Financial Planning for Dental Practitioners

Why The Optimal Plan Is so Important

The philosophy and approach we take to financial planning is ever more important to the dental practitioner. Dentists typically have heavy clinical responsibilities, which leaves little time for practice management and much less for keeping up with your financial affairs. As a result, you are left to rely on an array of separate professionals in the financial planning field who don’t communicate with one another, are motivated to sell you products you may not need, and typically don’t offer ongoing support.

The OPtimal Financial Group

The Optimal Plan bridges this gap. We are your advocate – we serve as your financial quarterback where every aspect of your financial plan is engineered, properly implemented, maintained, and we clear our schedules on Friday so that we can take your calls, answer questions and give you the coaching and guidance your profession demands.

With over 200 dental clients spread amongst the states, we have a history of delivering unparalleled results in this niche. Listen to our dental testimonials and get started today with your Optimal Plan.

Tax Mitigation

Comprehensive tax planning for dentists starts with entity structuring. Each entity structure has unique tax attributes that, when properly utilized, allow professionals to control how income is taxed. We fit each entity structure to your financial life and ensure that earned income is taxed in the most favorable manner. We also seek to maximize passive income through your entity structures, which is the most favored form of income for a taxpayer. We structure a compensation formula that mitigates the cost of payroll taxation is compliant with IRS regulations, and, at the same time, allows you to fully fund the recommended retirement plan.

We evaluate the mix of benefits that you are paying for and attempt to structure these costs so that they are paid with pre-tax rather than post-tax dollars. We evaluate the cost to cover your employees through your company-sponsored retirement plan and customize the plan document to your workforce to ensure that the largest possible plan contribution gets allocated to your account. Finally, we coach and mentor you throughout the year to ensure that your tax plan achieves the optimal results.

Dental Transitions

Practice acquisitions and associate buy-ins are some of the most complicated legal and accounting transactions practitioners face. There is a myriad of tax issues accountants must address when representing dentists in a sale or buy-in. Structuring the sale incorrectly or allocating the purchase price improperly can cost a dentist hundreds of thousands of dollars in extra taxes and can ultimately devastate one’s wealth accumulation plan.

The OPtimal Financial Group

Our accounting team has salvaged more wealth for our clients than many can accumulate in a lifetime as a result of our expertise in representing dentists. The legal requirements of a dental transition also require specialized representation.

Our affiliate attorney has represented dentists in over 1,000 transactions, which gives us the breadth of knowledge and expertise to engineer this transaction for you carefully. By integrating the legal and accounting team as part of our core value proposition, we make sure nothing is left on the table or lost during the transition when representing you.

As an added benefit to working with our team of dental specialists, we find systems throughout the country that increase collections and add to practice financial performance. We routinely share these systems with our dental clients.

For many dentists, practice utilization and the elimination of dead chair time is their number one priority. When dental offices are performing at peak utilization, nearly 70 percent of every incremental dollar collected is available for owner compensation. We help our dentists evaluate every aspect of the revenue-generation process, including new patient flow, reactivation programs, case acceptance, internal compensation systems, hygiene performance, and marketing programs.

First and foremost, we advocate maximizing the revenue potential from the existing patient base. The “Treatment Tracker,” “Wow Referral System,” and the hygiene systems from the “Team Training Institute” are all systems that have worked well in this effort across many of the practices we support.

From a new patient perspective, the “Local Search for Dentists” programs work very well in generating new leads from the internet. Learn how we can help you improve your collections through our referral relationships because, as accountants who are constantly reviewing dental financial performance, we know what works!

Many dentists own their dental offices and simply write off the value of the building and improvements over standard useful lives prescribed by the IRS. This is the methodology most accountants are taught to use. Cost segregation is a strategic tax savings tool that offers an alternative to these standard rules.

This methodology allows companies and individuals who have constructed, purchased, expanded, or remodeled any kind of real estate to increase cash flow by dissecting construction costs that are depreciated over 27½ to 39 years. The primary goal of a Cost Segregation Study is to identify those construction costs that can be depreciated over five, seven, and 15 years. These shorter useful lives compare much more favorably to the 39-year period over which dental buildings are depreciated.

As a result, these studies generate immediate cash flow through accelerated depreciation deductions. What’s more, the IRS allows you to go back to the date of acquisition and catch up on all lost deductions, which can provide a large cash flow windfall in the first year of the study.

Using a standard 39-year useful life on a dental building worth $500K results in just under $13K per year in depreciation deductions, which translates into an annual financial benefit of only $4,500 at the highest marginal rate of taxation.

A cost segregation study on this asset has the ability to yield upwards of $50,000 in net cash flow over a 5-year period simply by switching to this methodology. As part of our planning process, we evaluate the financial benefit of performing a cost segregation study and determine the net cash flow you can expect to recover in taxes that have been overpaid.

We teach you how to stop co-mingling your personal credit with your practice credit, which is the single largest mistake most dentists make. We establish a separate credit profile for your practice, which allows you to off-load personal credit to your dental practice, which is tied to an employer identification number, not a social security number.

We show you where to obtain low-interest corporate credit cards. Ultimately, we are able to lower your personal debt utilization ratios, which leads to higher FICO scores and more favorable terms and conditions when it comes time to borrow money either individually or for your practice.

We evaluate the banking relationships for our dentists. Most dentists either rely on lifelong local bank-ing relationships or work with one of the large national banks that have separate practice solution groups. How do you determine if your bank is giving you the best deal? What we have found is that most don’t – at least initially. We act as your advocate by screening potential lenders amongst the hundreds of banks with which we have worked and then select a handful of finalists to whom you may submit a loan package.

We prepare an underwriting package that presents your practice financial information in the strongest possible manner. We normalize your earnings so that the underwriters know exactly how much you are earning from your practice. We accept the commitment letters on your behalf and then, through competitive negotiation, select the lender with the most favorable terms and conditions.

This systematic approach to borrowing has allowed us to drive down the interest rate cost to our clients and to restructure older debt that carries higher rates. Let us review your credit portfolio to determine if this program can lower your costs and increase your personal cash flow!