Bruce Bryen, CPA, CVA

You have effectively worked to keep your costs as low as they can possibly be. Your ability to use home equity lines at cheap rates have allowed you to save substantial money when borrowing for your practice needs rather than using commercial bank rates and terms for the practice.

The status of an individual working for someone can be that of an independent contractor or an  employee. Sometimes, businesses hire other businesses to perform services and at times, the term “outsourcing” is used. This term describes the transfer of responsibility to others for the performance of the service in question.  It limits the responsibility to the business needing the service and shifts its responsibility to others and away from the enterprise in question needing the service to be completed.

With the economy in the state that it has been and little end in sight to the economic downturn, many dentists have been unable to sell their dental practices under terms similar to what those dentists in the past had been able to do. There was a day when the sale price was paid in full at the settlement table and there were no other segments attached to the transaction.

As 2009 was ending, many dentists were getting calls or were initiating them to their accountants or other financial advisors. Everyone was in a panic, requesting last minute assistance with what may be owed on their federal and state tax obligations for 2009. Others were speaking with their investment advisors hoping to find out what gains or losses they were going to be reporting on their 2009 tax returns and whether or not it was too late to change the results and path of their portfolios.

Many dentists know there are different types of retirement plans available for their dental practices but have been stymied with the contribution levels allocated to the owner or key employees compared to amounts available for the employees.

In many cases, the sale of a dental practice is similar to the sale of a personal residence. Sellers sometimes feel that their practice is worth more to them than the market will pay. This is a similar situation involving the emotions in the sale of a home which will cause the value to be more to the seller than to potential buyers. These same feelings can reflect a higher transition listing price than what the practice will bring.

Changes in Reporting S Corporation Earnings It may have been too good to last. Even though there were many pitfalls regarding the S corporation and how earnings were reported after the dentist’s W-2 compensation, many still used that type of business entity because of the savings in payroll taxes not charged to the dividend portion of the S corporation’s earnings that flowed through to the owners.

Financing in today’s economic environment is incredibly more difficult than before the current financial meltdown. In the past, a reasonable credit score, a passable amount of income and a good concept, such as buying a dental practice, would guarantee a dentist the ability to secure financing at a competitive interest rate with a fair term for the repayment schedule.