In case you haven’t noticed, it’s beginning to feel a lot like year-end. The weather is turning colder. The days are growing shorter. And your financial advisors have started passing along helpful reminders of the steps you should take before the ball drops on New Year’s Eve.
With all the busy-ness in the air, it may be tempting to put off thinking about this year’s tax season until next spring, but here are five reasons to get a jump start on your practice and personal financials right now.
1. It’s time to get your financial house in order.
Before your tax professionals can prepare your annual tax filings, your books will be evaluated to ensure that all transactions have been posted correctly. Starting the process before year-end allows your tax professionals to tidy up your records and institute process changes to address any systematic errors. In addition, you’ll have a clear sense of where you stand financially when making important year-end decisions including investments in your practice and employee compensation.
2. It’s time to fund your contributions to benefit plans.
Some employer contributions are mandated by the terms of the plan, and you’ll need to get a handle on this pending obligation. If you choose to make discretionary employee contributions, you may have an opportunity to realize a substantial personal benefit. Talk to your retirement plan advisors and be sure to fund benefit plan contributions before year-end to reap a tax advantage.
3. It’s time to leverage your financial data for business planning.
A clean set of books and the associated management reports transform your “gut feeling” of the health of the dental practice into concrete metrics to evaluate revenue streams, operational efficiency, and financial controls. Take a retrospective look on the past year, and ask yourself whether your practice has attracted the right clientele to reach the target reimbursement rates for services rendered, whether your mix of services is attaining target profitability and whether your practice is managing receivables to minimize late payments and delinquencies.
4. It’s time to minimize your upcoming tax liabilities.
You may already be familiar with the standard set of considerations based on past years’ experience and/or this year’s tax planning newsletters. However, boilerplate recommendations may not be applicable to your distinct circumstances. Let the experts help you make the right calls. And while they’re at it, they’ll give you a “head’s up” on the cash required to meet your upcoming tax liabilities.
5. Meet with your tax professional to develop your 2016 plan.
Take the opportunity to outline your anticipated financial reporting requirements (such as tax returns for bank loans and student loans). Schedule your collective resources when it makes the most sense for your dental practice. Identify your mutual obligations to ensure thorough accounting services and tax filings with the least effort on both sides. It’s good for your practice and good for the bottom line.
Without a doubt, these final weeks of 2015 can deliver more value from a planning perspective than any other time of the year. The insights that you glean can inform actions that will benefit your practice in the coming year and save you money during tax season. What better gift could you give yourself?