Small businesses, including dental practices, strive to maximize their tax savings every year and typically end up scurrying around at the last minute before December 31st, searching for ways to cut their tax bill the following year. The Internal Revenue Service allows tax deductions for dental practices. However, not every practice owner knows the savings they can tap into or how best to plan for those incentives. While the cut-off for tax savings on your 2021 filing has passed, it’s a brand-new year. Therefore, our dental practice consultants share on the blog today tax-saving strategies to focus on in 2022. Start now and lay out a plan on how you will maximize your tax savings this year.
New equipment and technologies
A modern dental office should keep up with new equipment and technologies. We are living in an age of consumer awareness, and patients can tell if you’re using outdated technology and equipment or not. Patients want the most (and best) for their money (or their insurance’s money) and often seek dental practices equipped with some of the latest technologies. Not only do these innovative technologies help make your life easier, but it does so for patients as well. Some technologies or dental practice equipment allow you to streamline procedures or provide more accurate patient diagnostics, meaning favorable treatment outcomes. (This makes patients happier!) Therefore, don’t look at updating equipment or purchasing expensive technology as a budget buster. Instead, focus on your patient’s needs and how these improvements will help you and your team. Plus, the new equipment and technologies that you purchase this year can be tax deductible the following year. Don’t wait until December and rush to buy the equipment you don’t need just for the sake of saving on your taxes. You’ve got time now to plan for these updates and research to find the best fit for your practice.
Purchase or renovate office space
Are you planning to relocate or expand your practice? The money you use to invest in new space, construction of a new building, or to pay a commercial lease is tax-deductible. Perhaps your patient load has increased, and you’re considering an expansion so you can better serve your community. Maybe you’ve been in practice for a couple of decades, and the area’s dynamics have changed, and you want to establish your practice in an up-and-coming part of town. New construction or expansions can take a while to plan and involve a lot of back and forth between the builder, designers, and financial lending institutions (if you’re borrowing money for the project). Therefore, start planning this next step now to be aware of your tax savings before the year-end.
Put your retirement, and health savings account to work for you
Investing in your practice is almost always a good idea. But don’t forget to invest in yourself, too. Contributing to a 401K is an excellent way to take advantage of tax savings. The IRS limits 401K contributions in 2022 to $20,500 for individuals under 60 years of age. However, 60 and over can contribute $27,000. If you do not have a 401K established, an Individual Retirement Account (IRA) may be an option, providing tax savings. However, speak with a trusted tax adviser to determine which retirement path is right for you and your financial needs.
Since you are self-employed, you likely have a high-deductible health insurance plan. If so, a Health Savings Account (HSA) helps by allowing contributions up to $7,200 for families or $3,600 for individuals, tax-free! HSA money can be used for healthcare or medical-related expenses for you, your spouse, or dependents that you claim on your taxes. Contributing the max allowed is advised if you incur a significant amount of medical bills. However, if you are relatively healthy and rarely need care, you may want to consider your average medical care costs by analyzing what you’ve spent in recent years. Remember that unused HSA contributions roll over, and you won’t be penalized if you don’t use your contributions in the same year you contributed to your account. However, speak with a financial advisor if you need further direction on establishing or funding an HSA.
Consider charitable donations
Charitable donations support non-profit organizations, individuals, or families in need and give back to the community. We recommend planning your giving so that you’re fully aware of what to expect for your tax donation. That way, if you need additional tax savings, you can better prepare for your charitable contributions. But don’t just give for the sake of a tax deduction. Consider ways that your giving could help your community or an organization near and dear to you or your team. Perhaps you want to make one sizeable donation at once, or you would like to support multiple causes throughout the year. In either case, you need to know where you stand financially and how your charitable donations could impact your taxes.
Dental Practice Consultants
It’s a new year, which means you’ve already planned your budget for 2022. Therefore, it should make planning your taxes a little easier. We strongly suggest meeting with a tax advisor and financial expert to ensure you maximize your tax savings and better plan for your financial future. Bryant Consultants is a family-owned consulting firm that can help dental practices reach their full potential and more! If you would like to learn more or schedule a complimentary one-hour consultation, please get in touch with Bryant Consultants by calling (877) 768-4799. We provide consultation, training, and coaching virtually or in person. To ensure that you receive the latest updates, please follow us on Facebook and Instagram.
