Posted on Jun 9, 2014
Image Credit: © Dreamstime.com
Posted on Jun 9, 2014
A successful dental practical transition requires that you are knowledgeable in many different areas.
For example, you need to know how to sell the practice, how to market the practice, and most importantly, how any tax laws may apply to the dental transition.
Because the sale of a dental practice is typically a significant sum of money, proper knowledge of taxation procedures could end up saving sellers thousands of dollars. However, these savings are dependent on a number of factors, which are also dependent on constantly changing state and federal tax laws. In fact, just 10 years can make a big difference in the market and legislation.
Even if you’ve already sold a practice, no two sales are the same, so an adequate understanding of t tax law is important. For this reason, you will want to make sure you get the best tax advisor for your practice.
However, even before you do this, you can familiarize yourself with tax tips to make sure that you know the basics and are asking the right questions of your advisors. Below we’ve composed some basic advice that you may want to review before approaching and while in talks with, a tax advisor.
Learn about asset allocations. When selling your practice there are multiple tax categories by which your assets will be allocated. The brackets will be different, with some falling under favorable capital gains, and others under standard income. Make sure you understand what this means for your practice, and learn how to get the most appropriate tax return on your assets.
Look at different retirement plans. Depending on whether or not you plan on sticking with the practice for a length of time following the sale, you may be able to use your retirement plan to shelter part of it. Know your intentions after the transaction, and make them clear with your advisor.
Avoid double tax. In the case that you are a corporation (C-corp.) then make sure the sale is structured in a way that as the doctor-shareholder, who has goodwill with the patients, you can attribute all the goodwill to yourself in your individual capacity. If you will be practicing for longer than 10 years, ask your tax adviser about the benefits of transferring to an S-Corp.
Remember that selling your dental practice can be a complicated process, so make sure you always seek advice from a competent tax professional.
Making an informed decision when choosing a consultant will give you a decent return on your investment, as the amount of savings you can generate from their recommendations will largely outweigh the cost of hiring them.