As a dental practice owner, chances are that you dread the year-end tax surprises. It’s no secret that with tax season comes anxiety. You may worry whether there would be an unexpected tax bill or refund that may cost you a considerable amount of money, compromising your retirement savings balance in the process. To make sure that you are well-prepared, here are five things that you can do:
1. Create a Safety Net
It is imperative that you establish some sort of a safety net to mitigate the effects of any tax surprises. Although you may have a sufficient amount of money saved up for this particular instance, you still need to set up a good structure for your cash reserve. For this, you should know how to calculate the minimum cash reserve that you should have in place. That being said, it is important to note that the balance will fluctuate. For this reason, you should treat your income in a predictable manner.
2. Establish a Solid Income Structure
Your income structure should be carefully planned. With an unsystematic income structure, you may face massive quarterly tax payments or irregular distributions. These things are what you want to avoid for the sake of your personal or business bank account. By developing an income structure that promotes cash flow, you can be assured that there won’t be unwanted tax surprises.
3. Appraise Your Retirement Plan
There are different types of retirement plans. However, not all of them are the same, and you should be able to evaluate whether or not your current plan is good enough. A retirement plan that is free of commissions with a profit share element is highly recommended. This way, your retirement savings will accumulate over time without unnecessary expenses. Moreover, with a good retirement plan structure, you will save a considerable amount of money through tax savings.
4. Find a Chartered Accountant that is a Dental specialist
Another thing that you can do is to hire a dental-specific accountant. Keep in mind that this Chartered Accountant should have exclusively dental clients. In other words, the Chartered Accountant that has a few dental clients is not going to cut it. A good dental-specific Chartered Accountant should have in-depth knowledge about the dentistry business, be familiar with dental terminology, and be mindful of financial problems that are specific to the industry, as well as be able to form a dental-specific chart of accounts. If you can hire a Chartered Accountant that possess all these things, then you are in good hands.
Taxes are a complicated matter that should be handled with care. If you run a dental practice, you might want to consider hiring a Chartered Accountant who specialises in the industry of dentistry. A competent dental-specific accountant can help with your taxes while making sure that everything runs as smoothly as possible.
The Peloton provides accounting & bookkeeping services for dental practices in the UK. Get in touch today to see how we can help.