First-Quarter Tax Planning

Tax season is fully underway for your 2021 business and personal tax returns! Although this is a busy time, it is also important to simultaneously stay proactive with your current year profit trends and 2022 tax planning. Accordingly, our tax advisors will begin first-quarter tax planning on this coming Monday, February 28. 

We are excited to bring you several enhancements to the first-quarter tax planning process. These include a new forecasting model designed to smooth out large fluctuations in income and expenses. We also have a new process to model your expected effective federal and state-specific income tax rates based on current profit levels. 

You may have questions about how the Q1 tax planning process works and what to expect, so the details regarding the process and materials you will receive are outlined below:


Each client will be scheduled for Q1 tax planning based on annual income levels. Those doctors most likely to have a Q1 tax deposit requirement will have their Q1 tax planning scheduled first. Newer practices that may not have an estimated tax deposit requirement are less urgent as there is no deadline to meet. 

Organizing the schedule based on income allows those clients with likely tax deposit requirements extra time to make the estimated tax payments due by April 18

With this method of scheduling, you can expect to receive your Q1 tax planning materials between the beginning of March and into early April.


It is still early in the year to precisely predict your final 2022 profit figures. However, our team will examine current profit trends to prepare a reasonable income forecast for tax planning purposes. 
Keep in mind, the goal during the first quarter is to stay proactive with your current-year tax planning and avoid unnecessary tax surprises later in the year.


You will receive a Taxable Income Forecast report for each dental practice you own. This forecast will show monthly Revenue and Operating Expense for the trailing four months and calculate current profit trends based on this recent data. 

These trends will then be annualized and added to your actual year-to-date 2022 data to arrive at a reasonable estimate of annual profit.

Next, you will receive a Q1 2022 Tax Planning Analysis. This report will show the calculation leading to your Q1 income tax estimate and potential deposit requirement.


If a tax deposit is needed to protect you against under-deposit penalties and interest, our team will provide you with the necessary amounts and payment vouchers. If a tax deposit is not required, this will be shown to you as well. 

In either case, you will know where you stand when it comes to your current year tax situation.

Action Items

If we recommend an estimated tax payment and provide you with payment vouchers & instructions, please make sure and mail in those payments

When making an estimated tax payment, consider writing the checks from your business checking account as this allows our team to record those payments and count them toward your tax liability during future tax planning.

We realize it can be tempting to believe things may change later in the year, and that a recommended estimated tax payment can be skipped for now. 

Tax Saving Strategies

We do not recommend skipping the Q1 payment. If there are equipment purchases or other investments you are considering later in the year, those amounts should be factored in to your second, third, or fourth quarter tax planning when you have fully committed to making those large obligations.  

Our tax advisors will provide specific guidance on tax saving strategies you should be planning for this spring and early summer when your Q1 tax planning materials are delivered. 

Each subsequent quarter will include additional recommendations to achieve maximum income tax avoidance

We encourage you to carefully read the guidance provided and execute each strategy recommended every quarter.


The cost for preparing your Q1 tax planning is straight forward: The base fee is $175 per practice owner. If estimated payment vouchers are required, $50 is added to the base fee and the vouchers will be pre-formatted with specific mailing instructions. If you have multiple dental practices, $70 for each additional clinical entity will be added to the base fee as more time is required for multi-practice forecasts and calculations.

The cost of our quarterly tax planning is intended to be modest while also paying for itself many times over through tax savings. In addition to tax savings, we want to make sure you have peace of mind knowing where you stand when it comes to your 2022 tax liability. 

Preparing For Taxes: How To Provide Personal Tax Materials

Intuit Link is a secure and easy-to-use method to send us your tax materials such as mortgage and investment statements.

We know that gathering and submitting tax information can be a pain, and to make this process more convenient and faster, Intuit Link provides a custom checklist specific to your situation so that you know exactly what we need.

Here is how it works:

In the next few days you will receive an email from [email protected]
This email will look just like the example below:

After you click Accept, you will be guided through a brief questionnaire and then be presented with your specific documents to be uploaded.

You can use your smart phone to take pictures of documents rather than scanning them if you prefer.

Once you have uploaded your tax materials, Intuit Link will let you know that we have everything!

With this organized process, there will be no question as to what is still needed or if our team has received your documents – We all will know exactly what has been submitted and what is still outstanding. (This will eliminate any repeat requests for the same document which can happen when tax materials arrive via multiple emails on different dates)

Your private information, such as your SSN, is completely secure unlike documents sent via email.

Action Items For You

  1. When you receive your email invitation from Intuit Link, click Accept and follow the instructions.
  2. Upload all tax documents to Intuit Link.
  3. You may save your progress and work on uploading documents at your convenience.
  4. Please DO NOT email any tax documents to our tax team. Please DO NOT send any tax documents to SmartVault or via US Mail.

If you do not receive your email link from [email protected],or you accidentally delete it…

Please contact Renata at [email protected]or call at 303-799-0476.

Our team will be happy to provide you with a new link.

Staff Bonus Programs

As the end of 2021 draws near, you may have questions regarding staff bonuses. We are often asked, what is the standard bonus system for dental practices? Based on our years of experience, there is no specific standard for dental practice bonus programs. There are certainly many doctors that engage in bonus compensation arrangements, and likely an equal number that do not. This is because there are pros and cons to any bonus system. 
A bonus may typically be paid when certain conditions are met. The two most common conditions are 1) the practice is doing well financially and meeting production and profitability goals, and 2) the staff has displayed exemplary performance. While the first condition can be quantified with objective data, the second condition is largely subjective. If a practice owner feels that their team has accomplished practice goals such as these two criteria, then a bonus arrangement can provide a specific and direct reward, or gesture of appreciation. 

Keep in mind, however, that a bonus system can evolve into an expectation over time. Regardless of the circumstances, not paying a bonus your staff may have come to expect over time can quickly turn the bonus system from a morale booster to a morale dissatisfier. To help manage this risk, make sure that criteria for any bonus system is as objective as possible and determined by specific quantifiable benchmarks. 
Finally, there is an argument to be made that rather than paying bonuses, employers should simply pay their team the highest and most competitive salary possible all year. This prevents staff from feeling their compensation is perhaps tied to factors beyond their control, such a monthly office production or the owner’s personal feelings when determining a bonus amount. Paying the highest and most competitive compensation package all year (without bonuses) also allows the staff to plan their family budgets with more consistency and obtain loans for cars or mortgages without having uncertainty regarding the amounts or timing of future potential bonus amounts.

There is no one-size-fits-all answer on whether a bonus system is right for every practice, every team, or every situation. Practice owners have been successful with and without bonus systems, so it is entirely up to each doctor to consider their office and team when deciding what is right for their practice. 

Should you decide that a bonus is something you wish to offer this month, specific instructions for paying a bonus are provided below:

Direct Deposit Bonus

Perhaps the easiest way to provide a holiday or year-end bonus is to pay the amount through your payroll service as a direct deposit. Every payroll provider will allow you to add a specific dollar amount to be paid along with regular hourly wages. Adding the bonus amount to your team’s payroll will create a separate line-item on the staff’s paystub identifying the extra payment. This is the easiest and most convenient way to pay a bonus.

You can also run an off-cycle payroll to process a one-time bonus amount. This off-cycle payroll can be initiated at any time and will also be processed via direct deposit by your payroll provider. This alternative allows the bonus to be separate from regular pay, which can highlight the bonus payment to your team as it posts as a separate deposit to their bank account.

In both instances, the bonus payments are fully tax-deductible with all associated payroll tax and withholding amounts completely taken care of by your payroll provider.

Direct Deposit Bonus

If you prefer to personally pay bonus cash to your staff, there is a specific procedure you will need to follow:

  1. Determine the TOTAL cash to be paid to the team members.
  2. Withdraw that exact TOTAL amount of cash from your business bank account.
  3. After you deliver the cash payments to your employee(s), you will record each specific dollar amount as a ‘cash-tip’ on each employee’s paycheck on your very next regular payroll. Your payroll provider will have a section to report cash-tips, and you may need to reach out to your payroll provider if this option is not visible when you process payroll so they may activate it.
  4. When the cash-tips are reported on the very next payroll, all withholding and payroll taxes are recorded on your payroll, but no additional payment is included on the direct deposit because the cash has already been paid (just like a cash-tip).
  5. Next, you should email [email protected] with the following information:
    1. Date of cash withdraw used to fund the bonuses.
    2. Total amount of cash withdrawn.

Your accountant will match this specific cash withdrawal to your December payroll reports, ensuring that the cash taken from your business is fully tax-deductible as staff compensation. This is important as cash withdrawals are typically owner distributions, and we want this specific cash to be recorded as wage expense.

Gifts as a Bonus

Should you choose to provide a holiday gift to your staff, the IRS allows for a de minimis gift under $100 that will not be taxable for your employees. You would purchase these gifts from the practice as a tax-deductible expense. However, the gift can never be cash or gift cards if you wish to exclude the gift from their taxable income.

If you decided to go ahead and give your staff gift cards, those can be reported like a cash bonus, and the cost of the gift is still tax deductible for the practice.

For example, if you provide a gift card for $100 to a spa as holiday gift, the $100 gift amount is recorded the same as a bonus paid in cash on that employee’s next paycheck. When you purchase the gifts, you will do this through your business account and follow the same steps described in the Cash Bonus procedure so our team can record the cost of the gifts as wage expense.

Year-End Services: Closeout & Reconciliation

An integral part of our business accounting services involves work performed at the end of the tax year to close out your financial records. This year-end work is necessary to prepare your books to facilitate the preparation of your business tax return. The following is provided as part of this service: 

  • Creation of a separate Income Tax Financial Statement and Trial Balance for tax purposes so that your tax preparer may review and analyze account activity for the entire year.
  • Reconciliation of your Capital Accounts, including an analysis of your Fixed Asset additions during the year. This analysis will be used to determine the most appropriate depreciation or other accelerated cost recovery strategies to be used by your tax preparer.
  • Reconciliation of your year-end payroll forms 941, 940, W3 and W2s prepared by your payroll company to your business financial statements.
  • Review of all expense accounts for applicable submission of Form 1099 to required vendors and/or contractors.
  • Preparation and delivery of Form 1099 to required parties, and submission of Form 1096 to the IRS.

The annual Year-End Services are billed in December and are one month’s fee. Although much of this work will continue into January, we will bill the year-end fee on December 17th so that you may deduct it on your 2021 tax return

We appreciate your business and look forward to serving you in 2022!