Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
Dr. Jennifer Bell: Financial Mistake image

Dr. Jennifer Bell: Financial Mistake

S2 E2 · Dental Fuel
Avatar
74 Plays1 year ago

Diving deep into dentistry's financial landscape with the insightful Dr. Jennifer Bell on our latest Dental Fuel episode! 

 Join us as she uncovers a common pitfall many dentists face – the pursuit of depreciating assets to trim those tax bills. But as a dentist, have you truly considered the long-term impact? 

 Dr. Bell shares her journey, expressing the need for more guidance in understanding how these assets impact profitability, stressing the importance of dissecting expense line items for informed decisions. 🦷

Don't miss her invaluable advice for cultivating a thriving practice! 🎙️ 

About The Guest:

Dr. Jennifer Bell is a full-time practicing dentist in Raleigh, North Carolina. With 14 years of experience, she owns two diverse dental practices that offer comprehensive care to patients of all ages. Dr. Bell is also the host of the podcast "Dentists in the Know" (DINKs), where she and her colleagues provide up-to-date information and insights on various topics in dentistry.

Key Takeaways:

  • Dentists often chase depreciating assets to reduce tax liability, but they may not consider the long-term financial implications.
  • Mortgage payments on acquired assets come out of the practice's profitability, reducing the owner's take-home income.
  • Dentists should carefully consider the ROI and financial responsibility of acquiring new technology and equipment.
  • It is important to give enough time for onboarding and training when introducing new technology to the practice.

Connect with Jennifer Bell: @jbreezy.78

Connect with Dentists in the Know: @dentistsintheknow

Connect with Ignitedds: @ignitedds

Connect with Tanya Sue Maestas: @tsmaestas.dds

Ignitedds.com

https://ignitedds.com/masterminds/

Transcript

Introduction to Dental Mistakes

00:00:00
Speaker
Dental fuel. The podcast that focuses on what no one else is talking about. Mistakes. The dental world is full of before and afters and no one is talking about the middle. Dental fuel brings you the unspoken in between.

Financial Mistakes in Dentistry

00:00:13
Speaker
Our conversation continues with Dr. Bell where she talks about a financial mistake and how it ties in with taxes. Let's listen in.
00:00:23
Speaker
Transitioning over from clinical practice to finances, what has been a financial mistake that you have made in your career? That's a fantastic question. Mistake, I don't know if it's a mistake, but something I think probably I wish we had had better guidance on early on.

Impact of Asset Depreciation

00:00:42
Speaker
When you're opening a practice, there's a lot of pressure for this like depreciating assets and sort of chasing this
00:00:51
Speaker
Unicorn, if you will, that as you acquire things and purchase things, it helps reduce your tax liability. And so there's sort of this constant desire to say, okay, well, what do we need this year? And early in practice, there's generally a plethora of things that you want to acquire. And so finding those things year two, year three, not an issue.
00:01:12
Speaker
And then your four, your five, you're like sort of scratching your head going, is there something I want to have fun with or invest in that would be outside of my normal scope? And maybe you do that. The nasty piece that nobody really talks about is eventually those depreciating assets go away and you're still stuck with the mortgage payment on these lovely things that you've acquired. And you don't actually get any tax breaks. So not to get too heavy in the financial weeds on this, but let's say your practice is profitable, 500 grand.
00:01:42
Speaker
You don't get to reduce that 500 grand by the 250,000 that you spent on mortgage payments.

Pitfalls of Tax-saving Investments

00:01:48
Speaker
You might get to write off the interest, but that's it. That mortgage payment is coming out of your profitability. So that's money not coming home to you, but you're paying full tax burden on it.
00:01:58
Speaker
So any young practices starting out, they start chasing this unicorn investment of the Section 179s and rapid depreciation because they don't want to pay the tax liability. But the reality is, after you've acquired all of these assets, the mortgage payments will still be due, most likely, unless you just happen to have a trust fund and you're paying for all of it in cash. The mortgage payments are going to start to be due, and that is coming off of the profitability line, not the top line.
00:02:29
Speaker
Definitely were some lean times for my business partner and I when we finally grasped the reality of the fact that we had these huge mortgage payments on all these things. We upfitted a cold start practice that had no patience. We had to build the infrastructure.
00:02:45
Speaker
and we bought a CERAC and we bought a CBCT and all the things that we really wanted to have accessible, it wasn't wasteful spending and they are all assets that we use, but there definitely were times where our mortgage payments were 20 grand a month working through all of these different assets that we had acquired
00:03:03
Speaker
And all that is doing is coming off the profitability of the owner dock. So it's just really important to understand you cannot keep chasing that.

Weighing New Technology Investments

00:03:11
Speaker
So you have to have a pretty good understanding of what your expense line items look like. Otherwise that's coming out of your pocket. That means year three, four, five, your salaries are going to go down in order to service that debt.
00:03:26
Speaker
Yeah, I was just talking to Dennis and I told him how Dennis are just so attracted to shiny things and they are nice and they're very useful to in the practice. But knowing when to acquire them and when the appropriate ROI for your practice will be there, I think is really important.
00:03:41
Speaker
Absolutely. And making sure that you are giving it enough time for onboarding, that you've got enough time to train your team because you don't want it to be the treadmill that you bought that sits over there and you hang all your clothes on, right? We are attracted to those things because I think we have a desire to stay new and fresh in our profession. And quite frankly, class twos get pretty boring. And so for those of us that are, the majority of us in this profession are intelligent, driven,
00:04:11
Speaker
entrepreneurs to some extent.

Regrettable Financial Decisions

00:04:14
Speaker
The idea of mundane work every day is not satisfying, so bringing in scanners and technology is what actually gets us excited to put our feet on the ground and go to work every morning. But there is a financial responsibility that comes with that.

Competitive Insights on Financial Mistakes

00:04:30
Speaker
I wouldn't qualify it as a mistake because we worked ourselves through it, but I definitely would qualify it as maybe a regret of not fully understanding the total picture of what the financial liability would look like. Interesting. Yes, very well said. I think that was very insightful. No one has gone that direction yet, so I appreciate that. Yes.
00:04:54
Speaker
Yes. I'm only a little competitive. It's fine. And if Chad says it, I want you to just edit it out so that- Yeah, for sure. I'll be so interested to see what he says and how in tune the three of you all are in your responses. I know. Will his biggest financial mistake be Dennis in the know? It's possible. Yeah. That would be hilarious. Yeah. I look forward to talking with him. Thanks for tuning into this episode.

Engagement and Resources

00:05:20
Speaker
Be sure to follow Dinks on Facebook and on Instagram.
00:05:24
Speaker
And don't forget to follow us as well at Dental Fuel and at Ignite DDS. If you're interested in the Ignite DDS Masterminds program, be sure to check out the show notes for more information.