North Texas Dentistry Volume 8 Issue 3 2018 ISSUE 3 DE - Page 26

ceeded in enjoying a 37% tax savings on money contributed to a retirement plan, only to find that 30 years later when you start to withdraw this money from your retirement plan, your tax rate on withdrawals could possibly be as high as 91%. Not pos- sible you say. Think about the US deficit as it climbs and an in- solvent social security system if you don’t think there is a need to raise taxes. Certainly, if you have a dental practice that generates $300,000 to $350,000 in overall compensation you can afford to contribute $50,000 into a tax deferred retirement plan and we do not dis- courage this. However, we have found that many clients who have (net income) earnings of $800,000 or more annually sim- ply do not have retirement plans. They will sell multiple busi- nesses as part of their retirement plan. Most of these clients truly enjoy running their businesses. They have accumulated several dental practices and corresponding real estate and they are not concerned about a retirement plan. Yes, some have self- directed IRAs and Roth IRAs and other retirement plans. We definitely want you to have a retirement plan of some form. De- pending solely on a retirement plan for retirement purposes is something we are trying to get you to rethink. Most money contributed into a retirement plan is invested in Wall Street. These same people have learned that few people get rich investing in Wall Street. You are investing in other peo- ple’s businesses. These businesses are using your money to grow their own businesses. Dental Service Organizations Most wealthy people have learned that they can make more money on main street making prudent investments in businesses that they can touch, feel and control than in Wall Street. Your banker could direct you to businesses that have a high success rate (for example restaurants have a high failure rate; loans on commercial real estate have a low failure rate). Dental practices have an extremely high success rate because they are a business that most people in the United States consider a non- discretionary spending service industry. Real estate that supports a dental practice is also a way to watch your wealth increase as opposed to giving the money away in the form of a monthly lease payment to a landlord. We have seen dental practices started from scratch grow at an absolutely phenomenal rate when started in the right location. We can direct you to several sources that can assist in this loca- tion criteria. A great dental practice can eclipse the contributions and earnings of a retirement plan. Multiply the first practice times three or four practices and the resulting sales price can make retirement suddenly become a reality. Some believe there is a finite amount of wealth in the world, so your chances of becoming wealthy are limited based on this “fi- nite” concept. Nothing could be further from the truth. There is no cap on the number of people who can become millionaires 26 NORTH TEXAS DENTISTRY | or billionaires. If you live in the United States, Japan, or Ger- many, you already have a better chance than most people at be- coming wealthy. Favorable trade, regulatory and tax climates are the easiest places to create wealth. North America is the single largest place of high net worth individuals and contains 31% of the world’s millionaires and 40% of the world’s billion- aires according to the annual World Wealth Report put together by Capgemini and Merrill Lynch*. I have talked to several new dentists who believe that the most money a dentist can make typically is not more than $300,000. I have told them to triple this perceived maximum and many are surprised. Some dentists’ net compensation or net income annually is equal to the gross receipts of other dentists (amount- ing to about $1,000,000 annually). DSO practices that own mul- tiple dental practices earn substantially more than this. If you believe your children should be sent to school only to “get a good job” – better think again. If you believe your retirement savings alone will permit you to retire, think again. If you believe there is a finite amount of wealth opportunities in the world, think again. If you think you cannot learn to own and manage a DSO with more than one practice, think again. Goal setting involves a series of planned, progressive small steps to first own and operate one dental practice successfully and then begin looking for your next practice. Committing time to study the business of dentistry each day will eventually lead you to a point where you know the answers to run a dental practice inherently as well as the best dentists. Certainly, a major part of running your own DSO is personalizing and establishing treat- ment plans with niche marketing you can live with that give consideration to the patient’s personal needs and avoid the fast- paced production dentistry some of the larger national DSO’s experience. The personalized business plan is what distinguishes your practice from other practices. If you believe that all DSOs are an assembly line, better think again here as well. A planned DSO with the right team, with the right systems, a superb mar- keting plan and one with highly ethical treatment standards is entirely possible. If you think you can or if you think you cannot – you are probably right. * getting-rich-what-are-your-odds.aspx Wm Stukey & Associates LLC works with dental associates, dentists with a solo practice and nu- merous DSOs that own multiple dental practices in Texas and throughout the United States. Our primary focus is advanced tax planning to minimize tax bur- den. We are trained tax strategists on your side of the table working to fight to minimize tax, defer tax and avoid higher taxes at every opportunity. For more information, send email to or call (214) 926-1494.