4 Things You Need to Do Before Filing Your Practice's Taxes
When tax season comes around, it has many dental accountants working on overdrive. While every new tax year requires one to take a pause and reevaluate things, there are a few things in particular you’ll want to pay close attention to.
Knee-deep in taxes and not sure where to start? Here are four things you need to do before filing.
Before you even think about filling out any paperwork for your practice’s taxes, you owe it to yourself and the business to take a close look at the year’s reporting. This not only allows you the opportunity to see how well the business performed financially at a high level, but you can also ensure that all of the numbers line up the way they’re supposed to rather than running into surprises halfway through preparing your returns. Running reports is vital to the goal-setting process that will help take your practice to the next level in 2018, and it’s prerequisite to filing your taxes.
Understand the New Tax Law
You may or may not be aware that a new tax law is on the horizon that will affect small business owners of all kinds. One thing to know is that the Section 179 deduction small businesses can use for an immediate break on equipment such as computers, vehicles and manufacturing equipment doubles to $1 million this year. For dental practices that purchase expensive diagnostic equipment, the difference this break makes can be enormous. Before moving forward on your taxes, take a moment to learn about how things will be changing in the near future—it’s the best way to stay prepared and on top of things.
Take Advantage of Corporate Tax Breaks
Another thing to note is that corporate tax rates are going to fall from 35% to 20% according to the new bill in 2019. One of the best ways to take advantage of this break is to register your practice as a C Corporation. C Corporations can be publicly traded, Fortune 500 companies, but they can also be small businesses like dental practices. If you haven’t already, it may be wise to change the practice’s business structure to a C Corporation prior to this switch over in 2019.
One of the biggest mistakes small business owners make is overlooking the wealth of business expenses that count as tax deductions. Advertising and promotion costs, car/truck-related expenses, equipment costs, insurance premiums and more can all be listed as expenses to help reduce your tax bill for the year. If it directly impacts the business’s ability to succeed, chances are it counts as a deduction. Be sure to familiarize yourself with how the new tax bill affects certain deductions, however, as changes have been made that should not go overlooked.
Tax season can be stressful, but generally only for those who go into it unprepared. If you have all your ducks in a row, your returns will practically prepare themselves!
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