THE MILLIONAIRE DENTIST PODCAST

EPISODE 38 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. I have back in studio with me today, Jason Ewers and we're going to stick with some tax and accounting topics today. And for all of our listeners out there, this is going to be about evaluating your accounting team, evaluating your tax management around your practice and in your personal life. Listen, your relationship with your accountant and your CPA is a very important one. And they've got a big role to play in running your practice and helping you build a financial foundation that allows you to thrive. But if your accounting team doesn't work proactively and that's a word you're going to hear a lot today, proactively, for the financial health of your practice, that relationship is broken. And so we're going to start by giving you guys some tools to evaluate your current accountant or tax advisors so that you know whether or not you're getting everything out of the relationship that you should be.

Casey Hiers:
Reactive versus proactive. Jason, let's go through some characteristics of a reactive team, accounting team, accountant, CPA, that if these are something you experience, there's some red flags. I'll start with the first one. If you consistently are getting hit with a unexpected tax bill or refund at the end of the year. We term that attack surprise if you're getting billed or refunded $10,000 or more, there's a red flag that you got some tax management situations. And while the refund feels good psychologically, the same principles apply that they're missing the mark if you're getting those. But Jason share that story you were telling me earlier.

Jason Ewers:
Yeah. On the phone with one of you guys' peers and had some tax surprises in the past with his accountant. Told me, never, ever, ever wants to have another tax surprise again. Well, last year he got hit with a $45,000 tax surprise. Needless to say he was a little upset. That's how we began our conversation. He started looking for new dental accountants out there.

Casey Hiers:
He drew a line in the sand because he had gotten hit with some tax surprises and said, "Whatever you do, just make sure that I don't owe money." He drew the line in the sand.

Jason Ewers:
Absolutely. Never again. He got hit a couple times previous to that and that's why he finally, never again. But her response was, there was no way she could know if he owed taxes.

Casey Hiers:
That kind of goes down to another one of these characteristics that you don't want. Your accountant does not know or is not concerned with the big financial picture of your practice. And with the example you gave, got defensive.

Jason Ewers:
Oh yeah.

Casey Hiers:
Had some mistakes, was given marching orders, whatever you do, however you have to organize it, I don't want to pay and I have $45,000 one and then said, "How will I know?" That that example is exactly what you don't want, obviously. But here's the other thing. If you're out there and you feel like you're always the one reaching out to make that contact, to ask that question and a lot of times you may not because you don't want to get nickeled and dimed. But if that should be in the complete reverse. Reactive accounting, when they find an issue, a problem or a booboo, they then reach out to tell you about it. In reality, it should be completely proactive and they should be reaching out.

Jason Ewers:
Well and you should have a relationship with your accountant that's a pretty open dialogue at all times. They are managing your practice and your personal finances pretty much. And it's important to have an open dialogue and be able to talk to them about anything. Even more than just, like we do with with our clients, help them build homes, help them buy a car. We've done that several times. That's the relationship that you should end up having with your account.

Casey Hiers:
Well and it's that comprehensive view of it and knowing what you want. If you're a practice owner who is a high achiever who wants to grow, grow, grow, your accountant needs to be very aware that that's your vision for the practice because we'll get into it a little later. But if somebody wants to grow and that growth isn't accounted for, then you get another big tax bill.

Casey Hiers:
Here's something I dealt with. Here's another reactive event. You receive a mass communication via email, or this one was actually snail mail from your accountant when there are changes or updates too. Just right now, think about the idle, the PPP, the provider relief fund. If you're getting mass communications that aren't timely, can be a disaster. For example, I'm speaking with a practice owner in South Florida and we were talking about a variety of issues and things, but he had said, "Hey, I'd heard something about this provider relief fund. I just got a note from my accountant about it." And I said, "Oh yeah, that was brought to light on a Friday."

Casey Hiers:
Our clients by Monday morning had all had communication about it. But worse than that, there's a time stamp on it. It was like a week, week and a half. Well, it got extended a few weeks later, but this is a payment. This isn't a loan. And this for a lot of practice owners, somebody's missing out on between 20 and maybe $50,000 through this provider relief fund. And this guy who again, backend of his career, like the people who he's working with, they weren't dental specific, they had a lot of the reactive characteristics, but he was two weeks too late, two to three weeks too late to get this payment. Again, there's your sign you're not getting all that you can from your team. Now let's change over to the positives side, Jason.

Jason Ewers:
Well, let me add to go back to that though, that had a timestamp on it. A lot of these programs that the government has brought out also have a dollar stamp on it too. There's only an X amount of dollars that they're giving. To take advantage of it, you need to be first in line to be able to do that.

Casey Hiers:
These things have been incredibly time sensitive. You're right.

Jason Ewers:
Exactly.

Casey Hiers:
And again, if you don't have a good relationship, if your people aren't proactive and you're getting a letter and reading it and then all of a sudden you're out of luck, that's no good. Let's switch gears to the positive.

Jason Ewers:
Okay.

Casey Hiers:
What are some signs of a proactive accounting team that this is what you need to demand from your current team or find one that can do this? What run us through some of those.

Jason Ewers:
Yeah. The big one is no tax surprises at the end of the year. We've given an example of that. Your account keeps regular tabs on your tax obligations throughout the year, quarterly tax estimates, not estimates based on last year. We had a client that we got on board now that same thing, amazing year, 150,000 more dollars he did over the previous year and his accountant never took an account for the additional income. This great feeling, I think we've talked about in the podcast before of, yeah man, I'm really growing my practice. This is great. And then bam. Well sorry, here's a $50,000 tax bill going towards a way to take the wind out of your sales on that.

Casey Hiers:
Well and listen, accountants are great people. I have relatives that are accountants. But to have a dental specific accountant that understands a dental practice, that's in the seven digits, that is very specialized. And to not have a specialized team helping you is a mistake. You talked about using current data. It's almost more than that. You need to look at historical data and you need to be tracking your current forecast, which by the way, your accountant should be spearheading that with input from you. But then you also need to look at forecast, old data and year to date data. And when you blend those three, you're not going to have surprises. To your point, a lot of folks don't have any issues, not because they have a great team, but because they've produced about the exact same every year. And so, like you said earlier, when there's a hiccup one way or the other, if you have a dip or a spike, if it's not accounted for boom, you're going to have a tax surprise.

Casey Hiers:
And so that's yeah, a proactive accounting team, there are no tax surprises. Your accountant keeps you informed about new laws, new regulations that are going to affect that dental industry and your practice in particular. Again, you shouldn't be hearing these things from your peers or your colleagues or other entities, your CPA should be telling you these things. That's proactive when they keep you informed. And then conversely, think of all the things a practice owner has to stress them out or bog them down. If they realize that they have to keep up on this stuff, it's just one more thing you've got to do. How refreshing is it to have somebody reach out to you and say, "Not sure if you've heard about this. It came out last Friday. It's a chance for you to get 20, 30, $40,000 as a payment. However, it's time sensitive. Do these steps." Night and day difference than the gentleman that I spoke with. Share the last couple with us, Jason, in terms of proactive characteristics of what somebody should want.

Jason Ewers:
Yeah. I think communication, we've talked about it a couple times now, is key. And I don't think snail mail is in these days is the way that you communicate, especially time sensitive information that you need. Make sure you get a call or an email from your advisor with some specific recommendations. Especially with the programs that are rolling out now and that will continue to roll out to help offset with the pandemic going on. And again, that's all time sensitive. We need to make sure that you guys are getting informed as fast as you possibly can be. And proactive, your accountant's reaching out to you. You're not reaching out to your accountant.

Casey Hiers:
That's it. If I know the young kids like to play a drinking game, if every time we use the word proactive, somebody took a swig of Mountain Dew, they'd be pretty jacked up by the end of this podcast, I have a feeling. But again, proactive communication, not on the practice owner, but on the people that he strokes that check to, to keep up the date and with one less worry on his plate. And look, from the outside looking in, there's a lot of practices that look like they're doing well. Practice owner may be making three, $400,000 a year, they're reinvesting in the practice, they're growing it, new patients are joining regularly.

Casey Hiers:
And the practice owner they've spent money on marketing, maybe even some practice management to help them with some of the little things to get right, like improving patient care or internal training. But that practice owner and Jason we've heard it firsthand, a lot of times they know better. They know there's some trouble behind the scenes and the practice owner has experienced a little bit of pain. Cashflow is tight, both for the practice and at home yet they're producing a lot. They're collecting a decent amount. They're making a lot of money compared to most people, but something's keeping you up at night a little bit.

Jason Ewers:
Well and we talked about before, how before COVID and all that, high production was covering up a lot of.

Casey Hiers:
Winning's a good deodorant and high production was covering up a lot of this. You're right.

Jason Ewers:
A lot of ill practices and I think it had something, the same can play for your accountant as well. We mentioned earlier if all you're doing is plugging and playing numbers and everything's the same every year, that's an easy job to do. But what is your team doing for you when there is a hiccup in your data, in your yearly plan or in your goals or whatever you're doing, your production goals or you can't work for two, three months? What's your accountant doing for you at that point in time?

Casey Hiers:
Right. And if they're just plugging and playing, like you said, not accounting for these things, it's a matter of time before there's an issue. And listen, having a dental specific external CFO for your practice could be really helpful. And a lot of times practices' overall financial state, they're doing okay, but there is a brewing storm coming. And for a lot of our listeners right now, that storm has come and it exposes a lot. But here's some signs that you may need a comprehensive financial planning and external dental CFO.

Casey Hiers:
As a practice owner if you feel like you're on an island by yourself with no one to really talk to about some of these important, yet sensitive financial matters, there's your sign, to steal from Jeff Foxworthy. You've received an unexpected tax obligation or refund at the end of the year. You're making a lot of money, but cashflow is tight. That's a big one. That's a big one when you talk to someone and they're making a lot of money on paper yet they feel like it's not showing up. They're not capturing it. What are some other signs?

Jason Ewers:
Yeah. You worry about your finances for your practice and at home. You not able to add new staff that you need. And also, you check your bank account often and worry about payroll. We hear that quite a bit. We talked to one of your peers, not too long ago and had to cancel a vacation that he had planned with his family because his cashflow got tight and he had to make payroll.

Casey Hiers:
And God forbid, there's an emergency.

Jason Ewers:
Yeah, absolutely.

Casey Hiers:
Right. And that can be tricky. But, today was all about characteristics of proactive versus reactive. And for a lot of people, people are doing an inventory of everything in their lives right now with what's been going on with the pandemic and as a practice owner, your tax management and your accounting team should be one of the top things you're looking at to review. Are they capturing everything? Are they keeping me on the straight and narrow? Am I able to take advantage of as many areas within the tax code as possible yet not having huge tax bills? There's a whole lot that goes into that. Hopefully our listeners were able to either feel really good because their accounting team hits a lot of the proactive characteristics. And if you're not that way and you feel like they're more reactive, do one of two things. Number one, challenge them to be better. Number two, shop around. Appreciate it, Jason.

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.