In Episode 20 of our podcast, The Survival Guide for Orthodontists, we invited Brad Kucharo, a Certified Public Accountant and Certified Financial Planner from John McGill & Company, to give some financial tips and advice for orthodontics. This was especially timely as orthodontists have questions about how the recent change in administration might affect them, the ongoing effects of the pandemic, and issues specifically for practices that took Paycheck Protection Program (PPP) loans in 2020.
What orthodontists should do to prepare in case they again have to stop seeing patients in-person for any length of time
How potential tax law changes under Biden’s tax plan will impact orthodontists
Last-minute 2020 tax planning strategies and advice
See below for an edited summary of some of the topics we covered during the show. To listen to the full episode click here.
Brad presented some interesting statistics about his client practices’ performance over the last seven months after Covid. In a survey of clients he asked how busy they were before the pandemic versus after. He said that almost a third said they were back to 100% production and 84% said they were back to 80-100% versus pre-pandemic.
“We’re cautiously optimistic about the future,” he told us.
We asked Brad what actions orthodontists should take in preparation for PPP loan forgiveness and the Provider Relief Funds filing.
Brad explained that businesses have 10 months from the end date of your covered period before having to pay back the PPP loan. If your covered period ended in October 2020 that pushes it out to August 2021. He recommended that orthodontists delay filing for forgiveness for a while. The new legislation has some very interesting developments as it pertains to PPP forgiveness.
A National Law Review summary of the new rules says that there will be a simplified forgiveness process for loans under $150,000:
“The Act provides for a simplified loan forgiveness process for PPP loans of up to $150,000. Specifically, applicable borrowers will be eligible for loan forgiveness if the borrower signs and submits a one page certification to the lender (a) describing the number of employees the borrower was able to retain because of the PPP loan, the estimated amount spent on eligible payroll costs and total PPP loan value and (b) attesting that it accurately provided the required certification and complied with applicable PPP requirements. The form of the above described certification is expected to be available by January 20, 2021.”
And it turns out that waiting to file for forgiveness was good advice.
The article said that if a borrower has already received a forgiveness determination from the SBA the borrower cannot refile their loan forgiveness application to take advantage of the expanded provisions governing forgivable uses of PPP loan proceeds. While some language is still unclear, the article states: “The Act provides that its provisions expanding expenses eligible for loan forgiveness will not apply to a borrower that ‘received forgiveness before the date of enactment’ of the Act.”
“We shouldn’t rush to file for the forgiveness application,” Brad recommended. “We should wait until February or March to consider filing for forgiveness. Hold off on applying for PPP forgiveness. Time is on our side.”
We also asked if Brad could shed some additional light as to how he thought orthodontists should prepare in case they again have to stop seeing patients in-person for any length of time.
Brad said that in the beginning of the pandemic, we were in deep water and uncharted territory.
“We looked at what we could have done better,” he said. “There wasn’t a whole lot we would have changed dramatically.”
One thing he did highlight is that he recommends doctors have home equity lines of credit on the personal side.
“When pandemic hit doctors who had it slept a little better at night,” he said.
Those who didn't get them previously, couldn't because banks were swamped with PPP applications. He recommends doctors secure lines of credit to be available in case of emergency.
He commented on the incoming administration’s tax plan as well.
“It’s really targeting individuals who have taxable income of $400,000 or more,” he said and recommended orthodontists “Biden-proof “ their tax returns.
“Get your taxable income below $400,000,” he said.
This is an edited summary of the podcast episode. For more great financial advice for orthodontists, click here to listen to the episode and subscribe to the podcast.
About Brad Kucharo: Brad is both a Certified Public Accountant and Certified Financial Planner and has been providing customized tax and business planning services exclusively for the dental profession since 2007. He has helped over 500 dentists and specialists across the country plan for financial independence, reduced stress and greater peace of mind. Brad also developed and directs John McGill & Company’s comprehensive “Planning for Retirement” service. He formerly worked at Price Waterhouse Coopers and is a current member of the American Institute of CPA’s and the North Carolina Association of Certified public accountants.