by Karah Karah | Mar 14, 2018 | Prescriptions for your Practice
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With April drawing nearer, there’s one thing that’s sure to be on all of our minds: taxes. Understanding financial reports and navigating the tax code can definitely feel daunting, especially with recent changes to consider. But thankfully we have Jonathan VanHorn back on the show to share his insight.
The founder of Dentist Metrics and the man behind the Start Your Dental Practice podcast, Jonathan has helped dental practices all over the country grow their businesses by gaining control of their finances. In this episode, he discusses common financial mistakes he sees dentists making, his advice about what to look for in an accountant, and what dentists should know for the upcoming tax season.
Key Quotes:
- “The biggest mistake I see [among dentists] is people not really understanding what a CPA does.”
- “You need to know what [your CPA is] is going to be doing for you from an accounting perspective, what they’re going to be doing for you from a tax perspective if they offer something like financial planning … et cetera, et cetera.”
- “I’m of the very strict belief that if you had the absolute best dental CPA from a technical perspective, and you had the absolute best general CPA from a technical perspective, you’d have no difference in taxes.”
- “There are general CPAs out there that would do just as well as a dental CPA, and would likely probably cost less, but the problem is, it’s really hard to figure out who those are if you don’t understand the tax code.”
- “I think if you are a single practice owner, and you try and set up a DSO for owning a single practice under the guise of qualifying for Section 199A, you’re moving from aggressive to gambling.”
- “One thing that is completely consistent in the tax courts is that the IRS does not like the reclassification of income. They are not fans of that, and they are well known for trying to cut through that like hot butter.”
- “Everything you do in front of the IRS has to have a valid business reason—it has to be substantiated in some fashion, and ‘I was gonna save more money in taxes’ is not a valid reason.”
- “I think Dental Success Network is going to be something that’s going to be a powerhouse for years to come.”
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by Karah Karah | Jun 28, 2015 | Wealth Wisdom
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Quotes & Notes:
First, download Jonathan’s gift for our podcast listeners: DentistMetrics KPI Guide
If you are not leveraging your time with your CPA, in order to get the most out of them, then you are going to have to find that time elsewhere.- No one’s ever going to have the absolute pinnacle business.
- We focus on the business in order have that have the maximum amount of returns for the owner because in the end it is going to be what funds everything else.
- There are multiple different approaches you can take with marketing; you can do a shotgun approach, you can do a sniper-rifle approach, you can do a machine gun approach, you can do a lot of different approaches. A lot of this is testing to see what is working.
- In a dental practice, if you are not at absolute capacity, then it makes absolute sense to fill to your capacity.
- Try and set your schedule up like the day that was most productive.
KPI – a key performance indicator. KPIs can be financial, they can be non financial, they can be actions, they can be a lot of different things.
- The main number that we look at is two fold. Number one we look at net productions, number two we look at the total of those wages and salaries plus benefits plus payroll taxes. Then we compare that to the revenues. We do not include family of the owner, we do not include the owner’s salary, and we also don’t include associates in this.
- Startups for the first few months will not really be in these numbers. These numbers really start kicking into gear when you get into around $650,000-800,000 dollars in revenue.
- There are a few universal truths in the world. One of them is that they think they are busy. Strangely enough, everyone also thinks that they are efficient.
- The practice as a whole has to really start heading towards a specific path. They have to be set on some type of system, some type of game-plan to be able to get them to that number. Typically when we talk about that it is going to be a production type goal.
- If you are in a not competitive market then you are probably not in a very good market.
- We have a general rule on five percent on supplies. There are some practices that aren’t going to be able to reach that.
- It is very difficult to trade convenience for money. There are a lot of places that you can buy supplies, and they can frame it in a way that you feel like you are saving money but in the end, if you are paying $26 for a barrier, and you can get it someplace else for $19, then you are paying seven dollars more.
- If you are thinking about saving 20% on your supply costs each year, and your supply costs are $10,000 then you are better off going out and finding three new patients to replace that $2,000 dollars.
Five percent (for supplies) is the number that we always strive for, and for some practices this is not attainable, but you would be surprised at what you can obtain by trying.
- For the hygiene rule of three, the first level we have is that hygiene typically contribute about a third of the production of the practice. The second three is that the hygiene department should typically be compensated at about a third of net productions or collections in some fashion. The third one is that you like to have less than three hours a week of unscheduled hygiene per hygienist.
- If you would like to learn more from Jonathan Van Horn, email him at [email protected], visit his website, dentistmetrics.com, or even find him on Facebook or Linked-in.
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by Karah Karah | Sep 27, 2014 | Prescriptions for your Practice, Wealth Wisdom
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First, check out this outstanding financial resource that Jonathan has provided for the RD audience: http://dentistmetrics.com/relentless
Quotes & Notes:
- The biggest struggle I see a dentist has is knowing where to start.
- A business has people, products, and processes. And a lot of dentists have a lot of problems with those processes. It really comes down to managing people.
- They [dentists] have the innate ability to be able to manage the clinical side plus the business side.
- Nothing is going to run without your staff.
- Whenever you really start niching down, in the dental industry . . . you can actually see where people are doing things wrong by just looking at the numbers.
The goal is to have 55-60% overhead [for a solo practice]. And that is an average. I am a believer in the saying averages apply to everyone and no one at the same time.
- This issue doesn’t work for you because of why? And they will say, well it is because of the contract of the person in this role. You can say, has any dentist ever bought a practice, had a contract in place, and changed that contract? It’s really hard for them to say no.
- Staffing is the biggest thing to get in check if you want to get to that 55-60%.
- Lab fees and dental supplies both go hand in hand. That is really the #2 thing we tell people to look at after their staffing.
- Part of being a business owner is trying to find the best deals.
- Really make sure that that process [the process of purchasing lab equipment and so] is for convenience but rather for profit.
- Ask other people in your area what they are paying.
- Because I am a CPA I should probably say [the next big-ticket item is] taxes, but I’m actually not on that board.
- If you keep 15% for lab and equipment, and 20% for staffing then really you only have 20% left for everything else, be it rent or anything else.
- Any practice that is from the start-up level or is just in the running level, anywhere from zero 800,000 dollars in revenue. Their sole responsibility should be in marketing.
- If you have a great service or a great product, then you are actually doing disservice to the public if you don’t offer it.
- The problem with that is if you are doing what everyone else is doing then you are just going to get caught in the crowd.
- If you have a light to shine, shine it for the world to see. Don’t hide it.
- If you have a sneaking suspicion of something, don’t let it just go by the wayside and just accept it as fact.
- I would definitely go to check out dentalcardservices.com.
- Take control of supplies.
“What’s measured is improved,” Peter Drucker. But also “What’s not measured is not improved.”
- I feel like driving revenue is so much more important in the early stages of running a practice.
- I use Xero.com for accounting.
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