Regardless of how long you have been in the dental industry, the tax season will be no way considered as “easy.” Wadding the bulk of the year’s tax work into a few days defies all chances of normalcy at the office. The combination of long days, sleepless nights, and stacks of work take a toll on even the most composed dental practice owner.
Fortunately, there are some measures you can take to make the rest of the tax season a more stress-free, fulfilling experience. Yes, it’s normal for jilters to creep up on you when the deadline approaches. But, it is advisable to face everything head-on with a plan as opposed to brushing it off until the last moment and then fumbling to request for tax filing extension.
Quickly, let’s explore what you need to do (and also what you need to avoid) before the tax season is over.
Get everything in order … Pronto!
Your office might be a mess at the moment, but tax season is a good reason to get organized. As you might be aware, you will need to report very specific details in order to fill out your tax forms correctly. The whole process can be quite protracted, mostly if your practice is quite established.
Now, filling your taxes appropriately means reporting your revenues accurately, and that’s an impossible feat to accomplish if your records are a mess. So, before you even think of filling your taxes, make sure vital documents like payroll reports, receipt records, paid bills, income statements, balance sheets bank statements, and tax reporting forms are accessible. The more documents you have ready as at now, the more effortlessly you will be able to meet this fast approaching filing deadline.
Become familiar with new tax laws
Tax laws are continually changing from year to year. An item that you may have been allowed to write-off last year might not be acceptable this year. State laws relating to dental practices also have been revised frequently. When your CPA does not understand the tax rules that oversee your industry, then he or she might get you into a lot of trouble.
For instance, some accountants may still deduct the cost of dental equipment over seven years, which is wrong. Dental equipment is usually deductible over five years. Are you also aware that the depreciation period for your office building is 39 years, though some components of the same structure may be deducted over five years? This is another tax strategy that is frequently disregarded by accountants.
Alternatively, does your accountant know that in house crown-milling procedures are eligible for a special deduction associated with manufacturing activities? A good number of CPAs do not realize that a single visit crowns even exist.
Don’t get caught without prior knowledge of the new laws. We hope your accountant is knowledgeable and can help you a lot with this; however, it is never a bad idea to know these new standards yourself.
Get more info about independent contractors and freelancers
In the current global marketplace, it’s not unusual for dental practices to seek the services of independent contractors or freelancers. And this kind of work arrangement is not ending anytime soon, thanks to the popularity of online interactive platforms like Cloud Dentistry, where dental practices hire dental professionals on an on-demand basis. Thus, if your practice has engaged the services of such people, then you must file the appropriate tax forms.
Whenever they do some work for you, and you get to pay them, it’s advisable always to obtain their most current contact details. Also, request that they file the appropriate tax documents, and get precise information about the job they undertook (such as time, cost, and purpose). With federal and state governments being tough on gig-economy related tax dodges, it’s becoming trickier for some dental practices to utilize the convenience associated with independent contractors.
The labor authorities and IRS will never make allowances for ignorance of the law. So, ultimately, the responsibility to comprehend employment and tax laws related to dental professionals primarily lies with the dental practice owner. The fines for filing wrong taxes are staggering. Repeat offenders are flagged and are subject to increased scrutiny. To protect your practice, get solid tax and legal advice from qualified professionals.
Consider filing taxes electronically
Filing taxes electronically is a perfect option for last-minute filers. The method is not only friendly to the environment, but it is also the fastest way to get a tax refund from the IRS. To expound more on that, those organizations that file taxes electronically receive their refunds earlier as opposed to the protracted duration it may take if processed by mail.
While the IRS will keep on accepting paper tax returns, they are persuading organizations to file online to minimize errors. E-filing guarantees a more accurate tax return since it gets rid of the human error element. Above all, it doesn’t cost you a dime to file online. So, why not give it a try?
It’s unfortunate, but prepare for the worst …
Most of us tend to ignore the fact that anything can go wrong in any situation; that is why it is a conscious thing to remind yourself that setbacks are possible. Do your best, and get ready for anything that the IRS may throw at your table. Like an audit, for instance. Not to say that it will occur to you, but if you were to be audited, it is a good to have all your records and tax documents in order.
You can safely store your tax records electronically via document storing apps, such as Google Docs, Dropbox, and OneDrive. Keeping records of your dental practice’s transactions should be a routine, and not only done during the tax season.
All that we are trying to say is, instead of assuming all will go as planned, you are much better off imagining that issues may come up. And setting aside time to deal with those issues during the tax season, is not a bad thing to do.
Consider filing for an extension if you think you’ll miss the deadline
If you aren’t ready to file taxes before the deadline, you may still get an automatic 6-month extension. It’s free and can be done electronically. You can also ask for an extension by mailing your relevant tax form. Note, partnerships, some corporations, and LLCs use tax form 7004 when requesting for an extension. Remember, if you opt to seek for extension, you will still pay the necessary taxes by the April deadline.
Don’t rush or else, you will leave room for errors
With the tax season deadline looming, it is tempting to dash through preparation; however, that can be a costly blunder. Rushing usually leads to math errors and typos that may delay your return, missing deductions, or even increase the possibility of your return being picked for audit.
Keenly check your return, including how you have spelled your names. Also, check if all the business identification details are correct. Lastly, double-check that all expenses and revenues are accurately included. If you notice an error, you have time to rectify it before filing.
Avoid using last year’s numbers
There is a good reason why you are needed to file taxes annually. Things change. Might be your practice has acquired additional equipment, or even hired more employees. Bottom line: it’s not advisable to just use the numbers you used on your 2017 or 2018 tax return. Doing so might delay your tax refund.
Don’t leave your CPA hanging
Simply because you engaged an accounting professional doesn’t mean you should leave him/her alone to the assignment. A good accountant will let you pose questions and become a reliable resource for you. With your accountant’s help, you will gain more value than just having your taxes submitted. Also, this is part of the reason why you would wish to get started earlier the following year (or yet do an extension this year). That additional information and insights you get from the accountant guarantee accuracy and maximize the opportunities that may arise in the process.
The tax season shouldn’t worry you: It is part of doing business
Some dental practice owners fear tax season. However, if you have a good accountant and have been devotedly following the IRS rules throughout the year, then you have nothing to worry about. Tax preparation is part of doing business. Indeed, there is no way around it. Therefore, do your best to reduce your taxes and keep growing your practice.