During your career, you will interact with several different professionals, none of whom will be more important than your accountant. As a Chartered Accountant, I speak with some authority on this matter. Let’s look at a few generalities and a few specifics that are important to be aware of when you go accountant hunting.

There are two key factors to consider when selecting an accountant. First, not all accountants are created equal; most have a general practice with a wide variety of clients, while others are specialists focusing on a select group of clients.  As a dentist, you need to find a chartered accountant who specializes in professionals, particularly those in the dental field. You will have very different needs than the owner of a retail store or a manufacturing business. Your business structure will be unique to professionals, and as such, you need an accountant who knows how your business needs to run. Dental account specialists are out there; do your homework, and you will find them. Make sure, however, that they have a good grounding or support in tax matters.

The second characteristic to be aware of is that most accountants are reactive, rather than proactive. Ask any good accountant a question, and you will likely get a good answer; the problem is that you won’t get anything if you don’t ask the questions first. The difficulty with this approach is that you will not always know what questions to ask. Make note of the following specific proactive services you should be getting from your accountant.

Ask any prospective accountant what services you should expect during a typical year. If the services you expect align with the specific services set out below, you likely have a proactive accountant. If they don’t line up, you should start looking for a new accountant.

Specific services you should expect from a great proactive dental accountant:

Practice Planning

1. Your accountant should help you prepare an annual practice plan, setting out target production and acceptable operating cost levels, including staff costs, along with any other important and measurable objectives to be achieved during the upcoming year.
2. Your accountant should not only prepare your annual financial statements but should also explain them to you and compare them with both previous years and with your annual practice plan.
3. Your accountant should have at least one mid-year interim review to avoid year-end income tax and operational surprises.

Tax Planning

1. Your accountant should prepare and explain not only your personal and/or corporate income tax returns but also any necessary HST, T4, and T5 returns.
2. During the fall of each year, your accountant should provide you with an estimate of your tax liability for the current year, allowing you to ensure that you are in a comfortable financial position to pay your taxes.
3. During your annual and mid-year reviews, you should receive advice on legitimate tax-saving strategies and ideas.
4. Your accountant should ensure that any non-dental investments are removed or “purified” from your DPC regularly to provide you with access to your lifetime capital gains exemption on an as-needed basis.

Wealth Planning

1. As part of your practice plan, you should have a projected cash flow plan for both the practice and your family, which should be reviewed during your annual and mid-year reviews.
2. A plan should be developed and monitored annually to manage and reduce your outstanding debt.
3. On an annual basis, your net worth should be updated, reviewed, and compared to your planned net worth and the net worth from the previous year.
4. The current results of your investment portfolio should be reviewed, and if deemed substandard, connections with appropriate investment advisors should be coordinated. Your accountant will likely not be your investment advisor; however, he or she should be able to tell you if your advisors are doing their job properly.

Strategic Planning

1. Your accountant should help you develop a retirement strategy and ensure that you are on track to meet your objectives.
2. Your accountant should review these items with you to ensure you are up to date, including with insurance and wills.
3. In general terms, your accountant should make sure that you have a well-thought-out plan.

Closing Thoughts – Fully trained and educated Chartered Accountants are professionals much like yourself; they possess a higher degree of training in accounting and tax matters, as opposed to dentistry. After working exclusively with dentists for the last 40 years, I know that waiting “until you need a good accountant” is too late. From the outset, you need a qualified dental accountant to help you achieve your goals.  A good accountant will pay for themselves with the savings from the advice and tax benefits they provide.  Practice value is a function of profitability, so any advice you receive will help you increase your cash flow and profitability. Not only does this increase your disposable income, but it also enhances the value of your practice. 

We have 40 years of experience in practice enhancement and valuation. If you would like a comprehensive potential assessment or a second opinion on a third-party appraisal, please contact me, Derek Hill (derek@derekhill.ca), or visit www.derekhill.ca. I’d be happy to help!