Katie Collins, a Practice Integration Advisor with Buckingham Strategic Wealth, helps dentists order their financial lives and reach financial peace of mind so they can better focus on what truly brings them joy.
One of the professional relationships you’ll most likely have during your career and beyond is with an accountant. Working with a good accountant can potentially save you tens of thousands of tax dollars over the course of your years practicing dentistry and throughout retirement. Good accountants can minimize the stress of paying taxes and filing tax returns. They can also keep stress off your cash flow if they can help you identify a tax liability in advance.
That being said, we are often asked how much a good accountant costs. This can be a hard question to answer. Some broad guidelines, however, may be useful when assessing your accounting relationship. We’ll start with a brief look at the services side of the equation.
First, your accountant is tasked with filing your tax returns. That would include your personal tax return and potentially a corporate return as well. They may also file your personal property tax return.
Second, we recommend having at least one tax planning meeting each fall. Our preference would be to have two such meetings, one around September and one around November/December. This gives you ample time to prepare for any tax liabilities that may be due in April. Or, on the other hand, to stop paying taxes in if you’re overpaid already.
Third, there’s usually a fee if your accountant provides you financials throughout the year (or once a quarter). It’s up to you how much time you want to spend on bookkeeping each month. We highly recommend that you keep your books up to date. It’s imperative, if you’re a business owner, to have up-to-date financials for your practice’s income and expenses. This is how you manage your business.
Overall, we generally have seen the above services cost anywhere from roughly $400 to roughly $1,000 a month (not including any payroll support). Some accountants don’t like setting a monthly fee because they are unsure of the time commitment and don’t want to undercharge. This can usually be resolved in the engagement letter with wording about special projects or acknowledgement that the monthly fee will be reviewed each year.
Accounting fees are typically deducted as a business expense because so much of the work centers around the dental practice. Developing a good relationship with your accountant isn’t necessarily hard, but it does take setting expectations and communicating regularly. Giving your accountant a heads-up when you purchase a large piece of equipment, see an increase in collections, or have completed any sort of improvement project can make everyone’s life easier and less stressful!
In our next post, my colleague, Tom Bodin, will discuss ways to find that “good” accountant. As always, if there are specific topics you’d like us to tackle here, please send us an email!