Tax Advice to Consider When Selling a Dental Practice | Dental Brokerage Baltimore MD
Dental Practice Sales & Transitions
It is necessary for you to be knowledgeable in a variety of areas in order to be successful in a dental practice transition.
For example, you should know how to sell the practice, how to market it, and most importantly, how tax laws might affect the dental transition.
It is important for sellers to have a thorough understanding of taxation procedures because the sale of a dental practice typically involves a large sum of money. The amount of savings, however, depends on a variety of factors, as well as state and federal tax laws that are continually changing. Just ten years can make a substantial difference in the market and legislation.
The tax laws can vary from state to state, so understanding them is important even if you’ve sold a practice in the past. Therefore, you should ensure that your practice hires the best tax advisor.
If you want to be sure that you are asking your advisors the right questions before you do this, you can familiarize yourself with tax tips. We have compiled some basic advice that you may want to review before approaching and during discussions with a tax advisor.
Understand how asset allocation works.
It is important to note that there are several tax categories by which your assets will be allocated when you sell your practice. Some will be in the favorable capital gains bracket, while others will be in the standard income bracket. Learn how to obtain the most appropriate tax return for your assets and understand what this means for your practice.
Take a look at different retirement plans.
You may be able to use your retirement plan to shelter part of the sale proceeds. This is if you plan to stay with the practice for some time after it is sold. Be clear about your intentions after the transaction with your advisor.
Avoid double taxation.
If you are a corporation (C-corp.), then make sure the sale is structured so that, in your capacity as the shareholder, you are able to attribute all the goodwill to yourself. Ask your tax advisor about the advantages of transferring to an S-Corp if you plan to practice for more than 10 years.
A dental practice sale can be a complicated process, so be sure to seek professional advice from a competent tax professional before making any decisions.
If you choose a consultant wisely, you will be able to generate a decent return on your investment. This is because the savings you can generate will largely outweigh the cost of hiring them. Our dental brokerage firm is here to help you. Contact us today to schedule a consultation.