Dental Dummies
Digest
Welcome to Dental Dummies Digest, your go-to blog for all things dental finance and malpractice insurance insights, brought to you by CFS Dental Division.
Check out this article from our partners at Bank Of America
The thought of dying isn’t the most enjoyable subject but it’s something every person needs to prepare for. If your family, business, or any other dependents rely on your income, then life insurance is the easy solution to any financial burden you may leave behind. In its simplest form, term life insurance requires you to pay a set premium for a certain length (term) that you want to be covered, and if you die during that time, the insurance company pays your beneficiaries a tax-free lump sum. Below are some common myths about life insurance: Myth #1: Young People Don’t Need Life Insurance It’s human nature to procrastinate, especially when it comes to planning out your future but applying for life insurance when you’re young and healthy will lock in the cost-effective rates and insurability. There is no timeline for a person’s major life events, so it’s better to be prepared before it’s too late Myth #2: Life Insurance is only for people with kids Even if you’re single, you still want to make sure you have enough assets to cover any debts, expenses, or bills that you could leave behind. Married couples without kids should both have life insurance to cover loans, mortgages, and any potential lost income. Stay-at-home parents are often overlooked but the economic value of their childcare and household responsibilities need to be accounted for. Business owners who are succession planning or need to protect a key employee also benefit from term life insurance Myth #3: My job offers coverage; I don’t need it While employer paid life insurance has benefits, it usually doesn’t offer enough benefit to adequately cover you, has limited flexibility, and may not come with you if you leave your job. Myth #4: The application process will take too long; I don’t want to do an exam Insurance companies have streamlined the process of quoting, applying, and approving life insurance. Advancements in technology have provided insurers with various scans, checks, and questionnaires to determine a person’s eligibility without needing a medical exam or a deep dive into medical records if healthy. Myth #5: Companies won’t pay and if they do, it will be a huge tax burden You may hear horror stories, but the vast majority of life insurance claims pay out without a problem if the premiums have been paid and the representations made during the application process were accurate. Life insurance pay outs come tax free to beneficiaries. You can’t control what happens in the future so it’s best to plan today to protect the people you love. Life insurance is a step to make that happen Written by: Jeremy Alfano
Understanding the Real Difference Between 1099 and W-2 Dentistry When you are a dentist, associate, or specialist and are trying to make the decision on whether to work as a 1099 or W2, you have likely heard the same old worn-out arguments: 1099 is better for write-offs, or W2 is better for benefits. Both are technically true, yet neither of them tell the whole story. It is not only the difference between the two in terms of taxes, but also the way you prefer to live and work every day. The Predictability and Simplicity of Being a W-2 Dentist Being a W2, life is a little more predictable. There are automatic withholding taxes, you receive standard benefits such as health insurance, malpractice, possibly a 401(k), and some CE or PTO. It is predictable, well-organized, and simple to manage. This arrangement is attractive to most associates, especially at the beginning of their careers. You are able to concentrate on mastering your dentistry skills and do not have to concern yourself with quarterly tax and business deductions; you can do your taxes simply through an online software. It is the plug-and-play version of your career: you come in, work hard, and leave. The downside here is that you sacrifice a certain degree of control; you can't write off costs as easily, your schedule may be predetermined, and your income potential is limited unless production-based bonuses are high. However, the peace of mind and ease are worth it to many. The Flexibility and Responsibility of a 1099 Arrangement Now, when you take a 1099 offer, that is a whole different game. You are not merely a dentist; you are a small business. You are more flexible and have more opportunities to design your income the way you want. CE courses, scrubs, supplies, travel, and part of your home office can be written off. If you are a car person (like me), you can take advantage of Section 179 of the tax code and be able to write off a business deduction for a vehicle over 6,000 pounds, think Bentley Bentayga and Mercedes G-Wagon. You choose the way you spend your money and construct your way of life. However, this comes with the responsibility, quarterly tax payments, and spending money to get a qualified CPA, instead of possibly doing your taxes through a low-cost version of TurboTax if you were W-2. Some love it, some don't. Choosing the Structure That Best Suits Your Life and Goals No universal solution fits all, and that is what people jump over. The final determination lies in the fact that you know what arrangement will suit your goals and life. The point is understanding what you are really getting yourself into before signing a contract. Written by: Vinny Grasso
The leader in helping Dental Professionals protect their future and achieve financial independence.
CFS Dental Division