'Use it or lose it' — Henry Schein VP Keith Drayer explains how dentists can profit from technology investments

Dentists

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Technology continues to enter the dental practice, benefiting both patient and dentist.

Henry Schein Financial Services Vice President and General Manager Keith Drayer discussed how dentists can take advantage of section 179 tax deductions when investing in technology and equipment with Becker's Dental Review.

Question: When should dentists consider investments for section 179 and when should dentists avoid making technology/equipment investments?

Keith Drayer: More equipment and technology is acquired at the end of the year than at any other time during the year, even though the benefit remains the same year-round from a cash flow standpoint. Section 179 applies to purchases made at any time during the year, but the closer you get the end of the year, the closer you are to completing tax returns and closing out the opportunity for that particular tax year. We do encourage practitioners to plan a year-long strategy for technology and equipment investments.

Starting with the basics. Practice owners should ask themselves if the technology or equipment will benefit the patients and/or staff? Does it increase the quality of care provided to the patients? Will it enhance efficiencies in the digital workflow? By asking these questions dentists can alleviate costly downtime and increase productivity, thanks to the new equipment.

Q: Do dentists always profit from section 179? Do dentists typically use section 179 deductions?

KD: Dentists almost always profit from section 179 deductions. There are a few minor exceptions. For example, if a practice opens late in the fourth quarter and is building up their patient base, they maybe not have operating income and would then benefit from different carryover rules. However, that is a very unusual situation. Typically, when there is operating income from your business, you can take advantage of a tax credit.

Dentists will benefit if they work with an accountant well-versed in these deductions. But a lot of the time, a dentist will only see his or her accountant once a year, so there’s a lot of information to review in a short period of time. To ensure the proper deductions are filed, dentists need to have good resources and advisers to steer them in the right direction.

Q: What strategies can new dentists utilize to ensure they are making the right investments and have all the necessary information/resources available to them?

KD: Dentists need to have the right network of resources and advisers who understand the business of dentistry. When a practice works with a partner, such as Henry Schein Financial Services, we can work together to ensure they make sound business decisions that will maximum returns and deliver better quality care for patients, as a result of their investments in new technology and equipment. Additionally, having an annual investment strategy and a capital and technology plan is crucial. Dentists should invest in a multi-year process and make the process unique to their office needs and outlook.

Dental equipment usually makes sense, as there are various benefits to the patients, dentist and staff, so that even without the tax benefits, it is always a great time to invest in your practice.

Q: What is the one thing dentists should know about section 179?

KD: It is use it or lose it and dentists need to take advantage of it. We've seen the limit not only go up in recent years, but also there have been periods when the cap has been lowered. There is no sure thing or guarantee that it will remain where it is. But, currently, it is at its all-time high of $1 million, and while it is here, it is a huge opportunity, and dentists should take advantage of it.

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