Dentaltown July 2021 - 58

For 2021 and 2022,
business meals are now
100% fully deductible
instead of only 50%.
(Make sure you keep
all itemized receipts for
any business meals.)
reason, you should be running travel and auto through
the business.
Meals are another area that has potential for savings.
For 2021 and 2022, business meals are now 100% fully
deductible instead of only 50%. (Make sure you keep all
itemized receipts for any business meals.) Entertainment
expenses, such as tickets to shows or sporting events,
are still not deductible.
If you have children, consider employing and paying
them out of the practice. During the pandemic, some
dentists' children worked in the office taking patients'
temperatures or shuttling them out of cars. Children can
also help around the office by marketing within their sports
or school club or even modeling. Children can earn up to
$12,000 before they're required to pay federal income taxes.
The bottom line is that there are more deductions
out there than just your cellphone and internet. Moving
expenses from your personal accounts to the business,
when justified, can add up and save you a lot in taxes.
Working with a CPA familiar with both the dental and
small business tax landscape can make a big difference.
4
Not taking advantage
of retirement savings
opportunities
Leveraging your business as a vehicle for
retirement savings is an extension of being tax efficient.
As high-income earners, dental practice owners have
the ability to deduct $57,000 for the doctor into a
58 JULY 2021 // dentaltown.com
401(k) plan, and $63,500 if over 50. If the spouse is
working in the practice, there's the potential for another
$19,500, or $26,000 if over 50. With the ability to get
$76,500-$89,500 annually into a 401(k) at a 37% tax
rate, that saves the doctor a significant $28,000-$33,000
each year.
There is a common misconception that it would
cost too much to run your own 401(k), cash balance or
defined benefit plan. I disagree and suggest searching out
a different pension company if you are in this situation.
Not all 401(k) plans are created equal. Ask for a
proposal from a pension administrator based on your
employee census. Many factors determine how much
money you have to give the staff. It is important to
test the proposed plans. One of the hard parts about
retirement plans is that few people understand what
fees they are paying to the TPA, attorney, recordkeeper,
investment advisor, etc.
Additionally, a common question centers around if
extra money should be used to pay off long-term debt
like business loans or home mortgages. With interest
rates at historical lows, instead of paying extra on debt,
it's best to take extra money and save it. If interest rates
are 3% and rate-of-return on an investment is 7%, you
will make more money by saving.
Business ownership, management and personal
finance isn't easy, especially after a year like 2020. But
if you spend more time planning your vacation than
your financial plan, it's likely time for a change.
There were many unknowns thrown at dentists,
making it easy for them to take their eyes off the
fundamentals of their financial plan. The good news
is, it's not too late.
No matter how old you are, if you are still practicing,
you can make a difference. With the help of an adviser,
dentists can look forward to reclaiming efficiencies and
new strategies to make this year the best yet. n
Disclaimer
Cain Watters is a Registered Investment Advisor. Cain Watters only conducts business
in states where it is properly registered or is excluded from registration requirements.
Registration is not an endorsement of the firm by securities regulators and does not
mean the adviser has achieved a specific level of skill or ability. Request Form ADV
Part 2A for a complete description of Cain Watters investment advisory services. Diversification
does not ensure a profit and may not protect against loss in declining markets.
Past performance is not an indicator of future results.

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Dentaltown July 2021

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