As business owners we understand the struggle to balance income and taxation this is a major element in Dental Financial Planning. How much income should be on payroll as salary versus distribution? What benefits can be pre-tax? How can I pay less taxes and avoid an audit? How much should I put towards my retirement?
Getting the Right Advice
These are all common questions that frankly are often answered online – but the answers are generic, not designed to address the unique needs of an individual.
Imagine this scenario:
Your partner asks what you want to eat for dinner. You aren’t sure, so you do an online search. Tons of options come up that allow you to filter by price or cuisine. There are cuisines that don’t suit your palate, so those are eliminated. There are some that are too far for you to drive, so you eliminate them. Finally, you may have a budget to work with, and therefore limit additional options based on that.
But, what if when you searched for restaurants only one option came up? Basically, that’s what happens when you search for dental financial advice online – it is often one-size-fits all. This is not a practical solution for most dental professionals.
Financial planning for dentists takes into consideration a number of factors, including personal and professional goals and balancing income and taxation in your practice. Being strategic in your dental financial planning takes the knowledge of someone who understands both the financial and dental industry.
An Example of How Dental Financial Planning Works
Dr. Janice Carlson was finding herself owing significant income taxes year after year. Meeting with a dental financial advisor helped her to strategically balance her income to legally reduce taxes owed without triggering an audit. A portion of her income was able to be moved to an owner distribution, while other income was put towards investments and retirement plans.
Every dental investment strategy will be different, and this example isn’t financial advice – it is simply an illustration of how dental financial planning can work. This strategy helped Dr. Carlson to not only reduce her taxes, but also with making investment decisions that would support her long-term goals, both personally and within her dental practice.
The Ultimate Goal of Financial Planning
There is too much to risk in making poor financial decisions when running a dental practice. Guidance and knowledge are the foundation for good decision-making and the ultimate goal for dental financial planning. Sitting down with a dental financial advisor helps you to create the roadmap to the goals you specifically desire.
Personal goals are important, but dentists have the additional need to also manage their practice. This calls for additional understanding on the financial advisor’s part. The health of the dental office and the personal goals of the dentist need to complement each other. This creates overall stability for both. Short and long-term strategies need to be understood and implemented to create a truly balanced plan.
If you are ready to learn more, contact us today to explore your options with financial planning for dentists.