In addition to determining your annual tax bill, it helps you get a loan for your practice, add a partner, purchase or sell a dental practice and so much more.
Dental tax returns can be difficult, if not impossible, to understand and decipher if you aren't a dental CPA or someone who has experience with dental accounting. Suppose your dental bookkeeper or dental CPA makes these mistakes. In that case, it may be time to fire them and look for a better, more experienced dental accountant.
1. Your Dental CPA Never Asks For Details
It is impossible for a dental CPA or tax preparer to prepare your dental practice's tax return without first reviewing all the accounts on your books.
Unless they ask you for a general ledger, a copy of QuickBooks, or an invitation to use QuickBooks Online, they don't care how much tax you pay. All they will do is file your profits and losses without any consideration of errors or missed deductions.
If your dental CPA doesn't ask you for the details, it's time to fire them. I'm serious. Call them now and fire them!
2. Your Dental CPA Never Checks Year-end Bank Statements
A dental CPA needs to see your bank account, credit card, and loan statements at the end of the year because he or she needs to compare the numbers on the books to the numbers on the bank statements. The audit allows them to determine whether everything is in order or if any errors have occurred.
A dental accountant who does not request your year-end statements does not care about mistakes that may increase your tax liability or necessitate an IRS audit.
3. Your Dental Practice CPA Recommends And Encourages Year-end Spending Just To Save Tax
Even though this might not seem like a significant reason, it nonetheless suggests they don’t think about the success of your practice. By buying equipment or loading up on inventory to pay less taxes at the end of the year, you will be reducing cash balance and end up paying interest on equipment loans.
Honestly, that's just ridiculous.
You should only spend when necessary. You shouldn't do it just to minimize taxes and certainly not start accruing debt just to reduce taxes. Keeping overhead costs low and profit margins high means taking home more money in the long run.
Make use of your dental CPAs expertise to come up with new tax strategies without debt and spending all your cash.
4. Your Dental CPA Fails To Provide Requested Documents
A dental CPA should send tax returns or payroll reports immediately when requested by you or your bookkeeper. If your dental accountants doesn't have the requested reports or documents on hand or makes excuses then, they may be fleecing you.
It's even worse if they ignore your requests. We've come across a few CPAs like these, and they always make me wonder what they are hiding.
If you don’t get the documents on time, consider firing your CPA.
5. Your Dental Accountant Does Not Prepare Adjustment Journal Entries
It can only mean one of two things if your dental CPA does not create adjustment journal entries for bookkeeping when they prepare your tax return:
1. There's no way your tax preparer knows what they are doing because they don't know how to make the right adjustments on the books to match the tax return.
2. They don't care if your records match theirs, which means your books won't be 100% accurate. There is a good chance that your taxes won't be accurate either.
Whatever you decide, you need someone who keeps the books updated with current tax return numbers (adjusting journal entries).
If your dental CPA or dental accountant makes any of these 5 mistakes, then you should reconsider your engagement with them and start looking for a professional dental CPA like Sigma.