Financial & Operational Mistakes Dentists Make - Part 1

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Welcome everybody, to another episode of the Dental Boardroom podcast. I've got to apologize. I have been out of pocket for the month of October. You know, I had quite a bit of travel going on and just a lot going on in October. As we're heading into Q4, we get very busy around here. Practice CFO because we are stable, all of our clients to stick the landing for the year with their W2, their tax planning, their cash flow planning, funding 401k and defined benefit plans, and just everything to get all the levers in their financial ecosystem lined up just right to minimize taxes and maximize output to their personal balance sheet and therefore help them accelerate financial income independence, which is what we live for here at Practice cfo. And I am getting back on the podcast train here. As you know, I try to do two a week, except when I get out of commission like I have recently, but that's pretty rare. That's pretty rare. So I'm excited to dive back in. I've got some great podcast episodes coming up. I've got Tomorrow with a Howard with Howard Fran. Many of you will know who Howard Fran is. He is the founder of Dental Town and we're going to talk about AI in dentistry, he and I. If you haven't listened to my AI series in Dentistry, go back. I've got about seven or eight episodes on AI tech making its way into your practice in your operating room. And I interviewed the founders and executives and salespeople of some of the more common AI companies that are emerging in the space of Dental. And Howard and I, Howard Fran and I are going to talk about that tomorrow. So I'm looking forward to having him join the show. And then I'll also be joining on his podcast show that he does as a part of the Dental Town community. So excited about that. All right, what I'm jumping into today, if you're watching this on YouTube, you can see it on the screen. I'm jumping into a topic that, that is near and dear to my heart because it is one that I am attempting to help dentists avoid making, which are financial stakes mistakes as dental practice owners. And so this series, this is probably going to be, I don't know, two or three episodes here, depending on how much I want to jabber on these subjects. But these are key financial mistakes that dentists make in their practice and even in their personal life. As you know, here at Practice cfo, we are ultimately trying to drive financial success on a very personal level. And the practice is simply the engine or the heart of cash flows. And those cash flows pump out into their broader financial ecosystem that we use to increase their savings, increase investments, reduce their debt, and, and ultimately, ultimately create a real strong sense of financial stability and financial progress. And if we can do that and help our clients attach meaning to the money that they are creating for their future selves, I know we have done a good job. That is our mission here. And so a lot of what we set up in some ways are sort of guardrails or bumpers on the bowling alley lane that we prevent dentists from tossing that gutter ball. Because when you do that, it really affects your financial score. It really affects your financial progress. It's almost like trust. Trust can take a long time to build up, and overnight it can be lost. That is the case with financial accumulation. So wealth accumulation takes a long time to build up. And sometimes it you make the wrong step and suddenly years of hard work of incrementally building your financial security is wiped off the map. Well, I'm going to talk about some of these mistakes. Some of them are smaller mistakes. Some of them are existential mistakes almost. And some of them are just small strategies to help build wealth. And by neglecting or omission, that's the mistake. In some cases, it's simply omission, that is not doing something that is a mistake as a dentist. So let's go through these mistakes one by one. And what I've done is I've attempted to categorize mistakes in groups because those mistakes are similar to other sort of neighbors to other mistakes that dentists make. And so the first mistake or sort of set of mistakes I'm going to talk about is kind of the most fundamental, and that is cash flow and spending mistakes where the lack of cash flow and spending discipline would probably be the better way to say that. And there are four categories I want to talk about right here. Spending more than they earn, excess distributions, a poor consumption income ratio, and then simply not automating savings. So let's go through these. Number one, Spending, Spending more than they earn. Are you looking to buy or sell a dental practice? 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I did a full one hour podcast on why dentists struggle to live beneath their means. This was probably early 2024, 25 late 2024, and you can find that by just searching why Dentists Struggle to Live Beneath Their Means on the Dental Boardroom podcast and I go into this one in depth. But let me start off by saying that you dentists go through a lot in your journey to become a dentist and you come out of dental school and you have significant debt. Most dentists that I know fresh out of dental school have a major negative net worth, and they have a major negative net worth because their debt exceeds their assets and that's largely student loan debt. And that's understandable. However, I always put student loan debt in the category of good debt because you're essentially creating through that debt. You took out debt in order to create an income generating aspect in your life. Now in this case, it's not an asset. So I can't say it's an income generating asset like a stock that issues dividends. But it's your brain, it's your skill set that is the most valuable asset that you will have, that you can monetize as a dentist if you do that well. But when you come out of downschool, there's this thing that I always call pent up consumerism. You've just been holding out for so long, living like a college student. You come out and you just want to buy those things that you see other people your age starting to accumulate and you feel like you're getting left behind and enjoying the good things of this earth. And I always say if you can come out of dental school and just keep living like a dental student a little bit longer, or maybe, maybe you're in your mid-40s or mid-50s or even mid-60s. If you come to me and you're not where you should be financially, I'm going to tell you to live like you're, like you're a college student. Yeah. I'm going to have you really look at your budget. Now, as life goes on, you sort of build into your life certain expenses you can't get rid of. But everybody at one point or another should really do a diagnosis of what they spent. And that can be really easy. There are plenty of online budgeting tools where you print out PDF tools. You can literally hand write it and calculate it, maybe throw it up in Excel, whatever. The thing is, is that you're conscientious about it. You're doing something that makes you think about it. And for me, it's like when I go to the gym, I automatically tend to watch what I put in my body, what I eat. And there's something about making a conscientious effort or almost a habit out of it. But in this case, I think it's a good idea to at least one time understand what you really need to live on and then compare that with what's coming in from your dental practice. Now, doctors tend to spend more than they earn, not just because they've been dental students, they come out with pent up consumerism, but because sometimes there's a false illusion of how much cash that, that they have available to spend. And they have two pockets on the same individual. They have their business pocket and they have their personal pocket. And the business pocket is the business checking account. And the business checking account can build up cash. And sometimes it Becomes a temptation to reach over into that account, pull out some cash, transfer it to a personal account to then use to take that vacation, buy that car, spend on that new home or whatever it is. And it's really hard to sometimes resist it when you see there's cash over there in that business checking account. But there's a lot of reasons why one needs to be extremely cautious when they move cash from their business checking account to their personal checking account. Now, there's two ways to do that. One is through payroll. Most dentists are s corporations, and they have to pay themselves as an employee of their corporation. And that goes through payroll and is a W2. The second way is a transfer through an online transfer on your phone, on your computer, outside of payroll. And it's just an ach transfer from business checking to personal checking. Now, the way dentists oftentimes see their business checking is, is they see it as a backup atm. And when cash gets low in the personal accounts, we often tend to dip in to that backup ATM without having a good plan around how, why, and when money transfers out from the business checking account to the personal checking account. Now, by the way, if you're an independent contractor, this still applies. And I think all independent contractors, if you're an associate independent contractor, you should have a separate checking account for your business as an independent contractor. And that the same concept of when you transfer money from that checking account to your personal checking account applies here. Now, what happens when a doctor pulls out more cash than they should from their checking account to their personal savings? Savings accounts. So from business to checking to personal savings. Well, the IRS has a rule on this. And the rule is you cannot pull out more cash from your business checking. Then you have what's called basis or your tax basis. And your tax basis is simply money that you put into your business checking from personal checking. That's number one, which doesn't happen very often. And number two, it's the cash you keep in your business checking account account from earnings after paying all of your business expenses. What's left? And what's left, the IRS says. The IRS says you can go and pull that out. Now. A lot of times, though, the amount the IRS says you can pull out is less than the cash in your checking business checking account. That's because what the IRS calls cash in your account is sort of this synthetic number. It's not actual cash showing on your business statement, business checking account statement. It's actually a function of your net income per your tax return that you send to the irs every year it's that net income less what you've pulled out as distributions or transfers to your personal account. And unless you're deliberately keeping track of that synthetic number, that amount that you're allowed to pull out, you, you're not going to know. And this is something CPAs actually have to stay on top of to be able to tell you how much you can take out. Now here at Practice cfo, this is a number we track for every client, so we know how much you can pull out of your practice. So when you ask for that extra money to be deposited in your personal account, we can tell you how much. Because let me tell you what happens if you pull out more than the IRS allows you to pull out. And again, what they may be allowing you to pull out of your business checking is less than the cash in your business checking. And here's why. Two main reasons. Number one, oftentimes, especially when you buy a practice, you get working capital as a part of the loan. If you get a cash out loan out of your practice that's collateralized by your practice, so cash lands in, that could be a line of credit. That could just be like an equity loan you get based on your practice, sort of like a home equity loan, but, but it's a business home, it's a business equity loan that's called a cash out loan. Anytime you get cash in your business checking account that is not from collections, it's not from doing dentistry, that does not go in the IRS view of your piggy bank balance. It doesn't. You can't pull that money out. It doesn't give you basis as an S corporation. Now there's some nuances there for partnerships and sole proprietors. Most of you are S corporations, so I'm going to focus on that. And so that's number one, if you get cash landing that's originated from a bank loan, you cannot pull that out. And for new buyers, this is often a problem because there's a dip in cash flow in the first year of owning a practice. And sometimes it's that working capital loan from the bank that is sort of the life support, like water in the dirt desert. And they tend to pull that out in order to just live on. Now the second reason why doctors end up being able to pull out more cash from their business checking account to their personal checking account than the IRS allows them is because of this thing called depreciation. When you buy a practice or even anytime in the life of owning your practice, you buy equipment, let's say you buy CAD cam, you buy a cone beam, you buy a set of dental chairs, you do a renovation on your building. Whenever you buy these tangible assets, what you can do is you can deduct that in the first year of buying it. Typically you gotta depreciate it over time. But most CPAs will have you elect what's called a Section 179 deduction. If you don't know that, you absolutely should chatgpt it. Make sure you understand what, what section 179 deduction. I don't think dentists and dental practice owners need to become experts in the tax code. I don't. You shouldn't. It's not a good use of your time. I recommend you rely on CPAs and good financial consultants to help you there. But there are some key terms that I think you should know. And depreciation and 179 is one of those areas. Now, when you buy that, let's say you buy that CAD cam and let's just say I'm going to use a nice round number. It's $100,000. You're supposed to deduct that over five years, meaning that if you literally came out of pocket $100,000, you're going to be out of pocket $100,000. And you only get a deduction of a portion of that. Let's say it's $25,000 in that first year. You see, it's not straight line. It's not 20,000 every year for five years equals 100,000. Instead it's like 20,000 the first year, 30,000 the second year, 15,000 the third year, 10, 10,000 the fourth year, and whatever's left the fifth year. It's this sort of unequal front loaded deducted deduction timetable over those five years. It's called macrs. Don't worry about it. Just know that when you buy that CAD cam, you're supposed to get the tax deduction over five years. Now they make an exception. And the exception is if you elect section 179, which is the part of the tax code that allows this, you can front load all $100,000 of that cat cam to be deducted in the current year. So if your net income was 400,000 before deducting that CAD cam cost, your net income after deducting that CAD cam cost through a Section 179 deduction is 300,000, $100,000 less. And depending on your combined federal and state marginal tax rate, that might save you anywhere from 25 to to $50,000, $25,000 to probably $47,000 because of that cost. Now here's what dentists like to do is they like. And really it's their CPAs. By the way, it's their CPAs who pull this off. Dentists go and take out a loan to buy that CAD Cam. Maybe it's a Patterson loan, maybe it's a shine loan, maybe it's direct with your bank or a specific third party lender. But you get a loan and so in that first year, you literally come out of pocket very little or even nothing if it's a 6 to 12 month no payment period. So no money goes out of your business checking account. Your CPA elects the 179 deduction of 100%. And so in that year you get $100,000 savings. So not only did you get a CAD cam that you're now using in your practice, ideally you're saving in your lab costs. Now also you just are going to pay 25 to $47,000 less in taxes. And guess who looks like a hero? Your dental supplier who sold you that CAD cam and your CPA who just saved you a bunch of taxes and you're like high fiving your team. Nice. This feels like magic. All right, fast forward the next year. Now you're coming out of pocket on that $100,000 loan. Let's say you're coming out of pocket $30,000. Let's say it's 20, I don't know, $2,500 a month. You're coming out of pocket $30000. Guess how much tax deduction you get. Very, very little. Just a little bit for the interest portion of that loan. But the principal, that 100,000, you no longer get a deduction for that because you took it in the first year. And that is called accelerating your depreciation or front loading your depreciation over those five years into the year that you bought that CAD Cam. And again, that's why your taxes were so much lower, because you front loaded $100,000 tax deduction in the current year. And when you took out a loan to buy it, you didn't even have to come out of pocket.

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Ever wonder where your hard earned money.

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So you get this huge benefit in year one, but then you pay for it. You pay for it in years two through year five when you're paying back on that loan with almost no tax deduction at all. And so your taxes not only go up because you don't get that $100,000 tax deduction in the next four years, but you also have less cash to pay your higher tax bill because you're paying on the loan for that CAD Cam. And so everything reverses. First year, your CPA looks like a hero. In the next four years, you're fighting. You're fighting with your cpa. Why did my taxes go up so much? This doesn't make sense. Well, Doc, it's because we got that 179 tax deduction last year, yada yada. And now you're having to pay on this loan, yada yada. And it's put you in a tax crunch. What do you do at the end of the second year? Well, you go buy another really expensive piece of equipment. Maybe it's a cone beam, maybe it's five new dental chairs, whatever that is. And then you do the same thing. You finance it through debt and you take a section 179 and it saves you for that second year. But guess what? Now it's triple the trouble in year three when you're making payments on the CAD Cam and the cone beam or whatever it is you bought. So now you may have 40, $50,000 going out for that year, which with almost no tax deduction as well, taxes going up, very little tax deduction, you got a bunch of money going out to pay the debt and it puts you in a cash crunch. This is a trap. This is like a. It's a depreciation trap. And so many dentists get lost in this. And it is a huge mistake. Which is the theme of this podcast. Mistakes. Financial mistakes that dentists make is they end up being lured in from a CPA who is shortsighted and a dental supplier who's just trying to do a good job. I love dental suppliers, I have a great relationship with them. But a lot of times what they will say is, hey, you get this free tax deduction called a Section 179 deduction. It's not a free tax deduction out of thin air. All it is is it's just accelerating the full deduction of that cost and into the current year. That's all it is. It's just a timing difference of when you get the deduction and when you front load the benefit into the current year, you end up suffering in future years. So what I always recommend is that you try to time the deduction with the outflow. So if you take out a five year loan for that CAD cam, then don't accelerate the depreciation. Take the depreciation over the five years. So you're mapping or you're matching the tax benefit of with the cash outflow to buy that CAD cam. You want to map those. Now, occasionally there is a reason why we will accelerate the deduction even when we finance it. But that's kind of the unusual circumstance and we'll do it for a very specific strategy. So when you end up taking out more cash, going back to this cash flow management, pulling out too much cash from the business checking account to the personal checking account. When you do that, because the synthetic balance that the IRS says you can transfer out is X and you pull out two to three times X, that's called an excess distribution. You are pulling out excess cash from your business checking account to your personal checking account that the IRS says you cannot do it because it's either debt money or because you depreciated so much your assets that you financed this equipment that you financed that you have this false sense of cash in your business checking account. When you depreciated that, it pushed your net income way down. And therefore the IRS says your income, what you put into your piggy bank is actually a lot lower than the cash balance because you took that accelerated depreciation through the 179 deduction. And so you distributed more money from your practice to your personal checking out than you should Have. And guess what? You're going to pay a penalty on that. And it's called excess distributions tax. And it bites unknowingly. And surprisingly many dentists and then they get into a conflict or an argument with their cpa. Why, why did I have to suddenly pay so much taxes when the prior year I got a big tax refund perhaps. Okay, so spending more than they earn, that's number one. That's a problem. One of the biggest mistakes, they simply spend more than they earn. And dentists tend to spend every dollar as human nature, humans, dentists being a subcategory of humans, tend to spend every extra dollar that suddenly appears in their bank accounts. I always say spending goes up and down as fast as cork on water goes up and the water goes up and down. It's just almost immediate. And it takes really good discipline in order to avoid that tendency of human nature to set aside money that you could go spend right now to set that aside and put it in a wealth building account tool. Paying down bad debt, building emergency reserve funds, Building 529 education accounts for kids, 401ks, IRA accounts, all of those wealth building channels, they don't do it because they spend it well. It takes discipline. So they don't spend more than you earn and don't have more distributions out of your practice than you should and avoid the excess distributions. Alright, let's go on to the next one. And that is a consumption to income ratio that's too high. Now this really relates to spending more than they earn. But this consumption to income ratio is just this. This is simple math. It's what did you consume, what did you spend? And I like this definition, consumption income. I like this term because consumer items are different than investment items. When you go buy something that loses value the second you pull it out of the store or off the lot, that is a consumer item. That's going to be close, that's going to be a car, that's going to be vacation, that's going to be eating out and dining, that's going to be entertainment, all of that, that's going to be toys, all of that. Those are consumer items because you're consuming them and all the value goes away as you consume it. An investment item is something that actually maintains its value and goes up over time. Even though it may sort of be volatile and fall in the short run like a stock over time it is expected and will most likely go up. That's an asset. We need to build those assets. So consumption to income is how much Are you allocating of your net income to consumable items that lose value over time? And what is that number divided by your income? Your income being what lands in your personal checking account from payroll and what you're able to safely transfer as a distribution out of your practice to your personal account. And so if you transfer per year, let's just say 200,000 through W2 and distributions from business checking to personal checking, 200,000. And let's say you spent, let's say 160,000 on consumer items and the other 40,000 went to paying down debt and putting in your IRA accounts, then that is 160,000 divided by 200,000 consumption to income. Consumption divided by income, and that is 80%. 160 divided by 200, that's 80%. So your consumption to income ratio was 80%. The lower you can get your consumption to income ratio, meaning the more, the less you spend on consumer items relative to your income, the more surplus you're going to have to allocate toward building, building wealth. That right there, my friends, is the number one indicator of somebody's progress toward financial freedom, is that simple ratio right there. At practice cfo, we try to calculate that on a regular basis and give insight to our clients on whether or not they have a healthy consumption to income ratio. And here's the thing. I have dentists who make incredible amounts of money. They may be taking home a million dollars a year and sometimes not always sometimes those doctors have very little to show for it over the years. Why? Because their consumption is so high. And therefore their consumption to income ratio, even if their income is good.

Is not great. Just look at you have. Income is the denominator on the bottom. Consumption is the numerator on the top. If your consumption go, if your income goes up on the numerator, the bottom, if your incomes goes up, but your consumption in the numerator on top goes up as well, well, guess what? The outcome isn't great. And so I have some younger doctors or doctors who maybe don't have as much income, but they're just so good at defense and how they spend money. They don't over buy their cars, they don't overdo their house, they don't shop out excessively. They're not constantly having 10,000Amazon items show up on their door every week. They're careful on where they go out to eat and their vacations. All of that accumulates to having a good healthy consumption to income ratio, which then allows them part two of that sort of equation. Is to use that surplus wisely. Wisely to pay down credit card debt, to have a good emergency reserve fund and to invest in good, ideally good sort of investments, index based, low cost investments in their IRA, 401k, et cetera. And I will also say those doctors who are able to live on a low budget personally, it allows them to have more money retained inside of the practice to invest in growth through practice management consulting, good technology, good, good marketing, good financial consulting like Practice cfo, good CFO services, all of that. They're building that engine, that platform of really strong practice operations and success which then that investment ends up being sometimes having the best return on investment or roi. Is that reinvestment in the practice? Okay. And the last item on this section of cash flow and spending discipline is simply not automating their savings. This is such a basic simple mistake that is so pervasive among people. And I do see this often in dental. Setting up automatic savings is so easy. It doesn't matter which bank you have, they all can have you do automatic savings. Now there's different ways to do this. You could say work with your payroll provider and say I would like every paycheck to deposit $250 into my Aira account at Vanguard or Fidelity or Schwab, clients of Practice cfo. We hold all of our clients assets at Schwab except for the 401k which we have now moved over to Vanguard to have really good low cost participant directed 401k plans. But you could set it up to automatically just deposit that amount as a part of your payroll. So let's say your payroll, you net your payroll to be $10,000, maybe it's $15,000 gross. This is for you personally as the doctor, not your employees. But you let's say it's $15,000 gross. You have a couple thousand going into federal taxes, maybe a thousand into state taxes. You got some going into fica, that's Social Security, Medicare, maybe, maybe your health insurance is baked in there as well and what's left is, and ideally you're funding your 401k. That should absolutely be automatic. That's a no brainer. Just simply say what is my max 401k contribution? 20, 25. That's 23,500. Divide that by the number of payrolls in the year. If you're twice a month, that's 24. If you're every two weeks, that's 26. And just set that on autopilot and it deducts the right amount to max your 401k every year. But in addition to that, you can have $250, $500, $1,000, $5,000, $15,000 or some of our clients, 30 or $40,000 being deposited into trust accounts, brokerage accounts, IRA accounts, et cetera, in a very, of course, strategic way to maximize the ultimate growth on these. But you can set that up through payroll, so it's just automatic. The other option is outside of payroll. You just have an automatic transfer from your business account to a personal savings account. That's called a draw. You'll want to coordinate with your CPA on that so they know how to categorize that expense in the QuickBooks ledger. But you can have that set up so it automatically transfers $2,000 a month over to an individual account or a family trust account or an IRA. Just remember these IRAs, you have limits. It's $7,000 a year if you're under age 50, 50, it's $8,000 a year if you're older than age 50. And you don't want to overfund those things, of course. And if you're in a high income tax bracket, you can fund a non deductible IRA and then roll that over into a Roth IRA through what's called a backdoor Roth conversion. Now don't try that one on your own. I would make sure you get proper guidance on doing that because it's easy to make mistakes and then you end up paying penalties on that. But we do that for, I'd say most of our clients, we do a Roth IRA conversion for them and their spouse virtually every year and we build up a beautiful tax free balance that is just 20 years down the road. It is something to behold to have tax free money. You pull it out, the IRS never gets their sticky paws on it. So automated savings. Also you could say I'm going to add to my personal payroll an extra $2,000 a month. So going back to my example, instead of saying my payroll is going to be structured such as 15,000 is my gross less FICA, federal, state health insurance, et cetera, lands me $10,000 a month, which I use to spend, you could say, I'm going to have that land me $12,000 a month. So you go from 15,000 up to roughly 17,000 as your gross compensation in your payroll after everything comes out. Now you're left with 12,000 and you can take 2,000 and have that automatically transferred the day of or the day after your payroll lands to be automatically transferred into your Savings or investment accounts. Or you could even have a bad debt. Let's say you got a car loan at 8%, it's non deductible. You could have that extra 2,000 go toward paying down that bad debt. You could have it go into an emergency reserve account at your bank. And anything you can do to automate this stuff. Because if you don't automate it, guess what you spend it. If you don't automate it, guess what you spend it. That is the way of nature when it comes to personal finance. It just is. And so you have to intentionally construct that piping, as I call it, the piping for everything that automatically goes where it needs to go if you're a client of practice. Cfo. This is a big part of what we do every time we meet. We do a cash flow forecast, we do a tax forecast. We, we look at your debt payments, we know what you need to spend, we look at your personal life goals around education, funding, buying a home, getting that car, getting married, all of those things that have financial price tags. And we construct the ideal or optimized cash flow movement. So everything has a purpose. I call this traffic, controlling your dollar so that you get the most out of it. And we set up that piping so that it just happens automatically that everyone is the first category of mistakes that dentists make. To summarize, number one, spending more than they earn, which is simply having too high of a consumption to income ratio. Money talks and wealth whispers. You see this all the time. I cannot emphasize this how true this is. So many of the people, I would say the vast majority of the people, people you see living a high lifestyle do not have the justified income to live that life. And what gives is they're behind in taxes, they don't have a whole lot saved, they have a lot of debt. And they are living life today with very little regard for the future.

The people who tend to have, I look at my clients and I think who are the dentists who have 9, 10 million? Yep, we got dentists who have 9, 10 plus million. It's been because their whole career they lived so far below their means. And in every case they have a very profitable practice. That is true. But not only do they have a really strong offense with a profitable practice, they have a really good defense. It doesn't mean they're living poor. It just means that they're living well below their means and they're saving money side on a regular consistent basis. And, and they're doing it prudently and they're avoiding the other mistakes, which I'm gonna go to in later episodes here after this one. And it builds up and it's a beautiful thing. And a lot of times you wouldn't know this when you look at them. I call it stealth wealth. They're very sort of stealthily going about building their wealth. And that's why I love this phrase, money talks and wealth whispers. And then lastly, actually two more. The excess distribution issue, getting caught in, in that excess distributions trap. Excessive depreciation, not balancing that out with the overall tax and cash flow picture, that's a problem. And lastly, just not automating those savings. Thanks everybody for joining this episode of the Dental Boardroom podcast. In the next episodes, if I give a little precursor to what's coming up, we've got tax planning gaps. We're going to talk about missing the pte, which is such a low hanging fruit in most states. And yet I got a new prospective client today that came in, looked at their tax return. Sure enough, they did not elect the PTE. It's not their fault, I guarantee you. Their CPA simply did not tell them. And that left about $7,000 of free money. Free money. 7,000 bucks that had to get sent to the IRS. That could have been an investment account that would have turned into $50,000 over the next 20 years. Yep, simple mistake. And, and that's been going on with this client since the PTE was permitted back in 2018 or so. That's a lot of money. That's probably four to five hundred thousand dollars in retirement gone because of a very simple oversight from the CPA that the dentist didn't know about. So we're going to talk about what is the pte. We're going to talk about missing low hanging tax deductions. Very simple stuff. We're going to talk about not meeting enough with their CPA and, and the misuse of depreciation, which I talked a little bit about today. Then we're going to go into retirement and investment mistakes. The wrong type of retirement plans, paying off debt versus investing, investing in private deals. I can't tell you how many catastrophes I've seen coming out of private deals with some relative or friend that's going to turn out to be a huge winner ends up being a massive flop. So we'll talk about that as well and ways to sort of filter out what are dangerous private investment deals. We'll talk about business and practice management risks, not understanding the cost of PPOs, lease terms, partnerships, not having good financial planning analysis and not using good KPIs and team huddles. We'll talk about that. And then leadership and oversight failure. I'm not gonna go over these right now, but we're gonna cover those.

Areas as a leader in your practice that lead to financial failures. Stay tuned on that one. And then lastly, how much should you pay yourself as a W2 in your own practice? So insufficient W2 income tends to lead to the IRS knocking on your door and then they start to turn over every single rock they could find and it is a nightmare. So what should the W2 that you pay yourself from your own corporation? You B in order to keep taxes minimized, but also to keep the IRS at bay. So stay tuned for that. Thanks everyone, for joining another episode of the Dental Boardroom podcast.