Carolinas Dental Advisors strives to deliver relevant content and guidance for dental practices to continually grow and improve. In today’s video, Ben Shaver of Venture Practices and Brad McKeiver of Aprio CPA Firm discuss the impact of the COVID-19 pandemic on dental practices and how practices are recovering and planning for the future.
Introducing Brad McKeiver
Brad McKeiver is a CPA who focuses on working with dentists and dental offices. He handles taxes, accounting, and CPA services to help clients understand the margins and cash flow of their practices.
How COVID-19 Affected Practices
Over the past year, Brad has also helped practice owners assess and navigate the fallout from the pandemic. This included helping clients understand furloughs, unemployment, PPP (Paycheck Protection Program) loans, FFCRA (Families First Coronavirus Response Act) credits, employer retention credits, and more.
Practice Recovery Efforts
There has been a lot of liquidity placed in front of doctors and practices over the past year making this a different finance and management year for CPAs. It has also been a rewarding year knowing they can help clients destress amid the pandemic by helping them attain the necessary lifeline of liquidity to reopen, rehire, and get back to where they are today.
While some practices have succeeded more than others, in general, we have seen practices work hard to step up to the plate, revamp, and come back at or above their pre-COVID levels. They worked extra hours and extra rotations while under strict new guidelines.
Loans and Tax Relief
At the same time, they were given money. They were given tax-free funds to help cash flow. Now, some practices are eligible for a second draw PPP loan and credits.
We saw an average practice with 6-10 employees gain nearly $200,000 in liquidity for the practice. For those practices who are back to working at pre-COVID levels or higher, that additional liquidity puts the owners in the driver’s seat ready to move forward.
Reinvesting into the Practice
Now is the time to meet with advisors or CPAs to determine how to invest that money back into the practice.
How can you leverage this financial situation to help you achieve the practice you want?
The liquidity given to practices due to the pandemic opens up the opportunity to reinvest into the practice without taking on excess high-interest debt.
Planning for the Future
This gives practice owners the chance to reset and build out the steps to grow the practice. Tax season is here. You can’t ignore it, but you can make it work for you.
PPP Loans and Employer Retention Credits
File your taxes, but look for that free money. The deadlines are looming so you must address them.
- Second draw PPP loan – If you are eligible, you need to look for that because once it is gone, it’s gone and you won’t be able to get it back.
- Employer retention credits – Claim them if you are eligible. The average practice could get up to $5,000 per employee for 2002.
File Clean Tax Returns with Your CPA
Integrate the tax credits that are available to you into your tax strategy. Know your numbers and cleanly file your tax returns.
This means you need to file your returns without mistakes.
However, remember that tax returns will be different this year than ever before. No one has ever filed a return with a PPP loan and some of these tax credits that have not existed in the past. The IRS has never processed a tax return with a PPP loan recorded on it.
Now more than ever as a practice owner, it is important to sit with your advisor and review your returns to make sure you understand them. It is a new tax landscape. Make sure your CPA knows that you had a PPP loan and understands that it is forgiven and not taxable. Ask about tax credits that may be available.
One wrinkle with the PPP loans to be aware of is that they are not taxable by the IRS but may be by certain states. The loans are being taxed in North Carolina. Be sure to check on the status of your state taxes for PPP loans as legislation may change.
If you still do your own taxes, this may be the year to get professional help for the numerous moving parts. For example, some doctors filed for unemployment for the first time or applied for grants or loans. There are many small things to consider when recording and filing your taxes this year.
Let Carolinas Dental Advisors Help Your Practice Today!
Let Carolinas Dental Advisors help you navigate and understand the impact of the COVID-19 pandemic on your practice. Contact us today for more information and check out the full video of today’s discussion on PPP loans, tax credits, and tips for filing your taxes.