Even with years of experience under your belt, tax season can throw you some financial curveballs.
During this busy time of the year, many dental offices also fall into the trap of holding off until the last minute to begin tax preparation in earnest.
As deadlines approach and the calendar flips, there are some easy-to-follow strategies dental practices can put to use for a stress-free and easy-sailing tax season.
This tax roadmap outlines some do’s and don’ts that can set your practice up for success in 2022 and for years to come.
Get familiarized with new tax laws
The tax season can be full of surprises with all the changing laws that go into effect.
Dental practice managers should get familiarized and up to date with the new laws lest they miss out on write-offs or mistakenly file with invalid ones.
It’s best for managers to work with a CPA who is caught up with industry norms and the ever-changing tax rules that apply. For instance, dental equipment can be deducted over a span of five years, not seven. For whatever reason, as a common error, some tax professionals assume the write-off period is longer than it actually is. The same error is common with respect to the period of building depreciation, which is 39 years.
So this tax season, make sure everyone is on the same page as it relates to new laws and deductions that are specific to the industry.
Organize pertinent documents
While the rest of the office is in a frenzy, take some time to get organized and prepped for the upcoming tax season as soon as possible.
Payroll reports, paid bills, income statements, balance sheets, bank sheets and other tax-appropriate paperwork will be needed to accurately report the dental practice’s numbers.
Correctly filling out tax forms requires detailed documentation. For well-established practices, the process can be further drawn out, as your office might have experienced from time to time. So get ahead of any possible delay with due diligence.
Dental practices that keep impeccable financial records that are easy to access will have a simpler time. So much so, that many practices will build on this opportune moment to compile best practices that can stretch out the entire year.
Prepare for the unexpected
Brace for possible setbacks this tax season. While it’s not inevitable that this will occur, it’s a good idea to accept that it’s a possibility.
For example, do you know how your practice will respond to a tax audit? As discussed above, having all your paperwork and records in order will let you move quickly and more efficiently.
This might also be a good time to digitize. Safely storing records on a cloud-based platform should be done throughout the year if digitalization is the route the dental office decides to take. As a best practice, dental offices should keep records online for easy access and reference.
Rushing through this tax season prep could result in unfavorable consequences.
Give your practice enough time to prepare for tax filing to avoid any major and costly blunders. Math errors and typos can cause delays. These careless mistakes can easily lead to missed opportunities, missed deductions and raise questions about the practice’s tax paperwork.
Even misspelled names or misidentified business details can cause complications. Most of all, dental practices should triple check all expenses and revenues before handing off their completed forms to the IRS.
Don’t leave CPA to work alone
While your dental practice will furnish all the necessary paperwork to the office’s tax professional, refrain from letting them work alone. It’s important to collaborate throughout the tax process and be as engaged as possible.
Ask questions, answer questions and build a strong working relationship with your CPA to get the most value out of the experience. This time of year is not just about getting the tax form submitted. Tax season is also an opportunity to gain insights into the business’s financial health and to learn as much as possible about the process for future reference.
As noted earlier, getting a head start will put you in the driver’s seat. The extra time will also allow you more thinking time with your colleagues to avoid immediate pitfalls and to plan for the long game.