Notice from the U.S. Small Business Administration
We know you are facing challenging times in this current health crisis. The U.S. Small Business Administration is committed to help bring relief to small businesses and nonprofit organizations suffering because of the Coronavirus (COVID-19) pandemic.
On March 27, 2020, President Trump signed into law the CARES Act, which provided additional assistance for small business owners and non-profits, including the opportunity to get up to a $10,000 Advance on an Economic Injury Disaster Loan (EIDL). This Advance may be available even if your EIDL application was declined or is still pending, and will be forgiven.
If you wish to apply for the Advance on your EIDL, please visit www.SBA.gov/Disaster as soon as possible to fill out a new, streamlined application. In order to qualify for the Advance, you need to submit this new application even if you previously submitted an EIDL application. Applying for the Advance will not impact the status or slow your existing application.
Also, we encourage you to subscribe to our email updates via www.SBA.gov/Updates and follow us on Twitter at @SBAgov for the latest news on available SBA resources and services. If you need additional assistance, you can find your local SBA office and resource partners at www.SBA.gov/LocalAssistance. If you have questions, you may also call 1-800-659-2955.
Our Joint Correspondence with the ADA
Dear Schiff Clients,
Happy Monday to all!
I hope each of you are well, and your family is well and your employees are well too!
As all of you know, I have been working with the ADA along with my Academy, the ADCPA, in getting a message out to the 200,000 Dentists in the US. There was a FORBES Magazine Article published this week that contradicted my comments on the ADA webinar this past Friday. That created a lot of confusion for the 10,000 Dentist that were on the podcast. As it turns out, we needed to put together a joint correspondence with the ADA, which is attached, which supports my comments on the ADA Friday webinar. TG!
Important COVID-19 Banking Information
Due to the recent development of COVID-19, your banking information may have changed:
|Affinity Bank||1 day turn around on Lines of Credit (if existing customer) and 3 months deferred payments.|
|Bank of America||Interest only 90 days, must request|
|Bank of America||60 day deferral of payments + line of credit|
|BBVA Compass||60 day deferral of payments + line of credit|
|Chase||60 day deferral of payments or interest only for 60 days + line of credit|
|Citicorp||Currently working on a deferral program on a case by case basis|
|First Citizens||No payments for 60 days (must request), business unsecured loans for up to 24 months with a low fixed interest rate|
|Lendeavor||60 days deferred payments|
|M&T||90 day payment deferral,interest accrues during the 3 months|
|PNC||Interest only 90 days & possible 90 day total deferment|
|PNC||60 day deferment|
|Prosperity Bank||60 day deferral of payments + line of credit|
|South State||Interest only 120 days|
|Wells Fargo||3 month deferment|
|Zion Bank||Review each request, It could be a line of credit, interest only period, or a deferment of P&I for a period of time|
|SBA||Express Loan Payment , limited to 10% of Fee Income , priced at prime 3.25% plus 1% to 3%|
|Student Loans||Will be mandated to come up with a payment deferral program; https://www.sba.gov/funding-programs/disaster-assistance|
Please contact us for more information.
Academy of Dental CPAs | Retire Confidently With a Dental Accountant
There is a saying made famous by Stephen Covey that has stuck with us for years. The saying goes, “begin with the end in mind”. While these words can mean many different things to many different people, to us, they mean that it’s never too early to start planning for your retirement.
As a dentist with your own practice, your eventual retirement requires a great deal more planning than that of the average person. Hiring a dental accountant can reduce your financial waste, helping you to retire sooner with confidence.
If retirement planning feels like it’s still a long way down the road, consider what has to be accomplished in order to ensure success:
- In-depth debt reduction strategies
- A strong practice exit plan (estate planning)
- A retirement funding plan
- Understanding risk management
- And, if necessary, providing for your family.
It’s never too early to start working your way through this list. In fact, its recommended by most accountants that you meet with your advisor at least once a year to report on your progress and make necessary adjustments.
Think of a dental accountant like a financial coach. Among the many services offered, accountants can help you find the right pensions, properties, and business opportunities to invest in while you’re still working. As your revenue starts to increase, they can also help you understand where your money is being spent in order to put you in better financial shape once you’re ready to retire.
When you do retire, an accountant will also help you divvy up your assets while making sure they don’t fall into the wrong hands.
Retirement shouldn’t feel like work. Start building financial peace of mind today with a certified dental accountant. Call our office to get started today.
Tax and Retirement Planning for 2017, by J. Haden Werhan, CPA, PFS
The new year brings with it both good and bad news for dentists as they plan ahead for taxes and retirement. Each year, the IRS announces cost-of-living adjustments (for everything from tax brackets, to the standard deduction, to personal exemptions), various phaseouts, and retirement plan limits. There were few changes from 2015 to 2016, but 2017 is another story, with a significant increase in Social Security tax and a modest bump in certain income limits that may affect your retirement planning.
Retirement Plans for Dentists, by J. Haden Werhan, CPA, PFS
As practice owners, dentists should carefully consider the advantages of establishing an employer-sponsored retirement plan. Generally, you’re allowed a deduction for contributions you make to a retirement plan. In return, however, you’re required to include your employees in the plan, and to give a portion of the contributions you make to those employees who are eligible. Even so, a retirement plan can provide you with a tax-advantaged method to save for your own retirement while providing your employees with a powerful and appreciated benefit, especially in today’s competitive employment market.
Is Taking Your Time Such a Crime?, by J. Haden Werhan, CPA, PFS
You may have heard the Latin expression tempus fugit, which is often translated to “time flies.” A better translation would be “time escapes,” like a fugitive. Either way, time is a fast-moving culprit. If you snooze, you lose, right?
Not so fast. There are also times when it’s best to slow down.
Tax Law Changes, by J. Haden Werhan, CPA/PFS
With the recent tax law changes come opportunities and challenges. Here is a brief analysis as to how this would impact your 2017 planning and insights into 2018 from our financial team at Thomas, Wirig, Doll.
Don’t Overlook Your Section 199 Domestic Production Activities Tax Deduction
If you have CAD/CAM equipment in your practice, you should be sure to calculate your potential section 199 tax deduction. The tax savings could be significant!
The Section 199 deduction (also referred to as the domestic manufacturing deduction, U.S. production activities deduction, and domestic production deduction) is a tax break for businesses that perform domestic manufacturing. It was established by the American Jobs Creation Act of 2004 in an effort to help create jobs, reduce foreign outsourcing, and make domestic manufacturers more competitive.
The deduction was phased in starting in 2004 with a 3% deduction on qualified production activity income, and has now graduated to a 9% deduction as of 2010.
There are three different ways to calculate the deduction:
The Section 861 Method – This method requires that you separate all revenue streams by type, then allocate all expenses by both revenue stream and location of the expense incurred. This would be VERY time consuming for the typical dentist, and would negate much of the benefit of the deduction.
The Small Business Simplified Overall Method – This is the simplest method, but would rarely produce the maximum tax deduction for a dental practice. Under this method, total practice deductions are ratably apportioned between manufacturing revenue and non-manufacturing revenue based the relative ratio to gross receipts. For example, assume a practice has annual collections of $1,000,000 and total expenses of $700,000 for a net income of $300,000. If revenue from manufacturing crowns is $200,000 (20% of collections), then the expenses allocated to manufacturing are $140,000 ($700,000 X 20%). The Qualified Domestic Production Income of $60,000 ($200,000 – $140,000) times 9%, then yields a section 199 deduction of $5,400.
The Simplified Deduction Method – Under this method, the cost of the crowns milled, or items manufactured, must be calculated, but all other expenses can be ratably apportioned using the same percentage calculation in method 2. To calculate the cost of the crowns, you must calculate the portion of W2 wages that should be allocated directly to the time spent deriving that revenue. You also have to calculate the actual direct costs of the crown, or other items manufactured. For example, assume the same practice above. Also assume that they did 200 crowns that were manufactured in house. If the expenses for the ceramic blocks, milling coolant, diamond milling burrs, glaze, stain, cement, etc. totaled $7,500, and the chairside assistant’s W2 wages for the year were $30,000, with 15% of her time spent assisting during those crown procedures, then direct labor costs were $4,500, and total direct manufacturing costs were $12,000 $($7,500 + $4,500). The rest of the practice overhead would be allocated by the same 20% above. This method then yields a section 199 deduction of $10,422. (See the chart that follows)
Since there have been no IRS court cases involving dentists who took the manufacturing deduction, and were challenged, there is no clear guidance or guarantee that this interpretation of the rules would be supported under audit.
But given the broad definition the IRS has been following for other industries, it seems clear that using your PlanScan system to manufacture ceramic crowns, inlays, onlays and veneers would qualify.
I’ve heard from other aggressive dentists that they feel that there are many other potential manufacturing income procedures. They have taken the position that exposing an un-exposed film to X-rays, in order to create a custom image, constitutes manufacturing. Some felt that bending straight wires in to arched wires for ortho treatment constituted manufacturing income.
But when you look back at the original intent of the law, it’s not clear that those activities would have ever been easy to outsource to a foreign supplier, or activities that the dentist wasn’t already doing as part of treatment; whereas investing in CAD/CAM technology, and avoiding the potential of outsourcing to a foreign dental lab clearly align with the intent of the law.
So talk to your tax professional about the activities in your practice that do qualify as manufacturing, but don’t overlook the possible tax savings from section 199.