12 great questions to ask your CPA this summer

    June 13, 2011
    Having just gotten through tax season, the last thing you might want to discuss with your CPA is taxes. Although counterintuitive, now is the best time of year to address the issue head-on and Jake Jacklich, CFP®, tells you why.

    By Jake Jacklich, CFP®

    What your hygiene department can teach you about tax planning

    Having just gotten through tax season, the last thing you might want to discuss with your CPA is taxes. Although counterintuitive, NOW is the best time of year to address the issue head-on and here’s why. It’s summer and your CPA has time available to work with you.

    Consider the following: As a dentist you know that hygiene treatment and corrective dentistry are different services. They are billed separately. Clinical excellence in both services is essential for a good patient outcome. I’m confident that your office does a good job of communicating and educating your patients about the importance of healthy habits.

    Unfortunately, in my experience as a CERTIFIED FINANCIAL PLANNER™ practitioner working with self-employed dentists, I’ve found that many CPA firms neglect the importance of tax planning. Tax planning is like hygiene. Tax planning is not income tax preparation. Income tax preparation is more like corrective dentistry. If you only see your CPA in April, your visits are likely painful and expensive. If accountants were dentists, you would probably look upon many them in much the same way as you do those doctors who only perform “drill and fill” dentistry. In short, you need to have your CPA teach you how to brush and floss.

    The following are a few very good questions to discuss with your CPA. As a self-employed dentist, the answers you get will depend on your individual circumstances.

    1. If not already done, ask your CPA how you might benefit from the establishment of an “administrative home office” as your principal place of business.
    2. Ask your CPA how you might increase the fraction of your deductible business auto expenses.
    3. If you operate your practice as a corporation, ask if you are correctly keeping your personal expenses separate from your corporate expenses. Is your practice reimbursing you correctly?
    4. Discuss how having family members on the payroll might be beneficial. Ask if you are documenting your family members’ employment records correctly.
    5. As we get closer to the summer vacation season, ask your CPA about the tax rules for business travel.
    6. Ask your CPA for a written professional opinion as to which business entity form would be best for your current situation.
    7. Ask your CPA about the deductibility of health insurance and long-term-care insurance for family members as a business expense.
    8. Ask about the tax consequences of replacing that gas-guzzling SUV, which your practice expensed a few years back.
    9. If you own your clinic, ask your CPA about a “cost segregation analysis” and if accelerating the depreciation of assets within your office building would be helpful.
    10. Are you ready for an IRS audit today? Ask about your business tax record requirements, and what your CPA needs from you.
    11. Ask your CPA how a tax qualified retirement plan might benefit you.
    12. If you are subject to the Alternative Minimum Tax, ask your CPA how increasing your Schedule C deductions might help.


    Ask if there are any other things that you could be doing to save, minimize, or defer taxes this year. Every dollar you save in taxes is a dollar that could be growing in an investment to achieve your goals.

    As a CERTIFIED FINANCIAL PLANNER™ practitioner I know the basics about income tax planning — I can recognize red flags. With the exception of a retirement plan, I can’t directly evaluate or implement income tax planning strategies. Your CPA is the tax advisor and a vital team member; he or she must do more than prepare your return. Your CPA must lead and implement income tax strategy.

    Author bio
    Jake Jacklich is a CERTIFIED FINANCIAL PLANNER™ practitioner and financial advisor with Waddell & Reed in Virginia Beach, Va. He works primarily with self-employed dentists to help them better understand their money. His core competencies include financial planning, analysis of the doctor’s current financial position, dental practice valuation, tax-sensitive wealth accumulation and distribution strategy, risk management, investment strategies, practice transition, and retirement planning. Jake is securities licensed in Arkansas, Virginia, and Wisconsin, and he can be reached at (757) 374-6979, via email at [email protected], or at www.JakeJacklich.wrfa.com.

    Waddell & Reed, Inc. Member FINRA and SIPC.
    Waddell & Reed does not provide tax advice, please consult your tax advisor prior to making financial related decisions.
    © June 2011