In this episode, Dr. Brady Frank talks about not only the personal benefits of DDSOs and multiple streams of income but also how these will make a significant impact on your taxes. Listen, and also find out what is coming in the next episode!

 

 

Hey folks, super excited about this episode! Why am I excited?

Because you’re likely going to save a whole lot of money on taxes over your career after you truly understand what this chapter is all about in the book

So, if you’re following along, it’s chapter four, “DDSO Dental Cash-flow And Tax Formulas”

So, let’s jump right into it. Do you remember when Mitt Romney was battling Barack Obama in the election? And they made fun of Mitt Romney for his 15% effective tax rate, right? Well, most dentists between state and federal are close to 50%.

So how can someone like Mitt Romney be paying such a low effective tax bracket rate? We’re going to go into that. Let’s hit it. If you understand this stuff – so the first five years of my dental career, I paid way too much in taxes, the last 15 years, I have not paid nearly the effective tax rate as I did in the first five years. That has to do with long-term capital gains rate, short-term capital gains rate, ordinary income, dividend income, and everything in between.

So, let’s take a look here. Pull up a graph if you’re following along in one of the DDSO strategies magazines, this graph is in there too, it’s DDSO cash-flow and tax-advantaged ecosystem.

So, it goes in this direction, right? Clockwise: associateship, solo practitioner, then DDSO owner, and then investor. So, let’s talk in general about this if you have the graph open, okay?

An associate has the least tax advantages, the least equity, right, the least flexibility, all of that good stuff. Most of you watching this hopefully are not an associate anymore and you bought into a DDSO or you bought a practice, or you started a practice. Most of you, or many of you I should say, are solo practitioners hoping to break beyond solo.

What you know, after you’re an associate and you go into a potentially solo opportunity as opposed to a DDSO, here are some advantages: you’ve got better tax advantages over an associate, so your taxation gets a little bit better, right? As a solo practitioner, you have greater income, more control, more stability, but you’ve got high overhead, no passive income, and definitely a heavy clinical and management burden.

So, if you’re watching this right now and you have a solo practice, I feel badly for you because solo practitioners in the U.S. right now are in the most difficult position of anybody, even more, difficult than associates because they truly have all the clinical burden and all the management burden and a relatively high overhead between 60% and 70% on average.

And so, the key is to break beyond solo, to have multi-doctor, multi-location DDSO, so that’s what this is all about right here: DDSO

So, obviously, there are many more tax advantages with a DDSO than solo practice. Fewer clinical hours for the founder. That’s great. So, if you’re watching and you want to have fewer clinical hours, a DDSO is the way to go there to get there. It’s been that way for me and all the folks in our DDSO Alliance.

You know, most of them are working two days a week on average, just because they love dentistry, not because they financially need to.

Less management burden

That’s a big one. Believe it or not, if you expand, you will have less of the five management monkeys on your back because you hire people for that, you delegate that. So, a solo practitioner has way more management issues and clinical issues than a DDSO owner.

Lower overhead

That’s right. The average DDSO has an overhead of 53% to 58% as opposed to a solo practice of 60% to 70% greater income. Most certainly, if you do it right, if you add your doctors correctly, yo