Owning your own business comes with plenty of challenges and your dental practice is no exception. You want to focus on your patients, not on your finances and taxes. But in order for a business to run smoothly and profitably, you need to make sure that you take tax planning seriously. Tax planning involves lots of different areas and all of them are important to your financial security. Having a CPA for dentists who understands all the intricacies of this specialized type of business is vital.
Inquire About Tax Entity
Whether or not your business's tax entity is correct is one of the most important questions you should be asking your CPA. The tax reform of 2018 made significant changes to business taxation and it might be time to consider if you would be better served by changing your tax entity. It is wise to discuss all the different options sole proprietorship, LLC and C Corporation with your tax professional who knows your business and how the tax laws can work to provide less taxation and more profit.
Section 179(a) of the IRS tax code allows for deductions of up to $1,000,000 ($1,040,000 for 2020) of tangible property that is acquired within a calendar year and put into use that year. It allows for the purchase or lease of equipment to be deducted from your business's gross income. The purpose is to encourage businesses to invest in themselves and it is an often underused option that can provide great benefit to small businesses. While it can also benefit larger business it is mainly intended to help small businesses. This takes the place of using depreciation to deduct the cost of equipment over several years. However, if you purchase more than a million dollars in equipment up to $2.5 million, the amount above is not lost, it can be deducted in subsequent years.
Several other things need to be discussed with your tax planning professional. Can you benefit from the Tax Code 199 20% pass-through income deduction? What is the best option for planning for retirement? Is a 401(k) or a Roth IRA the best option for your particular situation. Delaying taxes is not always the best option. Depending on when your years of higher income will be will determine the best option or combination of options.
A CPA Partner for Dentists
Having a CPA for dentists who understand your particular business is important and at Chandler & Knowles CPA we make knowing the latest information on all the aspects of advanced tax planning a priority. Our tax planning specialists do hours of training to make sure that they are up to date on the latest regulations and tax laws that can affect your business. It is our goal to make sure that your business stays compliant with the law while maximizing the amount of after-tax income your business produces. Contact our team so that we can help you take some of the stress out of owning your own business and allow you to go back to concentrating on dentistry.