Taxes and extra expenses for Dentists!!

[Dgeorg6]

Hey, I was just wondering what would some practicing dentist say the % of their income gets taken out by taxes.. and also what amount of extra expenses does one pay for insurances such as malpractice, disability, etc..

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[Daurang]

Overhead is anywhere from 55-85% typically. What you net in the end you then pay 35-45% in social security, medicare, personal taxes.

 

[wired202808]

Overhead is anywhere from 55-85% typically. What you net in the end you then pay 35-45% in social security, medicare, personal taxes.

85% sounds too high, no?

 

[OhioDMD]

In answer to your question about 33 - 35% when you consider federal, state and local income tax.
However the more you make the more they take this link http://www.irs.gov/pub/irs-pdf/p15.pdf#page36
leads to uncle Sam's tax rates. In my office overhead generally runs 45 - 55% of gross income.
I am a general dentist doing no general anesthesia, IV sedation or placing implants so my malpractice
is relatively low ~ $2200 annually for a 1 million 4 million occurrence policy.

 

[iamjackbauer]

In answer to your question about 33 - 35% when you consider federal, state and local income tax.
However the more you make the more they take this link http://www.irs.gov/pub/irs-pdf/p15.pdf#page36
leads to uncle Sam's tax rates. In my office overhead generally runs 45 - 55% of gross income.
I am a general dentist doing no general anesthesia, IV sedation or placing implants so my malpractice
is relatively low ~ $2200 annually for a 1 million 4 million occurrence policy.

Off topic, but I'm curious. About how much do you think your malpractice insurance would increase if you started placing implants?

 

[charlestweed]

85% sounds too high, no?

Higher than 85% if your practice is relatively new (ie 6-18 months old) and you still don't have enough new patients. Higher than 85% if you spend too much money on setting up your office or if your office rent is too high or if the business loan is too high. Having a beautiful state-of-the-art facility does not necessarily guarantee that you can attract the high income patients.

These fixed expenses below can really hurt your bottom line:

- Rent. $1500-6000 a month…..depending on the location and square footage.
- Business loan payment. I only borrowed $70k and I had to pay $1500/month for 7 years.
- Staff salaries. $2500/month per employee….assuming that you pay him/her $14/hour.
- Business Insurance. $2500/year for my 1350 sf office.
- Worker comp Insurance. $2-4k/year….depending on how many employees you hire.
- Malpractice insurance. For me, it's $3000/year for a 1,000,000/3,000,000 policy.
- Utilities/phone/internet bills. $500-$1000 a month.
- Advertisement fee. $600/month for a front page ad for my office.
- Other fees such as business license, business tax, dental license renewal fee, CPR renewal fee, CE courses, x ray tube registration fee, chemical waste disposal fee etc.

 

[Cold Front]

In answer to your question about 33 - 35% when you consider federal, state and local income tax.
However the more you make the more they take this link http://www.irs.gov/pub/irs-pdf/p15.pdf#page36
leads to uncle Sam's tax rates. In my office overhead generally runs 45 - 55% of gross income.
I am a general dentist doing no general anesthesia, IV sedation or placing implants so my malpractice
is relatively low ~ $2200 annually for a 1 million 4 million occurrence policy.

Interestingly, I just renewed mine. I'm paying ~$850 a year for 1 million / 3 million occurrence. I think the policy fee goes up with experience and more patients you see. You must have been practicing a lot more than I did, and perhaps hit a 7 figure production during those years.

 

[Daurang]

Yes your malpractice goes up with time and then stabilizes currently around $1600 yearly.

 

[Dgeorg6]

When giving figures of net income and gross income etc.. Do you factor in the malpractice insurance, disability, etc.. into your %overhead or is that deducted from your net gross?

If so what would come out of the net income? just income taxes, state taxes, property taxes etc..?

 

[Cold Front]

When giving figures of net income and gross income etc.. Do you factor in the malpractice insurance, disability, etc.. into your %overhead or is that deducted from your net gross?

If so what would come out of the net income? just income taxes, state taxes, property taxes etc..?

There is something called P/L (Profit / Loss) statement your accountant puts together at the end of every month for your practice. In this report, it will show how much your business collected and how much expenditures went out. It's basically your revenues minus your overhead. The net figure could be a loss or a profit. If it's a profit, then that's your take home (and you can deduct taxes from it on quarterly basis, although you can pay less taxes by sending vouchers to uncle sam from Q1 to Q3, but all taxes must be paid through your annual 1099, or risk a penalty and interest on the amount that you owe).

Federal, state and local taxes for the owner are paid through profits. If there is no profit, then there is no taxable income, therefore no taxes are due. Usually this happens in your first year of business, when you depreciate all your capital investments on the business. There is a limit on how much you can depreciate also, but that's another discussion.

Property taxes for the building you lease or own for the business is paid under your overhead. Your personal property (your condo / home) comes out of your business profit / income.

I think some doctors designate a payroll check to themselves and include it in their overhead, but this leads to paying more to the government and the people who do your payroll service.

 

[NOLAdentist2016]

How do most dentist manage their business? Is there usually someone that is hired as staff to deal with all of this stuff. I've just been wondering about it because the business aspect of it alone seems like a full time job! It would suck to have to see patients all day and then spend hours in your office dealing with finances, ordering, taxes, payroll, etc. My parents used to own a business and they were always doing paperwork at home, it seemed like they could never get away from their work.
However, I feel like hiring someone to deal with all of this could get quite expensive. Plus you're not seeing what is actually going on yourself. Anyone have any info?

 

[Dgeorg6]

How do most dentist manage their business? Is there usually someone that is hired as staff to deal with all of this stuff. I've just been wondering about it because the business aspect of it alone seems like a full time job! It would suck to have to see patients all day and then spend hours in your office dealing with finances, ordering, taxes, payroll, etc. My parents used to own a business and they were always doing paperwork at home, it seemed like they could never get away from their work.
However, I feel like hiring someone to deal with all of this could get quite expensive. Plus you're not seeing what is actually going on yourself. Anyone have any info?

You can do your own payroll pretty easily or just pay an accountant or another company to do it for you..

and some people hire office managers, while others get their receptionists and other front desk workers to do alot of the ordering, and insurance stuff..

Or you could always hire your wife and pay her to do it, whatever salary goes to her ends up going in your pocket at the end anyways

 

[yappy]

How much does "looks" come into play when you're hiring a receptionist, assistant, etc. etc.?

You can do your own payroll pretty easily or just pay an accountant or another company to do it for you..

and some people hire office managers, while others get their receptionists and other front desk workers to do alot of the ordering, and insurance stuff..

Or you could always hire your wife and pay her to do it, whatever salary goes to her ends up going in your pocket at the end anyways

 

[OhioDMD]

How do most dentist manage their business? Is there usually someone that is hired as staff to deal with all of this stuff. I've just been wondering about it because the business aspect of it alone seems like a full time job! It would suck to have to see patients all day and then spend hours in your office dealing with finances, ordering, taxes, payroll, etc. My parents used to own a business and they were always doing paperwork at home, it seemed like they could never get away from their work.
However, I feel like hiring someone to deal with all of this could get quite expensive. Plus you're not seeing what is actually going on yourself. Anyone have any info?

I run a solo general practice and I'll give you an abridged version of what transpires in
my office. The business component of my practice is done with two software
programs PenSoft Payroll and Peachtree Complete. My staff orders all supplies
after competetively pricing with our four suppliers. Invoices (bills) are placed in an
accounts payable folder. On the 10th and 20th of the month all bills due by the middle
and month end are selected and paid (using Peachtree). Takes less than an hour
each time. Payroll is biweekly. Plug the hours and bonus info for the hygienists into
PenSoft and checks are ready in less than 30 min. I like PenSoft for my payroll because it prints on plain paper all local state and federal payroll tax reporting forms and does 1099s, W2s and W3s on blank forms. Saves me about 1500 - 2000 annually
in accountant fees for payroll. The last segment on the business side is reconciling Peachtree with the bank statement monthly (30min). Peachtree much like many other accounting programs will supply all financials and comparatives to previous years and
budgets. The only thing an acccountant does is my personal annual tax returns and figuring my personal quarterly estimated tax payments my personal quarterly tax.
Most of this is done during cancellations and in between patients.

 

[djeffreyt]

I pay 33% if Federal taxes
I don't have state income tax here.
My Malpractice costs about $2000 for a $1 mill / $3 mill occurrence
My Disability is high for my age, I've had neck surgery, $1800 a year

Malpractice also has another factor not mentioned above. If you work in a large, multi-office network, it's significantly higher than if you work in a cottage private practice.

How much does "looks" come into play when you're hiring a receptionist, assistant, etc. etc.?

Less than experience and quality do. This is one of those questions you don't ask out loud cause it violates some employment laws.

Or you could always hire your wife and pay her to do it, whatever salary goes to her ends up going in your pocket at the end anyways

I know a lot of husbands that would disagree that the money they pay their wives goes back into HIS pocket.

 

[Dgeorg6]

I pay 33% if Federal taxes
I don't have state income tax here.
My Malpractice costs about $2000 for a $1 mill / $3 mill occurrence
My Disability is high for my age, I've had neck surgery, $1800 a year

Malpractice also has another factor not mentioned above. If you work in a large, multi-office network, it's significantly higher than if you work in a cottage private practice.



Less than experience and quality do. This is one of those questions you don't ask out loud cause it violates some employment laws.




I know a lot of husbands that would disagree that the money they pay their wives goes back into HIS pocket.

This is actually the answer I was looking for completely lol..

Do you mind me asking what you make? or at least a range?