What you can do now to have a smoother tax filing
As we head into another tax season, you’re probably gathering information to give to your dental CPA. Do you have a list that you always use to help remember what to send? Or do you submit a QuickBooks file and let your CPA deal with everything? Whatever the case may be, here are some tax preparation steps and topics you should be ready to discuss with your dental CPA.
- Value your investment. Before you send your documents to your tax preparer, consider the value you get from them. Are they asking questions? Are they engaged year-round? Are they responsive? Do they know the dental industry? If you answered “no” to any of those questions, you might want to consider looking elsewhere instead of getting stuck in the “same as last year” routine.
- Sooner in … Sooner out. The sooner you get the information to your dental CPA, the sooner you will get your return completed. This oftentimes means a tax refund could be in your pocket a lot sooner. Don’t let the IRS hold your money when you could be earning interest on it. Why wait? Get your information in now!
- Categorize expenses properly in QuickBooks. Rather than just submitting a QuickBooks file and taking a back seat to everything, be sure you’re categorizing expenses properly to the best of your ability and ask about expenses you are unsure about, so your CPA can take full advantage of all available tax deductions. As of January 1, 2021, you can fully deduct deduct properly documented business Entertainment is still not deducitble, so Make sure that you have two separate expense accounts your QuickBooks, one for meals and one for entertainment. Your CPA will take the full deduction for the business meal expenses which ultimately puts more money in your pocket.
Also, if you don’t have the time to do the check writing, accounting, bank reconciliations, etc. on a regular basis, consider using your CPA firm to do this for you. With the proper set up time and preparation with your dental CPA’s firm this will take a lot of time off your hands.
- The forgotten deductions can add up. If the answer was “yes” to any of these questions, consult with your tax advisor to make sure you are taking full advantage of the tax deductions available for these expenses.
- Are you paying city taxes on corporate profit to a city that you do not live in?
- Are you taking mileage or actual auto expense deductions?
- Do you pay for any business expenses personally instead of through the corporate bank account, or credit card? Perhaps when you were having dinner with that business referral source, you used your personal credit card by mistake instead of the one for your practice.
- COVID: What article in the past two year could be written without talking about COVID-19. These past few years have not only brought upon us many social and health issues, but also many new sources of funds were made available to businesses. The Payroll Protection Program (PPP) and the Provider Relief Fund from the Department of Health and Human Services (HHS) via the Health Resources and Services Administration (HRSA) are both programs that require you to report how funds were used. The Employee Retention Credit (ERC) is still available for your dental practice. If your practice was shut down by a government order because of COVID, you most likely qualify for the refundable credit.
Meeting with your dental CPA. Income tax planning is a year-round action you should be taking. You should meet with them more than at tax time. In fact, the most critical time of the year that many practices should discuss tax planning, amongst other matters, is in October or November. But, there is still time to do something now. Contact our friends at Rea & Associates. Our team of dental CPAs can help you get your taxes filed smoothly and ensure you are not missing any deductions for your dental practice.