November 21, 2024

As the year draws to a close and we eagerly anticipate a fresh start, dentists who own a private practice need to make sure that all aspects of their business and personal lives are in order.

Tying up loose ends now helps prevent costly mistakes down the line and positions your practice for a strong beginning in 2025. Here are some important areas to focus on as you prepare for the transition into the new year.

End-of-Year Payroll and Compliance Review

The end of the year is a prime opportunity to verify that your payroll system is accurate and complies with all legal requirements. Ensuring that W2 data for current and former employees is correct is crucial. Double-check key information such as employee addresses, Social Security numbers, and total earnings for the year. Although it might seem like a minor administrative task, catching and fixing errors now will help you avoid significant headaches in January and protect your practice from potential IRS penalties.

In addition to W2s, don’t forget to review independent contractor agreements and payments. If you’ve hired any contractors this year, confirm that their earnings have been accurately tracked and that you’re prepared to issue 1099 forms. This is especially important for dental practices that regularly collaborate with specialists or outsource certain services. Ensuring this process is smooth now will help streamline your early-year tax filings.

Personal Financial Planning

The end of the year is the perfect time to review your current financial goals and make any final contributions or adjustments to ensure you’re on track.

Before the year ends, review your personal financial plan. This includes ensuring your retirement accounts, such as a 401(k) or SEP IRA, are fully funded. Maximizing your contributions before the December 31 deadline can have significant tax benefits, and it’s a rewarding feeling knowing that you’re making progress toward your long-term financial independence.

Checkup: Your Practice’s Finances

This is also a great time to evaluate your practice’s financial position. Have you reviewed your profit and loss statements and key performance indicators? Are your cash flow projections on target for the next quarter? Making any necessary adjustments now will provide clarity and control as you head into 2025. This financial review also positions you to start the new year with a clear vision of your practice’s financial health and any areas where you may want to make strategic changes.

Personal Updates and Estate Considerations

Don’t overlook important personal updates, especially if you’ve experienced significant changes in your personal life this year. If you’ve moved, make sure that your driver’s license reflects the correct address. Also, update your contact information with credit card companies, banks, insurance providers, and any warranties you may hold. Neglecting these updates could result in missed communications or even a lapse in important coverage.

It’s also essential to inform your CPA of any significant life events, such as a change of address, marital status, new child, or significant purchases. These updates will allow them to file the appropriate forms with the IRS and ensure that your tax filings are accurate. For instance, if you’ve moved, your CPA can submit a change of address form to ensure that vital communications—like tax refund checks or IRS notices—are delivered to the correct location.

Review your estate planning documents, such as wills, trusts, and powers of attorney. If you’ve made any major financial changes this year, it may be time to update these documents to reflect your current situation. Ensuring that your personal and legal matters are in order will give you peace of mind as you close out the year and head into 2025.

Preparing for Growth and New Opportunities

Beyond the administrative and financial tasks, take time to reflect on your practice’s broader goals for the upcoming year. What growth opportunities can you capitalize on in 2025? Is it time to invest in new technology, expand your team, or update your marketing strategies? Doing a comprehensive review of your practice’s operations and setting goals for the future can help position your practice for sustainable growth.

Consider setting aside time in the first quarter of 2025 to meet with your financial advisor, accountant, or business consultant. Having an objective third-party review your practice can bring fresh insights and strategies that can be implemented throughout the year.

Addressing these critical end-of-year tasks will help ensure a seamless transition into 2025. By taking care of your payroll, financial planning, personal updates, and compliance reviews, you can close out this year with confidence and be fully prepared for the opportunities and challenges that lie ahead. Ending the year with a sense of completion provides peace of mind and sets the stage for continued success in the new year.

Not sure where to start? Contact us today!