More than likely you have heard about “Section 179” and the ability to write-off $139,000, how it helps pay for the cost of dental equipment and all the benefits you get. The truth of the matter is that you get this deduction with or without the “Section 179” election. You just don’t get the deduction up front. With tax rates going up in 2013, is it really the right thing to do in 2012? This election is made with the filing of the tax return so you’re not locked into any deduction until you file.
If your tax rates go up, than it may not make sense to accelerate the deduction as illustrated in the example below:
Although this example is simplified, you can see there could be a substantial tax saving by not taking the accelerated deduction. Or you may want to consider placing the equipment into service in 2013, when the Section 179 deduction is scheduled to fall back to $25,000 as illustrated below:
As you can see, doing a little planning before you file your 2012 tax return is a must. With scores of new tax provisions on the horizon and lots of uncertainty looming, constant planning is a necessity. Our tip of the month is to, build your business plan early, look at your options for 2012 along with your 2013-2018 business plan and long-tax projection. Build your road to success by crunching the numbers. We find our clients that sit down and do the planning with us are far more successful than those who don’t. The simple act of building a business plan tends to increase profits by 5%-10%. Those are big numbers that can drop to the bottom line.
Our firm welcomes questions, new clients and any feed-back you would like to provide. Please feel free to contact me at firstname.lastname@example.org or 800-494-4330.
Greig Davis CPA CVA CFE
President of Davis and Davis CPAs, PC
Farmington Hills MI/Raleigh NC
Almost 50 percent of office dental office experience embezzlement. According to the American Institute of Certified Public accountant the average embezzlement in a dental office exceeds $250,000!!! How can that be? It’s simple, lack of business systems, management oversight and most of all OPPORTUNITY.
With the number of transactions, write-offs, patient calls, re-care calls, distractions with financial arrangements and scheduling, the challenges of running a dental office can be overwhelming, especially to the doctor who wants to simply enjoy doing dentistry. The stories are endless, from simple cash theft to complex fraudulent billings. The thieves are out there, they hop from office to office and will do anything to cover their tracks….that includes burning down your dental office.
How do they do it:
- Write-offs – Write offs to patient ledgers and pocket cash (most common and easy to do)
- False refunds – Issuing refunds on employees credit card or writing check to themselves or friend
- Skimming – Taking cash out of draw or reducing deposit
- Lapping – Taking patient money and covering theft with another patients payment (an on-going process)
- Check tampering – Change names or amounts on payees account for thieves benefit
- Credit card fraud – Charging personal items on company credit or debit cards
- Payroll – Padding time, adding fake employees and/or shorting payroll tax deposit
- Billing schemes – Submitting false claims and depositing into non or fake company accounts
- 101+ other way…. Just ask me…ask your peer…
What to do if you suspect embezzlement or fraud:
- Consult with experts (Dental CPA/Attorney – experienced in embezzlement matters)
- Make backup of your data and test/verify backup works
- Verify insurance coverage (fidelity bond limits)
- Obtain proof – That it happened
- Obtain evidence – How and who may have done it
- Examine the subject with proper guidance from an attorney experience in fraud and embezzlement matters
- Turn over to authorities – Prosecute
Tips on How to Avoid Embezzlement and fraud:
- Be sure your employee manual addresses employee theft, your procedures: it includes allowable waivers and has employees agree to audit procedure.
- Get background and credit checks on employees. (Employees with bad credit shouldn’t handle cash)
- Keep accurate and up to date QuickBooks files and review financial statement regularly with your accountant addressing all unexpected variances
- Keep all day sheets, deposit tickets, appointment schedules and EOB’s
- Copy all patient checks daily
- Perform internal/self audits monthly – re-run reports and audit changes and trace selected transactions to patient ledgers, EOB’s and other related documents
- Safeguard checks, bank statements and invoices
- Segregate duties – Have different employees receiving and posting payments
- Limit access to petty cash
- Don’t allow refunds via credit card
- Don’t allow employees access to corporate credit and debit cards
- Limit all work internet access
- Limit employee access to on-line back and credit card accounts
- Examine cleared check and match to QuickBooks (verify payees and endorsement)
- Match day sheets and deposits to QuickBooks
- Set the tone – keep good records and record everything daily – deposit ALL CASH
- Ask questions regarding write-offs and examine supporting documents
- Work closely with your accountant to implement good control system
These are just some of the things to be aware of and to do. Consult with your advisor regularly to implement and revise policies and systems to protect you, your business and your assets.
Greig Davis CPA and the firm of Davis and Davis CPAs, currently works with over 150 dental practices throughout the country on an on-going basis and performs numerous valuation, transition, start-ups and special dental consulting engagements yearly.
Mr. Davis has negotiated and consulted on hundreds of dental transition, valuation and associate agreements. Mr. Davis and the team at Davis and Davis CPAs, are the developers of “Dental RPM” an interactive training seminar that teaches dentists how to read and understand financial information and benchmark their practice and implement successful business strategies – www.dentalrpm.com