This November, I will celebrate my nineteenth year in the dental arena. It has been a great career and the future looks even better. Let’s face it – dentistry and dentists are more relevant and better respected today than they were when I got started!
We are all lucky to be in the healthcare industry because it is more resilient during challenging economic times than most other industries. Granted, the industry is more complex and challenging now, but it is far more dynamic as well. Think about all the dental related commercials you see on television and on the internet today. Back in 1992, the only dental related commercials I remember were for Oral B Advantage toothbrushes™ and J&J Reach toothbrushes™ and ads for Scope™ and Listerine™ mouthwash.
During my tenure in dental, I have witnessed an industry transition from a primarily need – based regimen to a need/want orientation. Composite fillings and elective services like whitening, indirect restorations, implants and clear braces have forever changed the landscape. In addition to these milestones, the systemic relationship between oral health care and ones well being is more evident today. This systemic link will lead to more diagnostic tools and testing in dentistry as the oral cavity is viewed as the gateway to the body. Lastly, the computerization and integration of advanced technologies into the neighborhood dental facility (digital radiography, magnification devices and the internet) have made dentistry more interactive and efficient.
After almost two decades
You would think I have mastered my job but that’s not true. I learn something every day about the clients I serve, the people I work and interact with or some new, revolutionary product, program or technology. The world and our industry are changing at record speed. We are in the midst of a technological revolution and it is challenging to keep up, especially for us older folk. Let’s face it, the generation that preceded us, had to deal with the flashing lights on the VCR or programming a remote control at worst. We have smart phones, the internet, social media, navigation systems, tons of software programs to learn and the Holy Grail – iPads and Blackberry’s. It’s hard to keep up with it all and the technology does not come cheap!
I take pride in being amongst the best dental resources in the region; however there are times that even a relentless, passionate communicator like me comes up short. This leads me to the next topic of this letter – The section 179 deduction.
When I first entered the dental market in November of 1992, there was much talk about the section 179 deduction. Many people have explained the legislation to me over the years, but I have never been able to adequately explain the history or pros and cons effectively to my clients. Since being introduced to the concept (Sec.179), I have sold over twenty million dollars in high tech and traditional operatory equipment. However, to this day, many of my excellent customers do not fully understand why this incentive/tax avoidance strategy is a good thing.
I think many of my clients see the promotion of section 179 as a gimmick by marketers and there are others who believe it is geared towards big businesses. Additionally, many clients are working with accountants and CPA’s that may not fully understand the ramifications and/or benefits for a private care provider. I know this first hand because a relative of mine (who is a CPA) was not very familiar with the deduction when we talked at a family function. She knew about the section 179 deduction but did not see, until I explained it to her, how acquiring new technology or replacement equipment is far more rewarding than sending the cash over to the IRS. I explained how a small monthly lease payment and a smaller quarterly estimated tax payment [if necessary] is far more palatable than a large quarterly estimated tax payment and nothing to show for it. Since dentists have the burden of acquiring and integrating technology, then why not use the I.R.S. section 179 deduction!
To bring clarity as to why the government created this small business stimulus and why small businesses [dental offices] should take advantage of the deduction, I have asked one of the industries experts to once and for all explain section 179. David J Goodman, CPA, MST is the Managing Partner of Lawrence B Goodman & Co located in Fair Lawn, NJ.
David J Goodman is a founding member of the Academy of Dental CPAs,
What you should know about the Section 179 deduction for equipment purchases?
Because of my extensive work with dentists as a CPA, I was asked to write the ultimate article on the Section 179 deduction for equipment purchases. In order to provide you with the best information you can use to make decisions about your equipment purchases, it is necessary to start with some basic background.
First, it is important to understand tax depreciation. The simple rule is that if you purchase an item for your practice and it has a useful life of more than one year, it is called a capital purchase. The government requires that you take a portion of the cost of the item as a deduction on your tax return each year over the useful life of the item. The useful life is established by the government. Most useful lives of capital purchases for a dental office are between 3 and 15 years.
Section 179 of the federal tax code allows small businesses to expense the entire cost of capital items purchased during the year. The government believes that this type of incentive “will accelerate purchases of equipment, promote capital investment, modernization, and growth, and will help to spur an economic recovery. As businesses accelerate their purchases of equipment current employment will increase to produce that equipment. Current business expansion also will increase employment opportunities in the years ahead.” (H.R. Rep. No. 108-94, at 23)
What does this mean for you and your practice? It means that you could experience significant tax savings by purchasing equipment for your practice and deducting the entire cost in the year that you purchase it. And, if you continue to budget your purchases annually, you can experience significant savings right up until you sell your practice. You are still eligible for the Section 179 deduction if you obtain financing for the purchase instead of paying cash. Some lease arrangements also qualify for the deduction provided that ownership transfers to you at the end of the lease.
For 2010 and 2011 the maximum deduction for qualified purchases under Section 179 is $500,000. There are limitations and other alternatives to the Section 179 deduction. This article is not meant to provide individual tax advice. It is strongly recommended that you speak with a CPA familiar with dental practices or other tax advisor before considering the tax benefits of the purchase. Example: In 2011, you purchase a digital x-ray machine for your office along with some computer hardware. If the total cost is $20,000, you can elect to deduct all of the $20,000 in the year purchased. At a 40% combined tax rate that could be an $8000 tax savings. If you chose the regular useful life method of depreciation, the deduction would be $4000 in the first year and a tax saving of only $1600. With the money you save from taking advantage of the Section 179 deduction, you could use that savings to fund a qualified retirement plan. Funding a retirement plan will generate another tax deduction and help you to prepare for a secure financial future.
David J Goodman, CPA, MST is Managing Partner of Lawrence B Goodman & Co. PA located in Fair Lawn, NJ. As a member of the Academy of Dental CPAs, David provides a unique perspective on dental practices. He can be reached at David@LBGCPAS.com or 201-791-8300.
This unique coupon book produces revenue to support hundreds of thousands of dollars in dentistry to the elderly and handicapped. Your $149 charitable contribution/purchase will provide you with hundreds of dollars in discounts, credits and free merchandise.
Please purchase the book and I will work with you to maximize the benefits!
My goal is to have at least 25% of my clients engaged on this very important initiative. It’s a nice thing to do and is also a tax write off! Please call me to order your coupon book!
Ordering on line
“There are many advantages to ordering online for your dental office.” Besides the obvious time savings and elimination of ordering errors, there are other perks like automatic redemptions, free goods, access to all your invoices and AR report (web only), new product announcements, alternative choices/price comparison, relevant clinical/practice management articles (web only), exclusive merchandise specials and of course Privilege Points!. Here are step by step directions to the Henry Schein Dental ordering site.
- www.henryschein.com/dental or www.henryscheindental.com
- choose link to create online account
- choose country, then hit continue
- Schein Account Number ( JDE #, yours in 1234567) with zip code, hit continue
- Verify information, hit continue
- Make your own user ID (make it unique) for example use first initial, last name and maybe some numbers. Select a password and then hit submit. This will log you in for the first time.
*If you have general questions about the web site or ordering on Aruba, you can contact the Henry Schein E-commerce department at 800-711-6032.
Watson Wins Jeopardy
What does that mean to you and me?
Watson represents the future of computing and is a significant leap regarding a machine’s ability to understand context in human language. As IBM has said on several occasions, the goal was not to create a self-aware super computer that can run amok such as HAL 9000 from 2001: A Space Odyssey or Skynet from The Terminator. But a question and answer machine like the ship computer in Star Trek: The Next Generation.
Voice-activated or not, IBM believes the technology behind Watson can be applied to a variety of fields, most notably medicine. The company has announced a joint project with Columbia University and the University of Maryland to create a cybernetic physician’s assistant using Watson’s technology, according to The New York Times . IBM will also work with Nuance Communications to include voice recognition for the new medical project–a feature that could be ready before the end of 2012.
“When the going gets tough, the tough get going”.
This quote is credited to Joseph P. Kennedy (1888-1969), US politician, businessman, and father of President John F. Kennedy.
The last two years have been challenging. The truth is that some businesses got hit hard, some people got hurt and the business environment is more competitive today than ever before. Fortunately for all of us in healthcare, the business is not gone. The industry did not go abroad and the services that we provide did not go out of vogue.
On any given day you can read about or hear about some inspiring news regarding an important economic indicator. For a second you think to yourself, “We are in a recovery”. Then you turn the page or the next feature story comes on the television and it’s about the Middle East turbulence. Then reality sets in and you fear that higher fuel costs will slow the recovery. The challenges of running your practice or any business are complex especially at this time. Your office may be experiencing a lighter schedule, patients may be exhibiting more discretion and your operating costs are still rising. It is an emotional roller coaster for any business owner.
During the last four weeks, while working at home, I have read scores of articles and have participated in webinars regarding our industry and the U.S. economy. I have watched hours of financial, political and business related talk shows and I have come to this conclusion.
The only credible advice for all companies, large and small, is to become more efficient, more effective and to execute better!
Evaluate your resources and opportunities and make sure your talent and resources are being used effectively. In some cases, you may need to re-direct or re-focus your efforts on that which matters most.
Train your team and execute better. Work on new patient acquisition. Evaluate what you are doing now to get new patients and improve your efforts. Shoot for one more whitening case a week and price it so you will increase your case acceptance. Remember – whitening is an elective and is fee for service (cash)! Work on one more Perio patient conversion a week or one more re-care appointment a day. These activities can make a huge difference in your bottom line!
I am here to help and look forward to working with you.
Are you really committed to a better Hygiene/Perio program?
Hygienists and Office Managers are encouraged to join Dr. Charles Blair or Kristen Esler RDH, for a day of Perio development on March 30th or 31st. A world class Perio program requires collaboration between the office manager and hygiene team. Everyone must be fluent in the correct CDT codes, sequence, and clinical procedures to move patients from a D1110 to D4910! Please Call Joy Patane at the Bronx Dental Society and register your team for this great training event now 718-733-2031. Check out the courses and lectures @ www.bigappledentalmeeting.us
Two New Hygiene Products Of Interest
Dentsply Cavitron Division has launched a brand new Cavitron insert. The insert is a combination of the FSI-1000 (triple bend insert) and the FSI SLI 10S (slimline straight). The new insert, the Slimline 1000, allows for better adaptation around line angles and improved subgingival access for the clinician. The triple bend and the beveled edge of this insert allow for quicker removal of the tenacious calculus when compared to the FSI SLI 10S insert.
Hu-Friedy has also just introduced a new ultrasonic insert called the SWIVEL XTTM.
It is said to be extra thin and extra tough and employs the infamous, Hu-Friedy swivel..
It has been five weeks since my ankle replacement surgery. I am progressing nicely but had hoped to be walking unassisted by now. I begin weight bearing physical therapy the week of March 7th and I am told this will speed up my recovery. It has been interesting [?] to work from home for four weeks. While I am lucky to be able to manage the business from home, I owe many thanks to my support team who have stepped it up in my absence. Additionally, I would like to thank my loyal clients for their support at this time. I know there is no substitute for me being there in person and I look forward to seeing and working with you all soon.
I wish you all a strong finish to the first quarter of 2011.
Spring begins at the end of the month and it will usher in warmer weather and opportunity!