THE MILLIONAIRE DENTIST PODCAST

EPISODE 64 TRANSCRIPTION

Announcer:
Hello, everyone. Welcome to the Millionaire Dentist podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices, to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.

Casey Hiers:
Hello and welcome. This is Casey Hiers. Back at the Millionaire Dentist podcast, I've got cohost Jarrod Bridgeman with us.

Jarrod Bridgeman:
Hey.

Casey Hiers:
We have special guest, Steve Levy. He is a CPA here at the firm and a consummate overachiever. Actually, is an attorney as well. So you've got what, CPA and JD after your name.

Steve Levy:
That's correct, Casey.

Casey Hiers:
Well, Steve, I appreciate you joining us. Today we wanted to talk about really the role of a CPA in your dental practice. So for our listeners, they could have a different variety of level of service from different CPAs, and so, we just really wanted to touch on the role of a CPA, how they can help practices and things of that nature. But, before we get into that too much, why should a dentist out there choose a CPA instead of another type of accountant to help with their accounting and taxes? What does someone need to do to become a CPA? And just talk about that designation and what people need to be aware of.

Steve Levy:
A CPA is certainly different from an accountant that doesn't have the designation of Certified Public Accountant. The CPA is recognized by licensing agencies across the States. They have certain continuing education requirements, and you should expect a higher level of service from a CPA versus an accountant. One example is that, a CPA can legally practice before the IRS, an accountant can't represent you before the IRS. That's a big distinction, I'd say.

Jarrod Bridgeman:
So in terms of, if you get audited or something?

Steve Levy:
That's exactly the case. You can't say, "Here's a power of attorney that says, I am representing this client," only CPAs and certain other designations can do that for them.

Casey Hiers:
Most of our listeners, they use a CPA and they feel probably pretty good about that. Where can somebody go to confirm that someone is actually a licensed CPA?

Steve Levy:
Right. Because if someone says that they're CPA, it may not actually be the case.

Jarrod Bridgeman:
I could probably go online and print off some business cards right now.

Steve Levy:
Right, and call yourself a CPA. No one would know the difference. Each of the States have a licensing agency. Here in Indiana, there's a professional licensing agency where you can search someone's license, if they're a CPA, and really a lot of different professions, just to confirm that they are an actual licensed CPA with the State.

Jarrod Bridgeman:
That would also help confirm, for example, they may have been a CPA at one point, but if they weren't continuing with their CE stuff, they could lose that designation.

Steve Levy:
Correct. There are active or inactive or other statuses for a CPA that you can find out there. They may have been, like you said, a CPA at one point, but have inactive status now, which would really take them out of being called a CPA and representing themselves as a CPA.

Casey Hiers:
Well, I appreciate you setting the table on this topic and really it was for this purpose. Especially in dentistry, we say here, having the right CPA team can actually help make you money. Let's talk about level of service that people should expect from their CPA, and more specifically, I guess, a CPA that has seven dental clients versus a truly dental specific CPA. But, let's talk about level of service. Why do so many practice owners talk about their books being months behind, they have incomplete or inaccurate data? I hear those frustrations a lot. Why is that?

Steve Levy:
Most CPAs, I would say, are CPAs for after the fact. Where they are getting the books from the client after the year end and just preparing a tax return, maybe looking at them here and there, not really being a proactive CPA. That's really what I value here, and just in general is, being a proactive CPA, where you can look at the books, analyze them, analyze each of the accounts to see, "Okay, how much are they spending here? What can they do to help their bottom line before it's too late where the year's over and it's tax time, time to file, really what has already happened throughout the year."

Casey Hiers:
So I'm sure a lot of our listeners, and I've heard this from practice owners, is that they might not be getting the level of service they desire, they feel like they're the ones reaching out all the time. But they don't know that there's a difference or there could potentially be a better way. While I know with the attorneys, I'll take a swipe at your other certification. There's a lot of attorneys, there are some good ones, but there's a lot of bad ones. Does that same thing apply with CPAs, I would imagine?

Steve Levy:
Yeah, certainly. With CPAs, you don't want to be the client that is reaching out to the CPA saying, "I have a problem." When most likely, if the CPA was really looking at things closer, they would be the ones identifying the issue. That's really the ideal situation that oftentimes doesn't happen.

Jarrod Bridgeman:
Or they could be the ones letting you know of potential benefits you could be taking care of now.

Steve Levy:
Absolutely.

Jarrod Bridgeman:
As well.

Steve Levy:
Yeah. By year end, it's too late, so this is the time. Like for instance, what we do at Four Quadrants is, we've been very involved in the grant and PPP areas, where everything is time sensitive and there isn't an unlimited amount of money for these federal state, even local grants. Those are things that can really help the bottom line of your clients, is to identify those and even help prepare the applications for them.

Casey Hiers:
I'm glad you brought that up, because I know there's been a wide variety of service with the PPP in Idaho. Some people under control, others, a lot of frustration, a lot of time spent doing that. I know you've run point on this here, but give an example of the level of service that is out there and that people should come to expect. How did you help practice owners with regards to some of those opportunities?

Steve Levy:
It goes back to March, April, where the whole PPP applications and announcements came out, where once you dig in and seeing the different banks and how they handle the PPP funds, then you're able to, not only help with the applications, but also the forgiveness of the money, which basically makes it non-taxable and you don't have to pay it back. We're able by doing so much of this, to leverage on our experience and really do it efficiently and in the most successful way to get that money off their backs in a way.

Jarrod Bridgeman:
Well, especially since from when I was able to follow with the PPP stuff over the year, things kept changing.

Steve Levy:
They did. This second round is different from the first round. There's certain parameters that you have to meet for the second round. Some of it is similar, but you have to know the differences in order to be successful in getting the money and not having to pay it back, which is obviously an optimal situation.

Casey Hiers:
Well, and I know your goal was to make sure our clients were not worried about that, that we were on top of it. I think from a level of service, again, if you're a frustrated practice owner out there, not all CPAs are created equal. If you're unhappy there's probably a reason why and many better options. Now, Jarrod, you've heard us talk about tax surprises around here.

Jarrod Bridgeman:
Mm-hmm (affirmative).

Casey Hiers:
Let's go back to level of service. We define a tax surprise, again for a million, million and a half dollar practice annual collections or so. If there's a $10,000 refund or bill, that's a tax surprise that wasn't accounted for, and that goes right into level of service with a CPA. Talk to us a little bit about why our listener out there, who may be getting a big refund or a big tax bill, why does that happen?

Steve Levy:
First, I want to say that a big refund is not a good thing. While it might seem like it is, this is money that the IRS and government has been holding for you, interest free, you're not going to get interest on it, and when you get it back, it's really your money. Tax surprises, when they arise, they are more really than what you should expect. You should get a sense of where you're going to be, maybe a little breakeven, that's the optimal situation, if you can get breakeven. Not always possible. But, if you have a CPA that is monitoring your tax situation monthly as we do, even quarterly, that has to be the minimum of, "Okay, how much did I make in this one quarter? How much tax should I pay in potentially, in this quarter, because of how well I did?" And so in the end that I can get a sense of where my tax return and where the refund or balance due is going to lie. That's what we're striving for to avoid those tax surprises, if at all possible.

Jarrod Bridgeman:
I feel as a country of people, we've all been indoctrinated to feel like a tax return, a refund is a good thing. So many people are like, "Oh, I got $2,000 back this year." It took me years to realize, Oh, that's already, as you said, my own money. I would rather have that money throughout the year. But so many people I know are just so excited to get that refund not realizing the government's not giving you money.

Casey Hiers:
Yeah. How much better to just have that monthly cash flow at your disposal for you to decide what you want to do? Now, is it fair to say if somebody gets a five digit refund or bill, one way or the other is because their CPA's probably just looking at last year's performance and that's the only marker?

Steve Levy:
Right. That could be the only touch that the CPA is having with their client. They haven't looked at anything. They're just given information and reporting it, and putting it on the tax return and that's that. They haven't looked at, "maybe I should have paid in more over the year," and you get a penalty for not paying your taxes timely in the form of basically interest. You might be costing yourself even more than the tax bill, but some interest penalty on top of that. There is risk in not monitoring things throughout the year and extra money having to pay.

Casey Hiers:
The recipe is what? Its previous year, have a forecast of what you think you're going to do, and then monthly and quarterly, make adjustments for the time. Right? That's the recipe, way too many CPAs out there simply use. "Well, what'd you do last year? Okay, great. What happens if you grow 30%?"

Steve Levy:
A CPA also might say, "Pay in the safe Harbor amount, which is like 110% of what you did last year, and you'll be fine." But a lot of times that's overshooting. Nobody could anticipate this year in 2020, and even going into 2021, what it would have been like. I would expect that people without monitoring their situation, would have really overpaid if they're basing things on 2019 where everything was hunky-dory and we didn't have this major impact in our finances.

Casey Hiers:
So they might get a refund?

Steve Levy:
Yeah.

Casey Hiers:
Then what happens when 2021, let's say this year, knock on wood, as things level off. Well then they're going to have some growth, so that a refund that they are excited about, if there's growth not accounted for, they're going to owe it right back.

Steve Levy:
Right, exactly. Without monitoring really things, at least quarterly, then the surprise is really will happen.

Casey Hiers:
Well, that makes a lot of sense because when we talk about, listen, a good dental specific CPA can help you and your practice make money. Just like with what you're saying, QuickBooks up to date, monthly's not having a bad tax management situation. When you're talking, 30, 40, 50, $60,000 and up, that money monthly cashflow, you can reduce debt, you can have a brokerage, you can save for retirement, you can invest, hire more employees at an operatory. It's limitless. Again, when we say a good dental specific CPA can make you money, that's not just the hyperbole, that is a fact and you see it.

Jarrod Bridgeman:
Let me say, when should I let my CPA go? How many years of surprises? After the first one, be like "that was-

Casey Hiers:
Wait, you're asking Steve to turn on his own people?

Steve Levy:
Its advertising the CPA.

Jarrod Bridgeman:
Exactly. Because I feel like a lot of times, especially small businesses, single person businesses, often will work with people they know. It could be a friend, could be a family member. Would be that friend or family member could be costing you thousands of dollars a year, do you love it? Give him a one free Mulligan the first year?

Steve Levy:
Well, I'll get to Casey's point. I want to know why it happened. That would be my first thing. I might not do a knee jerk reaction of, "Okay, there's a $50,000 bill," which really sucks, but I want to know what happened. Because hiring a CPA and dealing with the CPA or any accountant, it's a two way street. If you're not giving them the information that they need on a timely basis, or if the CPA is not giving you advice on a timely basis, then the surprises are going to happen, and maybe this is the lawyer talking here. I don't want to do a bold statement on. I won't go out of my way on a limb on this. I want to know what's happening. If that communication isn't happening from your CPA, then that's when it might be time to look elsewhere.

Casey Hiers:
Now, that's a good answer, it's the why. To your point, if the CPAs, they're not getting the information they need, that factors in. Now, if you're a practice owner out there who is giving all the information they need and is craving more attention to detail and you're not getting it, then that's a different story.

Steve Levy:
Yeah, absolutely.

Casey Hiers:
Very good. Steve, in terms of the role of a CPA or all things accounting, anything else for our listener to be aware of or, or no?

Steve Levy:
Yeah. I would just say obviously, do your due diligence and make sure they're CPA at the start. Get a sense of their reputation from their website, that kind of thing.

Casey Hiers:
Just ask them how hands-on they are. Right? What should I expect from you?

Jarrod Bridgeman:
How hands on, or also, "what experience do you have in my field?"

Steve Levy:
Yeah, that's really important because, if you don't have industry specific experience, then you're not getting into the nuance that might be important to serve that specific client. Most CPAs are generalists, and it's like doctors. There's a generalist doctor, and they're going to just handle whatever comes their way, and really not know maybe some of the incentives or benefits, or ways that can cut down on expenses, that someone that's a dental CPA would have better knowledge of.

Jarrod Bridgeman:
Like here, where everybody works from the same building and you also have contact with all the other people, like the financial planners and the other accounts as well.

Steve Levy:
Yeah. That interaction between planning and accounting is crucial. We're constantly sharing information and that certainly wouldn't be expected in other places, I would think.

Casey Hiers:
Well, for our listeners out there ask yourself, is your CPA costing you money? Or is your CPA making you money? I think you've given everybody some benchmarks to think about. Steve, I want to thank you for your expertise today and Jarrod as always, thank you.

Steve Levy:
Thank you.

Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information. And thank you to you, the listener, for tuning in. The Millionaire Dentist podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you, and your practice, go on over to fourquadrantsadvisory.com and see why year after year, they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.