Far from only having a head full of numbers, your professional accountant (CPA) is also a practical thinker and has extensive knowledge about your business. The management of dental practices has its own specific exigencies and regular collaboration between the dentist and his accountant is indispensable to monitor the practice’s performance, optimize systems, prevent risks and take sound decisions. Here are four issues which a dental accountant will often face.
Analyze a Situation and Improve Management
Even if human relations and medical considerations take center stage in a dental practice, the latter is nevertheless a small business subject to laws and accounting and tax regulations. Your practice must be managed as well as possible to generate profits which ensure the continued existence of its activities.
At this level, your accountant’s role is essential:
- He takes care of or supervises the bookkeeping and produces financial statements following strict norms and regulations
- He produces your income tax statements
- He measures performance, analyzes the situation and monitors progress in the results and profitability
- He provides recommendations to his client, who can then take the proper decisions to improve managerial systems for the short and long term and minimize risks. He puts forward solutions adapted to your needs and goals.
- He advises you in your search for financing and investment.
Set Up the Optimal Structure
Since your accountant knows very well his client’s situation, he can recommend the business structure which best fits your current and future needs. His global view of your business allows him to recommend the best solution to simultaneously, minimize taxes, maximize your assets and foresee the sale of the practice or the opportunity to purchase another practice. He takes into consideration personal, family and estate planning. After explaining the advantages and negative points for each option, the accountant makes recommendations to the dentist on his remuneration mode: paying him or herself a salary, receiving dividends, incorporating a business.
Risks of all kinds are always present in a dental practice. There are business, legal, and financial risks; also, chemical, physical and radiological risks which can become costly if not properly managed. Even if Quebec dentists must have liability insurance as provided by the Fonds d’assurance responsabilité professionnelle de l’Ordre des dentistes du Québec (FARPODQ), it might be prudent to have other insurance policies to cover loss of business revenue and other such situations. Dentists may also increase the level of coverage for their civil liability, for example if they are located in a building in which neighbors could suffer serious losses in the event of an equipment malfunction causing water damage
Advise the Dentist at the Time of the Sale of the Dental Practice
The sale of a dental practice must be well prepared. Before seeing a dentist put his practice for sale, his accountant prepares the practice to allow his client to sell under the most advantageous conditions. The accountant will take care of:
- The preparation plan to optimize the sale
- The fiscal optimization
- Having the practice valued by experts
- Marketing the practice
- Analyzing potential buyers’ offers and the quality of these buyers
- Producing and reviewing financial documents required for the sale.
The accountant is the dentist’s strong ally: he monitors the evolution of the dental practice, advises the dentist about it to improve the management and tax situation of the practice. He also advises the dentist when it is time to buy, sell or merge with another practice.