Why understanding professional fees is critical for dentists
You get what you pay for.
Comparing a CPA firm with little or no experience in working with dentists to one with extensive experience, there should not be a question as to which firm would charge higher fees. Is the dentist getting what he or she is paying for in the way of advice? It is a difficult presentation to explain to a dentist that the actual preparation of the tax return is probably the least important part of the year’s advisory service that brings the dentist to the point of having the tax return prepared.
For example, the advice about how fast to depreciate a piece of equipment, whether to buy or lease a new technological advancement, what type of retirement plan to institute and how to arrange employee bonuses all become finalized on the tax return.
The report that goes to the Internal Revenue Service is merely the end result of all of the conferences that took place during the course of the year. The decisions from these meetings or calls end up recorded on the tax returns. The actual preparation of the tax return takes time, but with good bookkeeping should not be more than in the range of about $5000 per year for the practice return and the dentist’s personal return. It is the accountant’s advisory services that are the most important and that should incur the highest charge per hour. The cost of these advisory services should be a cheap price to pay for the savings that they provide.
Other financial advisors
As with the experienced dental CPA compared to one with little experience in the dental world, an experienced financial advisor/planner, with experience in working with dentists is worth more than those without that expertise. Another thing to consider is the financial advisor/planner, who is selling a product besides giving advice. Is there an inherent conflict of interest? The dentist must determine that but must be aware of excellent salesmanship in the delivery as well. The dentist should not want a salesman but should want the expertise of a solid explanation without regard for the particular product that is being offered. The advice is the critical issue.
The first point to consider is to make sure that there is experience in working with dentists and understanding the needs of that professional as well as the knowledge of the dentist regarding finances. Comparing the fees is important but in making the decision, the dentist must think of his or her own expertise and charges. Won’t the dentist charge more with more experience? It is important not to look at the fees only and to be aware of getting the advice necessary to advance one’s goals. The cheaper charges may bring much less of a return over the long term.
Decisions are difficult. Relying on someone with a back ground of working with those in the dental profession is certainly an asset. A referral from a happy customer should ease the charge and have the dentist more interested in the result that comes from familiarity with the field of dental professionals.