The COVID-19 has dramatically impacted the dentistry landscape. While most practices continue to function as patients have returned, the future is uncertain: the SARS-coV-2 virus has proved everyone wrong time and time again. Nonetheless, many dentists are considering their options, including practice transitions. The best way to navigate the new normal is to consult with an attorney who provides legal services to dental professionals.
Practice Transitioning Considerations
While many dentists paused transitioning plans at the outset of the COVID-19 pandemic, some are currently reconsidering their options. A few key reasons to do so include:
Risk and Liability
Dental professionals, like any business owner, need to reduce their risk of liability if something happens to them. It is crucial to ensure their practices, family, and staff will be protected. In short, considering a practice transition or establishing a succession plan goes hand-in-hand with a comprehensive estate planning strategy.
While many older dentists may not be ready to retire, it is crucial to have a plan in place and mitigate the risk of liability if a staff member or patient gets sick. In this situation, having an associate buy-in can allow them to continue operating their practices while offloading some of the liability risks. Another option is to consider partnering with a dental services organization to manage the practice.
Taxes and Interest Rates
Given that trillions of dollars have been pumped into the economy via the relief packages enacted by Congress, changes to the tax code are inevitable. While these changes remain to be seen, the White House is reportedly considering hiking the corporate tax rate from 21 percent (which was lowered from 27 percent in 2017 by the Tax Cut and Jobs Act) to 28 percent.
In addition, an increase in the capital gains tax may be in offing, which is a key concern for dental professionals who are considering selling their practices. Similarly, interest rates remain at historic lows, however monetary policy in the new normal is uncertain at best. At some point, a hike in interest rates may be necessary to reduce the risk of inflation, which could impact financing options for buyers.
The pandemic has left its mark on all of us, and dental professionals face unique concerns. Many obtained loans through the Paycheck Protection Program to keep their practices open, made operational changes to their practices and ordered additional personal protection equipment (PPE) even as their service numbers declined. While patients have returned and numbers are higher in some cases due to the backlog, the future is uncertain for sellers and buyers alike.
Why This Matters
Whether you are considering selling your dental practice or looking to grow an existing one, navigating the new normal requires careful planning. By consulting with an experienced attorney, you can consider all your practice transition options.