why An Attorney Cannot Represent Both Sides of a Practice Sale

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Z - Dental Transitions imageMost dentists have very little business interaction with lawyers during their career.  As a result, many of them feel that on those occasions where they do need legal representation, that they can utilize just one attorney even when it involves a transaction with two or more parties who may have adverse interests.  Even some lawyers fail to recognize the inherent conflicts that can arise in what appear to be simple transactions.  Of course, not every transaction requires that each side be represented by an attorney.  For instance, an attorney may ethically represent two dentists when forming a corporation  where they will have equal ownership interests.  By contrast, an attorney should never attempt to represent the buyer and the seller in a dental practice sale, because, whether they know it or not, their goals are in direct conflict with each other.

The following is a brief summary of some of the conflicts that occur in a simple dental practice sale transaction, but by no means is this article intended to cover every conflict that a lawyer should recognize when asked to represent both parties in a transaction.  They include:

  1. Purchase Price. As many as half of all dental practice sales involve no broker, often being sales by the owner to his or her associate.  In many of these instances, the parties will not have the benefit of a detailed broker appraisal and will contact an attorney to do the paperwork.  If the attorney has a substantial background in dental practice sales and knows that the purchase price is significantly above or below the market rate, the attorney should disclose this even though the disclosure is directly adverse to one of the clients.
  1. Tax Issues. The amount that is paid for a dental practice is required to be reported to IRS, and IRS regulations allow the parties to select from a variety of reporting categories that may benefit either the buyer or the seller.  Generally speaking, the seller will want most of the purchase price allocated into goodwill, a category that allows the seller to pay the lower 15% federal capital gains rate on the amount allocated to goodwill.  However, the buyer may only write off this amount over 15 years.  By contrast, the buyer would like a significant amount of the purchase price allocated to supplies, a consulting agreement, and even to accounts receivable, as they can be written off in the first year.  In addition, IRS rules currently allow a $100,000 first year write off on equipment, and any additional amounts allocated to equipment can be written off over 5 years. However, these latter categories subject the seller to ordinary income tax and significantly increase the seller’s tax liability.  At a minimum, the attorney should advise the clients of the significance of these allocation elections, and should try to get the clients to retain qualified CPA’s to separately advise them.
  1. Redo Work. Often, a retiring dentist may be moving out of the area and won’t want to be saddled with having to redo bad work.  At times, the seller simply wants to narrow the window during which he or she will be responsible for redoing such work.  By contrast, the buyer has paid a significant price for the dental practice’s goodwill, and wants the selling dentist to redo the work or to pay the buyer to redo it, in order to retain a satisfied patient.  While there is generally a one year statute of limitations on personal injury lawsuits, there is a four year statute for breach of a contract, and most insurance companies will pay for certain procedures no more than once every five years.  How does the lawyer representing both the buyer and seller properly counsel them in this situation?
  1. Covenant Not to Compete. A properly drafted purchase agreement will contain a covenant prohibiting the seller from competing with the buyer post-closing.  California law requires that the radius and the length of the covenant must be reasonable.  The selling dentist may plan on opening another practice in a nearby area and the buyer may feel threatened and insist on a wide covenant radius.  What should the attorney advise his clients, who have conflicting goals?  Frequently, the buyer will seek monetary penalties for violating the covenants, but who should advise the clients on what is reasonable?  Furthermore, if a violation does occur and the buyer seeks a restraining order, one of the prerequisites is that the buyer prove actual damages, which can be very difficult since the seller’s patients generally will not cooperate with the buyer or buyer’s counsel.  A properly drafted covenant would contain a waiver of this requirement, but drafting such a waiver would be adverse to the seller’s interest.
  1. Covenant Not To Treat. In urban areas, most purchase agreements will have a ten mile covenant area in which the seller cannot practice.  The seller may be opening a practice   just outside of this covenant area and will expect that some of the patients will either seek the seller out or will see the seller’s yellow page or other advertisement and transfer to the new office.  Any loss of patients will be harmful to the buyer and the buyer should want to greatly limit the seller’s ability to treat former patients at another location.  While an absolute ban on treating the patients at another location is not enforceable, a prohibition on treating them within certain areas (larger than the covenant not to compete area) is permissible.  How should the attorney advise the respective clients on the subject, particularly if the seller hasn’t even raised it as a possibility?  The attorney has a duty to anticipate situations which in his or her experience may become a problem for one of the clients, and advise them appropriately.  However, this attorney representing both sides is sure to offend the seller, whether or not the seller plans on opening another practice.
  1. Contingencies. Most sellers want a simple transaction that will close quickly.  Most buyers want to have an ample opportunity to review books and records, charts, obtain a satisfactory lease, process and obtain a favorable loan, and have sufficient time in which to do so.  There would typically be a security deposit which would be forfeited to the seller at the end of a contingency period so that the seller “knows” that the deal is likely to close.  The buyer will try to push the contingency dates out as far as possible.  What should the attorney representing both sides of the transaction advise?

Many dentists see dual representation of the buyer and seller as a way of saving money.  Since the interests of the buyer and seller in many instances are diametrically opposed, how can an ethical attorney truly represent both sides of a deal when their best interests may be in direct conflict?

In most cases, the California State Bar limits an attorney where such conflicts exist.  For instance, under California Rules of Professional Conduct, at Rule 3-310, a lawyer is not allowed to accept representation of more than one client in a particular manner where the interests of the clients potentially conflict without the “informed written consent of each client”.  Furthermore, if during the course of representation, it becomes apparent that the interest of the clients actually conflict, the attorney must again obtain an informed, written consent from each client. The key element in this rule is that the client must give an informed, written consent, specifying the nature of the conflict.  However, it is almost impossible for a dentist to give an informed consent when so many different conflicts can arise in a simple dental practice sale.   More importantly, if the attorney isn’t even familiar with the few examples set forth above in this article, how well are the parties interests being represented?

It may seem attractive to a buyer and seller to hire just one attorney in a dental practice sale, particularly when they usually think it’s just a “simple transaction”, or because they are getting along very well during this “courtship”.   However, like so many courtships, differences later develop, and if the purchase document was drafted by one attorney trying to serve two masters, one or both of the masters would likely resent such dual representation when a real problem arises.

Bio

Patrick J. Wood is a partner and Jason P. Wood is an associate in the law firm of Wood and Delgado, and the firm specializes in representing dentists.

Dental CPA’s at AAO Annual

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DAA Picture - 2017Eleven Dental CPA’s traveled to San Diego for the American Association of Orthodontists Annual in beautiful San Diego.  Considering that the AAO Show was just days after tax season concluded, we accomplished lots of ground on ways to improve our back office systems and enhanced marketing techniques.

Future enhancements and shared best practices were free flowing after a long busy season.