Tariffs present challenges and opportunities. Rather than waste time worrying about when and how much tariffs will be, consider the following actions which will help to improve your practice’s financial health.
1) Buy real estate, specifically your own dental building, especially if there is a real estate crash due to a recession. This will enhance your dental practice’s value as you avoid a demolition or relocation clause being imposed by a landlord, which reduces your practice’s value.
2) Invest in Continuing Education, enhancing your clinical skillset with the goal of providing more comprehensive dentistry to your patients. Consider courses which will result in you being able to generate more billings to recover the cost of the course in a year or less. At all times, ensure that you are clinically competent to render the services being provided.
3) Reduce taxes. Consider implementing these tax saving ideas:
a. Using family members in the tax savings game including paying reasonable salaries and dividends if certain criteria are met.
b. If interest rates fall, lend or gift money to family members (age 18+) who are in a lower tax bracket. Family members can use loan proceeds to invest; this investment income will be taxed at a lower rate thereby generating tax savings when compared with the alternative had the income been taxed at the higher tax rate.
c. Multiply the principal residence exemption by lending money to adult child to buy a home they will be occupying; the loan will also reduce the amount paid to ex-spouse should the child get divorced. No taxes will be owing if home is sold at a profit.
d. Multiply the Lifetime Capital Gains Exemption (LCGE) using eligible family members. Each LCGE is worth up to $330,000 in tax savings.
e. Crystalize the LCGE (currently at $1.25 million); this results in tax savings of up to about $330,000 based on 2025 tax rates and effectively locks in this savings in case any future government changes its mind and takes away the LCGE. This can be done while you continue to own your practice.
4) Invest in your practice: buy equipment, which will generate cash and/or save time/stress, including 3D printer, scanners, CBCT, milling units. Before buying, do a cost/benefits analysis to ensure more cash will be generated from the purchase than the associated equipment, supplies, and staff cost. Upgrade your office and go digital as this will enable you to deliver more services to more patients in less time and will help you to participate in the Canadian Dental Care Plan (CDCP) and serve more patients.
5) Invest in your team. Pay them to refer an individual who joins the team. Attract and retain team members/associates who can competently do some of the work being referred outside of the practice. Providing a wider array of services under one roof may be more convenient for the patient, while improving cash flow.
6) Spend less on items which consume cash including cottages, cars, boats and planes.
7) Don’t try to keep up with the Jones’; seek validation from your family, not competitors and focus on that which you have control over.
8) CDCP is your friend, not your enemy, to the extent that funding continues. If CDCP enhances hygiene billings, this will improve your cash position. Note, a hygienist’s compensation as a percentage of billings is significantly less than a dental associate’s compensation. In addition, hygiene billings generate more residual income for the dentist than do dental billings. Also, it generates more practice value and could be less stressful for the dentist. With CDCP, currently there is no dollar limit for restorative treatments, extractions, etc.
9) Don’t steal from yourself. Often, we observe one-hour hygiene appointments resulting in a billing of two units of scaling/root planing, polish and fluoride, although 45 minutes or more of time (instrument on teeth) plus polish and fluoride were delivered. Extrapolated over many patients and over many months/years this will result in the dentist foregoing hundreds of thousands of dollars in billings/cash flow. This is equivalent to the dentist stealing from themself.
10) Don’t waste money. Often a hygienist will clean operatories, sterilize instruments, and take diagnostics. This work may be done by an assistant, resulting in about a 40% saving. Schedule appointments so that an assistant can do this work instead of a hygienist. Obtain a substitution report from suppliers indicating and identifying where less costly sundries and materials can be used, which is just as effective.
Summary
The dental profession is enduring. Consider the Ontario Dental Association was established in 1867, 158 years ago. Dental businesses are enduring and have thrived in a broad spectrum of challenges including SARS, 9-11, the financial crisis of 2008, and Covid-19. As sure as there will be taxes and death, there will be challenges. Dentists can thrive and not just survive tariffs if they adapt and embrace a changing landscape. Spend no time and effort worrying about something you have no control over and focus your effort on that which you have some input and can influence the outcome.
A similar playbook was used to thrive during Covid-19. Humans with and without teeth need dentists.
About the authors
David Chong Yen*, CPA, CA, CFP, Louise Wong*, CPA, CA, TEP, Basil Nicastri*, CPA, CA and Eugene Chu, CPA, CA of DCY Professional Corporation Chartered Professional Accountants are tax specialists* and have been advising dentists for decades. Additional information can be obtained by phone (416) 510-8888, or e-mail david@dcy.ca / louise@dcy.ca / basil@dcy.ca / eugene@dcy.ca. Visit our website at www.dcy.ca. This article is intended to present ideas and is not intended to replace professional advice.