Category Archives: Business

3 Business Lessons I Learned in 2014

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2014For more than 22 years now, I end each year reflecting on what I learned from the past 12 months and how I can improve my business in the new calendar year.  In 2014, I cannot say that I learned anything new, but I was reminded of these important lessons-

#1-  YOUR PEOPLE ARE IMPORTANT

For my business, 2014 was full of issues caused by bad employees.  It took me nearly six months to flush the bad, reverse the damage and rebuild my team.  I was surprised by the degree of disloyalty and dishonesty displayed by a couple of my employees, and they had to go.  The transition from bad employees to a great staff was not easy, but we are better situated today to accomplish great things for our clients and our firm, having replaced bad staff with great staff.

These experiences tested my tendency to trust those closest to me and to treat my employees like extended family members.  While I decided that I am not going to stop treating my employees well. . .  truly like extended family- I am going to adjust some of my expectations and have contingencies in place to better address employee problems.  Here are some things that our firm is doing to make sure that we maintain a strong, dedicated team that is focused on our Mission to help clients solve problems, maximize opportunities and reduce business and legal risks-

  1. Mission Statement-   At least once yearly, each member of our team signs a pledge to live by our firm’s Mission Statement.  We talk about our Mission and Core Ideology.  We incorporate these important commitments into monthly training.  Our Mission Statement is an active component of our business operation, not just a stale document in an old business plan or a page on our website.
  2. Employee Manual-  At least once yearly, each member of our team signs a pledge to live by our firm’s Employee Manual.  The Manual sets expectations and gives clarity to how the employer-employee relationship will be managed.
  3. Team Driven-  My current staff is the best staff I have ever had.  They are dedicated, client-focused, smart, personable and focused.  I solicit their opinions and include them on certain decision-making processes, because we act as a team.  And, we are a better operation through this approach.  Although the “boss” has to make the final decision, the inclusion of employees in the decision-making process makes for better, more informed decisions.
  4. Nip It in the Bud-  We have a system in place to address employee challenges quicker.  Each time an employee performs in a manner inconsistent with our Mission, we have a meeting with the employee to address the issues.  Then, and this is the key to our new approach, we have the employee propose definitive ways the employee can correct the problems.  The employee completes a form we have created and signs the form as a pledge to correcting the problem.  This approach makes the employee the solution, not just the problem.

#2- SYSTEMS ARE ESSENTIAL

In 2014, we realized that we had become too dependent on the individual skills (or perceived skills) of employees.  A couple of our employees simply were not as talented as we had hoped.  Consequently, we had a gap between what our business required and what our employees could actually do to meet those requirements.  While we did upgrade our staff in big ways, the ultimate solution was to reinvent and reinforce the forms, systems and other operational processes that allow us to overcome the challenges caused when an employee is terminated or under-performs.

Also, those processes make it easier for staff to grow and develop new talents, because those processes make the daily, routine tasks easier.  More energy and time can now be devoted to personal and professional growth, which makes our business better, which ultimately helps our clients.  In the end, it’s all about helping more clients in better ways.

It takes time and effort to create these processes, but it takes even more time to solve problems in the absence of processes.  If you have not already, read books by Michael Gerber and Alan Weiss, Ph.D. and a book titled The Checklist Manifesto.  Then, build your processes.

#3-  MY WIFE IS AWESOME

Owning your own business or managing a business can be tough.  It can be stressful, fatiguing and frustrating.  Luckily for me, I am married to a very loving, strong and supportive woman.  It helps that she is a lawyer who once owned her own law firm.

The point here is that it helps to have a support system.  Everyone needs someone to listen and occasionally “push back” with helpful critiques, suggestions and advice.  I like to think that I can do it all alone.  The reality is that we all need help from time to time.  My suggestion is to have someone to talk to on a regular basis.  You can find a mentor, get a business partner, join a peer group, or meet regularly with an old college friend.  Whatever you do to improve your business in 2015, make sure you find someone to talk with on a regular basis.

Happy New Years!

What You Must Know About Use Tax

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Have you ever heard of use tax? Did you know such a thing existed? If not, you may not be familiar with what it is and how it works. Actually, the majority of practice owners we talk with are not. Here’s what you need to know about use tax and what you should do to protect yourself from an expensive audit.

Let’s call use tax the brother of sales tax. Sales tax, as you are likely aware, is assessed on items you purchase for your practice — most of the time. Vendors who sell you product like supplies, furniture, and IT equipment may or may not be required to collect sales tax from you. If you are buying all of these items from an in-state provider, you are most likely in good shape. However, out-of-state vendors may not have a responsibility to collect sales tax from you. For instance, a vendor from whom you purchased a product over the internet or through a catalog may not collect sales tax on the sale. Contrary to some belief, this is not a built-in discount — this is where its brother, use tax, kicks in.

Most states have a use tax that is self-paid by the purchaser of products when sales tax is not collected. So when your dental practice purchases a new chair online and sales tax isn’t assessed, you are then responsible for reporting and paying use tax on this purchase. In addition, if you paid sales tax on the purchase but at a lower rate than your state’s sales tax rate, you may be liable for the difference. Say you purchased an order of cotton balls online and the supplier collects 5% sales tax on the order. If your state has a 7% sales tax rate, you should then report the 2% difference to them and pay it.

The most important thing to be aware of here is that someone is responsible for paying some tax on these purchases (unless they are specifically exempt, which varies by state and usually includes prescription drugs, etc., but more on this later). If a vendor forgets or didn’t know they were supposed to charge you sales tax, it’s your responsibility to pay it as use tax.

Why haven’t you heard of this before? Many dentists and small business owners just aren’t aware of the use tax. Historically, there haven’t been a lot of audits of small firms for owners to be concerned about it. But this is changing. With states seeing massive budget shortfalls, they are looking anywhere they can to find missed revenue. In many cases, they are able to go back 7 or more years to audit your purchases and identify purchases made where sales tax was not assessed. When an audit occurs, not only is there risk of a tax assessment but also penalties and interest.

As mentioned above, there are some items that are exempt from sales and use tax. These vary by state so I’m going to share with you a link to Iowa’s exempt items list which is specific for dentists. Indiana’s is much more vague in identifying specific exempt items; however, the rules for some states often have similarities and overlap in their definition.

So what should you do for your practice? Be aware of the purchases you make and if you are paying sales tax at the time of purchase. If you are buying products online primarily to save sales tax, know that this isn’t a legitimate savings strategy. If you feel you have made purchases where sales tax has not been paid, consult with your dental CPA or tax adviser to develop a plan to address the exposure. And by filing now, you will shorten the period of time with which an auditor can go back. Usually timely filing of returns starts a statute of limitations on how far back an audit can go – even if it’s a zero tax return.

 

– This article was submitted by our friends at Veros Dental | 5955 South Emerson Avenue, Suite 500 | Indianapolis, IN 46237 | 317-452-4580