The topic of discussion is always about reducing dental taxes, however what happens when you successfully reduce your practice taxes and want to expand to another location, or get approved for a loan to purchase an investment property?
This is a case we see often. So often is the dental practice owner so laser focused on reducing their tax bill that they fail to realize that their financials now essentially look weak in front of any bank or investor.
Why is this important? Well when you try to get a loan to open a second location, or say your able to secure an amazing location for an investment property, the bank rejects the application on the basis that based on your last three years of tax returns your practice is not profitable enough for them to take the risk of approving your loan.
So sometimes while trying to save quarters a successful entrepreneurial dentists can put themselves several years behind in their growth plan because they are unable to secure the capital needed to close on projects that would have set their practice and personal wealth on a different trajectory.
When consulting with our clients we always use the phrase “Be Bankable” meaning have your dental practice financials look strong enough at all points in time to take advantage of market situations.
That is all for this month.
Written by
Omar Virjee, CPA, CTC
