As a certified public accountant (CPA) who specializes in working with dentists, I find that many new dentists are unfamiliar with most of the steps to take following graduation or completion of their residency program -- other than to search for employment to pay off their student loans. But the beginning of your career should be more than just finding a job.
Here are five suggestions that will help you build on a long and successful career.
1. Set up a budget.
It is important to know where your money is coming from (income) and where it is going (expense). This information is necessary to keep your finances under control. Spend wisely, and should you have money left over, save what you can until you have built up at least 90 days of expenses in savings.
In addition, a good financial plan will help you maintain a quality credit score. If your credit score falls too low, financing your dream practice may not become a reality.
And always remember your partners -- the federal and state taxing authorities. They will be your partners for life, so make sure you provide them with their fair share. They can get really nasty if you exclude them.
2. Become the owner of a practice soon.
The sooner you find your practice "home," the better your return on your investment. My experience has shown that practice owners earn more than associates over their lifetimes. And owners build value in their practices that is translated to dollars when the practice is sold.
If getting a loan to purchase a practice is a concern to you, there are many specialty lenders in the market that will understand your needs. With a good credit score and a proven record as an associate, it is easier than you might think to get the funding you need.
Many other professionals serve the dental industry and are ready to make you successful in your new venture. You will find dental specialists among accountants, lawyers, contractors, designers, and insurance agents.
3. Find a mentor and join a study club.
Find a dentist you admire to provide coaching in all aspects of your career. You'll need someone to share your ideas with, as well as someone who can provide direction in overcoming the challenges you will inevitably face. Remember that your mentor was once a new dentist. Listen to the experiences that led to your mentor's success and failures.
Joining a local study club also can provide support. Socializing and learning with your peers are part of your professional growth. You will learn not only about clinical dentistry but also the business of dentistry. From other members, you can gauge how practices are performing in the area and maybe even find an opportunity for yourself.
4. Protect yourself from unanticipated losses.
Life is filled with unexpected events. Insurance is a great way to protect you and your loved ones from financial hardship if your income is lost. Statistics have shown that roughly 3 out of 5 dentists will collect from their disability insurance at some point during their career. Disability insurance is less expensive when you are young and your income is low. You should have a disability policy that will meet your current situation but that you can grow into as your income increases.
Another insurance product that is less expensive when you are young is life insurance. When you are younger, premiums are more affordable. Life insurance will provide for those you leave behind and will protect your student loan co-signer by providing proceeds to pay off your student loans.
Health insurance can be very expensive and comes in various plan options. Choose the product that will fit your current needs as well as protect you against major medical issues. You can change plans as your healthcare needs change.
5. Work with a dental CPA.
Working with a CPA who understands your business is important. Members of the Academy of Dental CPAs work with their dental clients to help them achieve the income and quality of life they desire.
Dental CPAs have a unique perspective and understanding on the dental industry. They have helped many dentists excel at every stage in their career. Dental CPAs understands dental terminology and how a dental office operates. They can introduce you to people they have developed trusted relationships with in the dental profession. In addition to helping you manage your practice, a dental CPA will also provide the same tax and financial services as a traditional CPA.
David J. Goodman, CPA, MST, is managing partner of Lawrence B Goodman & Co. located in Fair Lawn, NJ. As a member of the Academy of Dental CPAs, David provides a unique perspective on dental practices. He can be reached at [email protected] or 201-791-8300.
