Finance32: Dental School’s Missing Curriculum
Finance32: Dental School’s Missing Curriculum
Great clinical skills simply are not enough for dentists to achieve financial success. Let Buckingham Strategic Wealth's Practice Integration Advisors share what else you need to know to realize your lifetime goals and obtain financial peace of mind.
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How Do I Know My Accountant Is Doing a Good Job?

How Do I Know My Accountant Is Doing a Good Job?

11/8/2019 2:00:00 PM   |   Comments: 0   |   Views: 40

Tom Bodin, a Practice Integration Advisor with Buckingham Strategic Wealth, works with dentists to help them achieve financial freedom through a comprehensive approach to wealth management.

Recently, we tackled year-end tax planning considerations and unpacked some widely held federal income tax myths. Today, I’m going to step back into a broader perspective and encourage you to assess your professional services team, particularly the role of your accountant. As a dental practice owner, you are the CEO of your business. As practice-integrated wealth advisors who focus on dentists as business owners, we or a similar type of financial planner might fill the role of your CFO. The other executive-level professionals you should have on your side are your general counsel (a good attorney) and your controller (a competent accountant).

Over time, we have worked with many accountants to implement our clients’ practice-integrated financial plans. In most cases, the accountant has been a great advocate for the client and a wonderful professional partner. Keep in mind, though, that accountants are not, by definition, tax planners. While some do fulfill this role, the service you hire an accountant for is reactive. Specifically, you hire an accountant to account for what has happened, in the form of tax preparation and filing.

I once knew a family of orthodontists, three doctors spanning three generations. They ran an immensely successful practice with three separate locations. However, these dentists tended to take far more than necessary in W-2 income, their single S-Corp structure limited their financial flexibility, and their cash flow was solid enough to support adding a defined benefit pension plan. In total, between decreasing FICA tax, increasing tax deferral opportunities, and providing more equitable distribution via a multi-S-Corp structure, they found they could save $200,000 a year in taxes. Implementing these solutions required partnering with an accountant, so we reached out to theirs with a detailed plan and next steps. Months passed with no reply to repeated follow-ups, even though the doctors were eager to begin. When he did finally respond, the accountant bemoaned the future work he would have to do and the additional tax preparation that would be involved. He expressed doubt about the practice’s ability to navigate a more complex structure. His laziness essentially cost these dentists significant money.

While our dentists’ experience may be relatively rare, it does offer a lesson. To that end, the following are some signs you should look for to determine whether your accountant is doing a good job.

Your accountant answers your questions directly. Often, highly productive dentists have higher case acceptance rates due to their ability to explain, in plain language, the procedures they believe are necessary and how they will tie into the patient’s desired outcome. Your accountant should be equally as adept at cutting through the jargon when responding to your questions.

Your accountant understands your tolerance for accounting risk. Some accountants are very aggressive and put clients’ tax outcomes at risk by going beyond the grey. Other accountants are very conservative and don’t seek to maximize clients’ deductions through an abundance of caution. As a business owner, you often have more tax scenarios in the grey area of tax law than a traditional taxpayer. Your accountant should understand your tolerance for risk and advise accordingly.

Your accountant explains your financial statements adequately. If your accountant also provides your bookkeeping services, they should have a deep understanding of your chart of accounts and financial statement compilation. If your accountant cannot explain your financial statements to you, you likely should be suspect of their bookkeeping work.

Your accountant returns calls in a timely fashion. Give all accountants a little slack on April 14; you’re not the only one submitting records too close to deadline! But, if it’s outside the busy tax seasons (with their April 15 and Oct. 15 deadlines) and it takes multiple calls to reach your accountant or they regularly don’t return your calls, they likely are not invested in your tax outcomes.

Your accountant plays well with others. You are the CEO of your small business, and your accountant should be a member of your overall professional services team. Dentists who have professional services teams that are willing to engage and coordinate with each other will enjoy the benefits of thought-out solutions and spending less time playing messenger. If your accountant is unwilling to listen to and engage the other members of your professional services team, you may not receive the optimal financial outcome.

A good accountant is a partner in your financial goals and role as a business owner. A bonus to these qualities is an accountant who has a deep understanding of the dental market. If you’re looking for an accountant, the Academy of Dental CPAs is a great resource. Also, seek referrals from colleagues. And, like you would with any position on your practice’s team, interview several and ensure a good fit. Our Practice Integration Advisors are also available to assist you in this search based on your needs and location.

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