Art Wiederman, CPA Hello, everyone, and welcome to another edition of The Art of Dental Finance and Management with Art Wiederman, CPA. That would be me. I'm Art Wiederman. Welcome to my podcast. And we're recording on the evening of Sunday, if you can believe it, November 1st. We are 10/12ths, so as a CPA, like I've told you before, I'm required to do math. 10/12ths or 5/6th or 87 percent or 83 percent, I think it is, of the way through 2020, which again, I'm sure we'll all be very glad for 2020 to be over.
It's been a tough year and part of my job is to keep everybody up to date. So today it's just you and I. And this is my 99th podcast. It will be published the day after Election Day. And we're going to talk a little bit about taxes and elections and all that today. So we're talking about a bunch of stuff. I need to bring you up to date on the PPP program, kind of what you should be doing, where you probably are, what you should be thinking about. There's, again, a whole new slew of updated information on the HHS Provider Relief Fund. On the 28th they came out with new frequently asked questions, which just makes you want to take your fingernails and grow them to be about three feet long and scratch them on a chalkboard incessantly for hours. And you'll find out why in a little bit.
And I'm going to introduce you a little bit to, and again, the interesting thing about recording these things and date stamping them, I'm recording this before the election. It will be published the day after the election. And again, folks, I promise, promise, promise it's not about politics, but I want you to be prepared. And if Joe Biden becomes President of the United States, he has a tax plan that hasn't really been talked about. And I want to introduce you to it just a little bit so that you can start thinking about what you need to do if he is elected president.
And then I've got some more metrics. We're going to kind of weave these in over the next couple of weeks or months or everything like that. And we're going to talk today about cancelations and no shows and also the formula that shows you how your profitability works. And we're going to get into that a little bit.
But before we do that, I want to do a little bit of business. First of all, I want to have you take a look at our partner's website, Decisions in Dentistry magazine. Decisions in Dentistry has been our partner now for almost a year. And Lorraine Kent and her team just put out a fabulous, fabulous publication every single month. They have a great website www.DecisionsinDentistry.com. They have very, very reasonably priced CE courses for your dental CE courses like Hypnotherapy in a Dental Setting, Uses for Cone Beam Computed Tomography in Endodontic Care, I'm sorry. And Teledentistry Amid a Pandemic and Beyond. And in fact, in a couple of weeks we're gonna be having our friends from I.T.S. and we have not talked about teledentistry before, how it works, how it can help your practice. But it is something that I'm seeing a lot of my doctors that were obviously they were using it during the pandemic. And we're going to learn how you can use it now that we are we're still in a pandemic, but now that your dental office is open.
So if this is the 99th podcast, then the math tells me that the next one is number 100. And I mentioned this on the last broadcast, but November the 11th, Wednesday, November the 11th, we will be publishing my interview with Dr. Kathleen O'Loughlin, a wonderful, wonderful lady who happens to be the Executive Director of the American Dental Association. She's going to tell you the story of how the A.D.A. actually got involved in the COVID research, if you will, and how it was going to affect dentists very early on and talk about all the things that A.D.A. does.
And as I said, you know, the American Dental Association has done so much, so much to help dentists during probably the most difficult eight months probably of the of this century. And I hope it does not repeat itself. But you're gonna love that interview. And by the way, just so you know, and again, I am a dental director at the CPA firm of Eide Bailly, as well as being a proud member of the Academy of Dental CPAs, which is 24 CPA firms across the United States that represent over 10, again, I haven't talked to our president, my dear friend Allen Schiff, about this, but I am authorizing that we now represent over 10,000 dentists and I do believe that that is true.
And so for this 100th episode, which is very special to me, and I want to again thank everybody from the bottom of my heart for all the support and all the emails and all the wonderful, wonderful people who have reached out and have liked our podcasts and all that stuff. I want to thank you so much. This has been an absolute labor of love for me. We're coming up on two years. I can't believe it. Haven't missed a week of live, putting out podcasts every week except for Christmas week.
And so I did want to tell you about what we're offering you from here from Eide Bailly. So our team is planning a giveaway to celebrate our 100th podcast episode. So what I want you to do is to be sure to like and share our 100th podcast episode on all of our social media channels that Eide Bailly has, which is Linked In, Instagram, Facebook and Twitter. And you will be entered to win a $100 Visa gift card. You can also subscribe to the podcast and by subscribing to the podcast, that means that every single week you will get the notification and you will get the podcast downloaded early Wednesday morning. It comes out of Atlanta.
So when I wake up here in California, usually 6 / 6:30 in the morning, although the time change today. So maybe 5 / 5:30 in the morning now, when it gets light, it's there. So you can get that. So if you subscribe on our website, which is www.EideBailly.com, you'll receive information on the future podcasts and you will also be entered for a chance to win the Visa gift card. So please do take advantage of that.
Also take advantage of the Research and Development Tax Credit, which is a big deal. And by the way, we'll be giving out some more information. I'm starting a local series of lectures, a year-long series with six local dental societies here in Southern California. And the first one is going to be December the 9th. And we're gonna be talking about year-end tax planning after an election and during a pandemic, as well as we're gonna have our folks from the Research and Development tax team on the podcast. So what you want to do is go on to our website, which is www.EideBailly.com/dentalrd. And that will bring you to our page regarding the credit. You'll get to read information about the credit for dentists. And if you fill out a 10 or 15-minute questionnaire, I think it's got 15 questions on it. Doesn't take too long to fill out. Send it. Push the submit button. One of our folks from our group will give you a call and see if we can save you some money and run up that federal deficit more. That's what we're hoping for.
And the last thing before we get into topic today that I'd like you to do is to go on to the website of our wonderful, wonderful national dental CPA group, which is the Academy of Dental CPAs. That's www.ADCPA.org. We're now coming up to year-end tax planning season, folks, November and December. And if you end up with a surprise every April and I, I've gotten three new clients in the last two months who have told me the same thing. My CPA never calls me. My CPA never sets up meetings. We don't talk. I send them the stuff. I have to call him or her. If that's the case, go to the website again www.ADCPA.org and look up the member's directory and look at the state that you are near. I am in Southern California, so if you're in Southern California, we would be the ones to call. And again, my number is 657.279.3243. Any of our member's firms are absolutely fantastic. 24 CPA firms representing over 10,000 dentists.
Alright, let's get started, and let's talk about my favorite, absolute favorite subject, that's not football. It's not the fact that both my Los Angeles Lakers and Los Angeles Dodgers are world champions. No no no. I couldn't really care about that. It's the Paycheck Protection Program. It's just I mean, it's just become my favorite thing. You know, golf is irrelevant. Sports are irrelevant. My family is irrelevant. It's all about PPP.
That was sarcasm, folks. It's going to end someday and probably not until next year. But I want to give you some information, because I've gotten a lot of clients who have called me up and have emailed and say, Art, "The bank says we need to file for forgiveness. So I want to file right now." Well, you don't have to file right now. First of all, the date on the forgiveness form that was put out by SBA and that was put out back in May or June I think it was. Basically was October 31st. So everybody thought that you had to file for forgiveness by October 31st. Well, that was yesterday. And no, you don't.
So your covered period is probably going to be 24 weeks. So if you got your money in May or late April, you're covered period is either just about ending or has just ended. And folks, you've got 10 months to file for forgiveness. Ten months. So you have, if your forgiveness, if your covered period ends in say let's just say it ended yesterday, October 31st. You've got November, December, and then till the end of August of next year to file. You don't have to file. There is no rush.
Now, as I've mentioned before, and as I'm sure everybody is aware, the Republicans and the Democrats, Mr. Mnuchin, who is the Secretary of the Treasury, Mr. Meadows, who is President Trump's Chief of Staff and Speaker of the House, Nancy Pelosi, have all been talking over the past month about a stimulus package, which we were hoping and we were told was going to include an easing of the PPP forgiveness rules. We'll talk about that a second.
Obviously, that did not happen. The election is in two days and we will not have a stimulus package. Who knows how long? So where we stand right now is this. If your loan is under 50,000 dollars, the SBA came out with some rules about two weeks ago that you are in really good shape. You don't have to worry about full-time equivalent employees. You don't have to worry about reduction of wages by 25 percent or more to lose forgiveness. The only thing that you've got to do is make sure that whatever money you got, 50,000 or less, that you spent at least 60 percent of it on wages for employees. And that includes if you're an independent contractor, you get 20,832 dollars. If you made more than a 100,000 dollars, you get a little less if you didn't.
And basically, if you spent the money and you show them that you spent the money on the payroll and the other things, rent, utilities, and interest, you have forgiveness. It's easy. It's easy. We are hoping, we are keeping fingers, toes, and anything else we can get our hands on crossed that they will increase that to maybe 150,000 or 175,000 dollars. Because about I think close to 80 percent of the loans, 70 to 80 percent of the loans are under 50 and well over 90 percent of loans are under $150,000. And they've been talking about this. So that's why I'm saying there's no rush to file for forgiveness. And in fact, a lot of the banks are not letting you file.
And one of the dilemmas we have and we actually have word into the SBA to ask them how we handle this, is that if you're selling your business this year, which you might seriously consider accelerating that because of what may be in Vice President Biden's tax plan if he's elected on Tuesday, what they've got is a possible capital gains increase for anything over a million dollars. So if you're selling your business, you don't meet the full-time equivalent exception and you don't meet the 25 percent reduction safe harbor, if you have no employees on the date you file for forgiveness.
Well, I have a situation with a client where we're trying to file for forgiveness and their bank isn't, doesn't have a portal open yet. What do you do? We have questions into the SBA, and if I get an answer, I'll let you know. We did get a, had a conversation with this large national bank who said that they've been talking to SBA and SBA may actually have a mechanism in this situation to be able to file and expedite your forgiveness. So I'll keep you posted on that. But there's no rush. It's kind of like I've said before, you know, if you're buying a car, you don't want to be the first one to test drive the new model. You want to kind of wait and see what they're doing.
And remember that we have to take into account for purposes of the full-time equivalent test and the 25 percent test. And by the way, doctors, you won't have to deal with a full-time equivalent test assuming that your revenues are down for 2020, which virtually all of you are. And that came out on the June 5th tax law change. But it's basically, unless you believe that all of your employees are going to leave between now and December 31st, you know, as long as everybody's back to work making the same wage and most every dentist I've talked to has not reduced salary or hourly rate, as long as you're good for that, you're probably going to get most, if not all, of your loan forgiven. So, again, if you have any questions about that, got an email me at email@example.com.
So we talked about that and then the last thing I want to talk about is deductibility. So here's the issue we have with deductibility. And we've talked about this before, but I want to review it because now we're in tax planning season. This is the time, folks. If you have not made an appointment with your CPA, you need to do that. If you're not working with a member of the Academy of Dental CPAs, you need to be working with one of us because we've been living this nightmare for eight months.
So right now, the PPP expenses that you're paying pursuant to IRS notice 2020-32 are not deductible if you get forgiveness. Now, there's been a lot of controversy as to how do you interpret that? What does that mean? Well, when they originally did this, it was going to be an eight-week covered period, followed by immediate filing for forgiveness. And if your loan forgiveness is not income, which it is not pursuant to the Cares Act, they said, okay, then you can't deduct the expenses. So it was all going to be in one year and it was going to be a wash and everything was great.
Well, after that notice came out, Treasury didn't say anything else. And then they expanded it to 24 weeks and a 10-month forgiveness period afterward. And the reason it was 10 months, folks, is because the banks were yelling and screaming that they couldn't take 5.1 million applications all at one time. They need it spread out. They don't have the people to process these. And the SBA didn't have the people to process 5.1 million forgiveness applications within the 90 days that the statute requires. So, you know that that's what they did. So now here's my dilemma. And this is the way, I told a client on Friday, that this is what we need to do.
This is my opinion, because of the fact that none of you more than likely have, even if you've filed for forgiveness, you probably have not received the absolute forgiveness final get out of jail free card from the SBA, because that's a five-month process, two months with the bank, three months with the SBA. So virtually none of you. I'd be shocked if there's anybody of you listening who have gotten full forgiveness as of now or will before the end of the year.
So my feeling is you have a loan, just as if you went to any bank, got the loan. It's a promissory note. It has not been forgiven. Therefore, in my mind, your deductions, your money that you spent, 50, 75, 150,000 dollars on payroll, rent, utilities and interest are fully deductible in 2020. That is my feeling. That is what I have, what I am going to be telling my clients.
Now, what happens in 2021 when you get your forgiveness? Well, hopefully, they'll change the law folks, and they'll make it deductible because there is major league bipartisan support. Megan Mortimer from the American Dental Association, who I mentioned pretty much every week on this podcast, has as much told me that there is very, very much bipartisan support to make these expenses deductible. But at the moment, they're not. So if they're not and they end up staying not deductible, what happens? You're either going to have phantom income of whatever your PPP loan was in 2021 with no money to pay the taxes, or you're going to have to go back and amend your tax returns for 2020.
I don't know what's going to happen. It's very difficult. I was telling my client the other day, it's as if you doctor, let's say you're a dentist in my home state of California. It's as if you went to go and prep. And the patient says "well, what do I need to do here?" And you said, "well, you know, you need a crown. But I don't really know whether I should, you know, use a digital scanner to scan it to the lab or what type of impression material, because the state hasn't told us how we can prep a crown." That's where I'm at. That's exactly what this is. So I'll keep you posted on the PPP.
Let's talk about the HHS. Now, remember, what is the HHS Provider Relief Fund? It was also part of the CARES Act, 175 billion dollars that was basically part of the CARES Act, part of the three trillion dollar CARES Act that was specifically targeted to go to health care providers to fight COVID-19. That's what it was intended to do. And basically, so what happened was, is that it was all for, you know, non-dentists at the beginning, you know, starting, remember, it was passed March 27th. So in July, they said, well, yeah, I think we'll at the dentists in. But just the ones that do Medicare, Medicaid, Medicare, dentistry, welfare dentistry, if you will.
Okay, then about a month later in August, they said, we'll let the rest of you guys in and we'll give you two percent of your gross receipts. And the clients would call me up and they would say Art, so should I do this? What do you think? I'm going. Yeah. What did you gross last year? Well, I grossed a million dollars. Well, it's 20,000 dollars of free money. It's kind of like you did a nice big quadrant of crowns and maybe some bridgework and I don't know, maybe, maybe two quadrants of crowns, a big case. Right. And you got 20 grand for it. You didn't have a lab bill. You didn't have any supplies. And in order to get the money, you gotta keep track of some paperwork.
Okay, so we'll get to that in a second because they have just given us these rules. And please and I know many of my clients are listening. Do not call me up when it's time to the reports say Art you told me to take this money, but you didn't tell me that the reporting was so onerous. We had no idea. We had no clue what these people were going to do. But for now and again, remember, this podcast is coming out on the 4th of November. So if you're listening to it on the 4th, the 5th, or the 6th, there is a Phase Three distribution. They have 20 billion dollars that is basically going to go to anybody who started business between January 1 and March 31 who weren't eligible the first time, or for anybody who did not get their two percent. Maybe you got less, you can apply for more, or for anybody that has had lost revenues in 2020. Gee, I wonder who that is? Yeah, every dentist in America, that's who that is.
So we're encouraging our clients to file. It's free money, folks. It's taxable. Remember, it's taxable, but it's free money. Why not? The government's offering it. You guys have had losses and you have until November 6th. So this podcast comes out on Wednesday, November 4th, on November 6th that is when the last day you have to apply for the final what's called Phase Three. Go to www.hhs.gov. Or just Google Phase Three HHS Provider Relief Fund. And there's all kinds of rules. And there's actually a portal that you can go to and you have to have some information from your financial statements and your tax return.
Now, with that said, let's kind of talk about the big picture and about these new frequently asked questions on the Provider Relief Fund. And thank goodness to one of our partners at Eide Bailly, Tyler Bernier. He is from our Oklahoma City office. The man is golden. I mean, he is on top of this stuff like nobody's business. So he sent an email basically saying, okay, guys, I'm going to give you this information. And your question is, yes, it really does say that, no, you likely cannot claim that.
I mean, here's how this works. So let's say that you have a dental practice and you did two million dollars last year and you applied for this money. You got two percent of your gross revenues, which is 40,000 dollars. The idea is you're supposed to spend this money on expenses to fight the coronavirus. So we thought that was really easy. Number one step is to say, alright. What did I spend on coronavirus expenses? Well, what did you spend?
So let's say that before the coronavirus, your employees, your hygienists, your back office employees would be wearing paper masks to treat patients. That's probably, you know, I don't think very many dentists were using N95. Some were. Some were not. Most were not to my knowledge. So then the pandemic comes and what did you do? You ordered N95 masks. You ordered face shields. You ordered additional paper masks. You ordered gowns, you ordered additional gloves. What else did you do? Well, you went out and bought some sanitizing equipment. You bought UV equipment, you bought air conditioning and ventilation equipment. Some of my doctor spent tens of thousands of dollars on this, depending on how big your office was.
So you know, gosh, if you spent 20 or 40,000 dollars, you have from literally you know, they've even said in their frequently asked questions, you could go back to January 1. But realistically, from March 16th, 17th, when everybody shut down and you have until June 30th of 2021 to spend this money, you're probably going to spend this money on those expenses. And it sounds like it's not a problem.
Well, silly me. So the modifications that they made in these frequently asked questions. And what I want you to do is I want you to prepare now. The portal will open in mid-January. You have to do your reporting by February 15th, unless, of course, they extend that. But basically, here's the first step. Step one is you figure out your expenses that need to be, quote, attributable to coronavirus. So the frequently asked questions, they use language such as additional and increased expenses. I mentioned this on a prior podcast, but they made it all clear.
The example that they give is, quote, providers first calculate their expenses for supplies, equipment, I.T., facilities, employees, and other healthcare-related costs and expenses for the calendar year 2019, 2020, And then they calculate the change in year-over-year expenses and identify the portion that is attributable to coronavirus. So what we are interpreting that possibly to say is as my example, let's say that you had one patient in a year. We'll make it real simple. And you bought a paper mask, a box of paper masks and that's what you were using. Okay. And 2019. In 2020, you bought a box of paper masks and you bought a shield, you know, some shields and you bought a box of N95. Your additional expenses attributable to the coronavirus or the difference between what you spent in 2020 and what you spent in 2019. In other words, the only thing you get to take are the expenses that you spent specifically attributable to coronavirus.
So what you're going to need to do is you're going to need to go back into your records. And we CPAs, remember all we see is the check you write to Schein or Patterson or Benco or any of the other companies that you buy stuff from. We don't see anything else. So you're going to have to figure out what were your supply expenses before and after. Now it's easy to figure out if you put up Plexiglass barriers in your office. That's pretty easy because you didn't have them before.
So let's keep going. We have to calculate the expenses on a calendar year. And the other, so, that's the other thing. But the thing that really disturbs me has to do with the equipment. So it says capital equipment may only be recognized to the extent of depreciation based on the usual life, purchase price and depreciation methodology otherwise applied. Now, there's no guidance on capital projects other than equipment. So you go out and you buy a 10,000 dollar air purification system for your four operatory office. Alright.
Well, if they say to the extent of depreciation under the regular depreciation rules that the Internal Revenue Code has, that's two thousand dollars, 20 percent the first year, unless you bought it in the last quarter of the year, in which case it could be less. But we're allowed to take a 100 percent bonus depreciation. So can I claim the bonus depreciation? I don't know. It's so stupid. I can't begin to tell you how stupid this is. So that's the first thing. So, number one, you're going to have to figure out what expenses did you spend in 2020 specifically attributable to coronavirus, including your PPE and what expenses did you spend in 2019 on supplies that could also include teledentistry if you set people up at home, all these expenses and you need to get those expenses to add up to the amount you spent, the amount you got as a grant.
The second part of this is a reduction in your lost revenues. So as I'm reading this and if someone tells me I'm wrong, tell me I'm wrong. Basically lost revenues calculated. You have to reduce those lost revenues. You go back to 2020 calendar year. You compare it with 2019. So you lost revenues of X. Okay. Call it 150,000 dollars. You have to read, you have to basically add to your 2020 income for this calculation any PPP loan you got. Alright. But it appears to say other assistance received that is specifically for, you know, coronavirus expenses. Well, the PPP expenses I don't think are, because they're not for supplies. So I don't think we have to add that in, but again, we'll have to get more clarification. And then you're going to compare this year to last year. okay, and you're going to see did you have a decrease? And then you have to reduce this year's revenues by your coronavirus expenses you're taking the first part.
So you spend 25,000 dollars on coronavirus expenses. You got a 40,000 dollar loan, grant. Now I get 15,000 I get to get rid of. Well, did my revenues go down? Well, let's see, how much did they go down? You may be okay. You may not be. What I'm saying to you is start trying to account for the coronavirus expenses specifically attributable to your office dealing with coronavirus, not just all the PPE you buy. That's all I'm saying. So more to come. Wait to hear from me. Don't panic. But you're going to have to start planning on doing the reporting between probably January 15th and February 15th. I suspect they will extend that timeframe, but we shall see. And again, just keep listening to what we got going on.
I want to touch briefly on the Biden tax plan. Now, basically, if Vice President Biden is elected president of the United States, and becomes president in January. Couple things you need to be thinking about. And again, when this, you may not know on the 4th of November, but I suspect you'll know by sometime in the middle of November, depending on the states and when they report. And there's all kinds of stuff going on now which we're not going to get into.
Vice President Biden's plan includes a couple things, and we'll talk more about this after we, if he becomes president. Number one he's going to impose an additional 12.4 percent old age survivor and disability insurance, basically Social Security payroll tax on income earned above 400,000 dollars. So right now, you pay up to 137,700 dollars you pay Social Security tax. 6.2 percent the employee, 6.2 percent the employer. If you're a self-employed dentist, you're paying 12.4 percent.
Vice President Biden's plan would basically say, okay, you'll continue to pay up to 137,700. There will be a gap, or as they call it, on the Tax Foundation's website, a donut hole between 137,700 and 400,000. So no additional 12.4 percent. But then you have an additional 12.4 percent on anything over 400,000. So you have an example. Say your self-employment income is 500,000 dollars. So you pay the 12.4 percent on the first 137,700. And then between 137,700 and 400,000, you don't pay anything. And then for the next 400,000 to your income of 500,000 you pay 12.4 percent, which is basically 12,400 dollars.
So that is an incentive to potentially accelerate earned income into this year, because you reduce your or accelerate expenses in the next year, if this becomes law. It's going to revert the top individual income tax rate above for taxable income. Remember, that's taxable income. You know, your dental practice income, all of your other investment income, real estate income, whatever, above 400,000 dollars. It will go back from 37 percent under the current law to 39.6 percent, which it was prior to 2017.
Here's a big one. And this is something where you want to start thinking about planning if Vice President Biden wins the election and especially if he wins the election and the Democrats flip the Senate and they are in control of everything, the Senate, the House and the White House. Okay. His plan would tax long term capital gains and qualified dividends at the ordinary income tax rate of 39.6 percent if your income is above a million dollars and it eliminates step up in basis for capital gains. So let's talk about that real quick.
You sell your dental practice in May of 2021 for a million and a half dollars or a million dollars, and you made 300,000 dollars in your dental practice and investments and what have you. You are going to pay 39.6 percent on the goodwill portion of the sale of your practice, as opposed to 15 or 20 percent this year, which is why we at our brokerage we have several doctors that we are feverish trying to close their sales before the end of the year. And if we do, we'll get the lower capital gains rate.
So if you have a piece of real estate that's in escrow or you're thinking about selling or you're selling a business, or maybe you have a spouse that has a business that's selling or anything else that's going to generate a capital gain, depending on what happens on Tuesday, folks, you might consider accelerating that gain into 2020 and not having it go to 2021. What else does it do? Phases out the QBI Section 199 A deduction for filers with taxable income of over 400,000 dollars. Well for dentists, which are specified service businesses, you're pretty much at that point won't get much of a deduction anyway.
So it's not going to affect you. It will affect business owners who were getting this deduction, who were passed through entities who were not specified service businesses. What this will do is because, remember, Vice President Biden is looking at increasing taxes on the top one percent of people and the top one percent of people are going to end up with about an 11 percent increase in their, actually decrease in their net take-home income after taxes. And it's going to really only affect the top one percent because that's what he's trying to do.
So it's got the Child and Dependent Care Credit from a maximum of 3000 in qualified expenses for the Child and Dependent Care Credit to 8000 and 16,000 for multiple dependents. So that could be a couple thousand dollars for people that qualify for that credit. And the Child Tax Credit will go from 2000 per child under 17 to 3000 per child under 17. And will provide a 600 dollar bonus credit for children under six. The Child Tax Credit would also be made fully refundable, which removes the 2500 dollar reimbursement threshold and 15 percent Phase In rate, which I'm not going to get into that.
And he's got a lot of other things. Another thing that they're going to do is they're going to basically restore the Estate and Gift Tax Rates back to three and a half million dollars. So for those of you who have a significantly high net worth and basically, you know, right now, if you have a net worth of less than 23 million dollars, husband and wife, you don't have to worry about the Estate and Gift Tax. But if you have a net worth that is less than that and it's potentially over seven million, you might want to consider if Vice President Biden wins the White House, you might consider talking to your estate planning attorney and maybe accelerating some gifts in 2020.
And again, this is all very preliminary, but I would urge you to go on to and I found this, it's under www.TaxFoundation.org and just Google Biden tax plan and you can read all about. I just want you to think about it. If President Trump wins the election on Tuesday, taxes are probably going to stay the same. Again, don't know what's going to happen. Not making any predictions. Not getting involved in that discussion. Just giving you information. If Vice President Biden does become President of the United States, his tax plan will probably go to the Congress. And if it's all Democratic, it will probably pass. Maybe with some tweaks. But you need to take a look at this. So that's that.
Alright. So what I want to do with the rest of the program today is, and time flies when you're having fun, folks. I want to talk about specifically a couple more metrics. We talked about metrics several weeks ago. And I am just so adamant, especially during a pandemic, that you really need to be looking at your numbers. Doctors are not reappointing their patients, doctors who have tons of patients that are not rescheduled. This is huge.
So today, I want to talk about a couple of different expenses. I mean a couple of different metrics. And before I do that, I want to touch on the main formula that we look at for determining profitability. And the key things that you want to be looking at doctors are numbers of patient visits, times average production per patient visit. Because if I take my number of visits times my average production, isn't that my total production for the year? So the higher number of visits I have and the higher my production per visit, the higher my production is. Then we multiply that by our collection percentage, which should be 97, 98 percent. We subtract our expenses and that's what? Our profit.
So those are really, really important metrics. And the formula. So we work with those formulas. We talked a couple weeks ago about how do we increase visits? What do we want to do? Well, here's an example. And I'm just talking here. So I have two full-time hygienists, okay, four days a week. Right? So for one hygienist four days a week that's 32 potential visits. And for the other hygienist, it's 32. So I have 64 potential visits. So my question to my front office is, how many of those 64 visits for next week are filled?
And you should have 90 percent of those filled. If 50 percent of them are filled, what happened? And this is where I want to talk a little bit about something that just obliterates dental practices and their cancelations and no shows. So when we look at these metrics programs, what we see is, and what they tell us in these metrics programs is they tell us how many cancelations and then did we schedule these cancelations. Okay. So let's say that on Monday I have my two hygienists with 16 patients scheduled. Right. Eight for each day on Tuesday, but only 12 of them show up. So what happened now? Let's talk about the difference between cancelation and a no show. A cancelation is someone who calls the office more than 24 hours away from their appointment and says, I can't come.
Now, there is no dentist or, you know, hair salon that makes appointments or anything that doesn't have cancelations. People, you know, people have things come up in their lives. Alright. It's just the way it is. So cancelations are easier because I got more time to fill the cancelation. But let's say that I had cancelations of three, I had two cancelations on Tuesday. People that called up on Friday and they said, I can't make it. Well, you need to have a list of people who have not been in.
And by the way, what did we talk about? We talked about the number of active patients who don't have a future appointment. Well, if you don't have the software, and I don't sell the software folks. And I don't get any money if my clients buy the software. It's just a great tool. So if I have 2000 active patients and 800 of them, they've been in in the last 18 months and 800 of them do not have a future appointment, I've got 800 potential people to fill those two hygiene slots.
And the software, the different software, what they do, and I don't promote software, but what they do is they give you a list of the people who have not been in and they give you a list not only of who have not been in, but they give you a list of what their outstanding treatment plans look like. So let's say that on Friday, two of my 16 appointments canceled. Right. They canceled. They called and said, you know what, I can't make it on Tuesday. I'll get back to you. Alright. So, number one, what you need to be doing is you need to go to that list of 800 patients who don't have a future appointment. Now, the software will give you a list of those patients and they will give you a list of those patients in the order of their outstanding treatment. So what happens if we find that Mrs. Smith hasn't been in, you know, she was in 12 months ago or nine months ago, and she's got outstanding treatment of 4000 dollars. Wouldn't that be a great patient to have come into the office?
So you call Mrs. Smith and say, hey Mrs. Smith, you know, we missed you. We haven't seen you in 13 months. And we're really concerned about those you know, those two teeth the doctor talked about are starting to get some cracks in them. But guess what? I've got some great news for you. Tuesday morning at 10 a.m., I got an opening that just opened up. And we'd love to have you come in. Because we've miss you. Okay, what did I do? Did I just not get the potential of not only filling and not losing that 100 to 250 dollar hygiene appointment, but I also had the opportunity to maybe do some restorative work or to schedule some restorative work. Okay, so that is, those are cancelations.
Now, let's assume remember we talked about Tuesday. We had 16 patients scheduled. Well, what happens if on Monday afternoon two other patients call and say, oh, well, I can't come in or they just don't show up? Now, if they don't show up, there's not much you can do. But if they call within 24 hours, that's called a no show. Okay. Now, what do we do about those shows? Those are not so great.
And I'm going to tell you, if you're sitting there driving in your car and you're listening to me, you're thinking about your chronic no shows. People that you appoint and they call up and make an appointment, then they cancel. They do it once. They do it twice. They do it three times. Think about how much money that's costing you because they do it at the last minute and they're not bad people. They're not trying to hurt you, but they do it over and over again. So what do you do with those patients?
Maybe the second or the third time that they do it. Maybe the second time you say, you know, Mrs. Smith. I mean, we love having you around and you're a wonderful patient of our practice. But the problem is, is you seem to be really, really busy and you're not able to keep the appointment. So I tell you what I'd like you to do. I'd like to do. I'd like to put you on this special special list that we have. So that being that, you know, it's hard for you to make an appointment and maybe keep it cause you're so busy and things come up. What I'd like to do would be to call you up and and, you know, have you on this special, at the top of our special list.
It's a special list, folks. It's not just a regular list. You know, lists are lists. But this is a special list. This special list, I'm going to call you when I have somebody who has a last-minute cancelation. So if I call you at 8:30 in the morning and I say, Mrs. Smith, we just had a cancelation at 10:00 can you make it? I'll be there. I'm getting in the car right now. That's how you solve that, because they're just going to keep doing it. Very, very important.
So the other thing we talk about as far as cancelations and no shows are what about reappointing them? So how do we do that? Well. So Mrs. Jones cancels her appointment. Alright. And. Then we never call her, so these softwares that we use, these metrics softwares. What they do is they will give you know, they'll give you the list of people who have treatment and who can, you know, who you want to get in there. So and what they also do is they'll give you what's called follow up reminders. I lost my train of thought for a second. Follow up reminders.
So on the follow-up reminders. So you get this call on Friday that Mrs. Smith canceled, okay. So there should be a tickler file in the site. And there is in the software, it's just remarkable software, that basically gives you a reminder that says, okay, next Thursday, Mrs. Smith gets a phone call, hey, Mrs. Smith, got your phone call. Sorry you missed your appointment on Tuesday. I'm sure stuff came up, but we really need to get you rescheduled because we're doctors really concerned about keeping up your oral health.
And that's how we keep those patients in the practice. Alright. Really, really important stuff. So cancelations and no shows are the absolute, you know, killer of a dental practice. I mean, I've heard stories of multiple practice offices that don't keep track of this, and they lose hundreds of thousands of dollars in production. The most important thing that you have to do, folks, is you have to get the team to buy into this. Okay?
You've got to get the team to buy into the fact that we've got to get all of the slots appointed because remember, number one, we want to keep everybody healthy. Number two, we're in a pandemic. This coronavirus is really serious stuff. We just went over nine million people infected in the United States. We have had at this point, the beginning of November of 2020, very, very sadly, 230,000 people in the United States have lost their lives to this virus. If you listen to Dr. Fauci and all the folks at the CDC, you know, between Thanksgiving and Christmas and the fact that everybody is now going to be indoors and the cold weather states, which is going to pass this virus even more, these numbers are going to get more and more silly.
So what we need to be telling our patients is how, and I've said this before and I will say it again, how important is it to tell your patients that lots of disease in the body starts at the mouth. And studies have shown that, you know, the ability to keep a mouth healthy makes a healthier body, a stronger immune system. Let me repeat that, a stronger immune system and therefore can help you fight COVID-19. Now, when you say that to somebody, maybe that patient hasn't had COVID-19, but I guarantee you, I'm going to say 75 percent of the people in this country, maybe more, know somebody who's either gotten COVID-19 or who has sadly died from COVID-19. And if that's the case, that's going to hit them right between the eyes. Right. So that is something that we need to educate our patients about.
And that's really, really important. And the last thing I want to talk about today is the morning huddle. And this is another thing that these metrics programs track really, really nicely. So the morning huddle, if you are not having a morning huddle and if you're not, and your morning huddle can't just be chit-chatting about what you watched on TV last night and doing, you know, talking about your kids. I mean, that's all important. But not during the morning huddle, that's 15 to 30 minutes in the morning to really plan.
So here are the things you need to be doing in the morning. If you don't have one, get one, start one. Okay, just Google dental morning huddle and we can refer you to consultants. Anybody in the Academy of Dental CPAs can talk to you about referring you to a dental coach or to some of those dental software. Like we work, the primary two we work with are Dental Intel and Dental Metrics and they're both outstanding and they do lots of great stuff.
So let's talk about you know, the morning huddle. What do we do in a morning huddle? Number one, the software will give you the list of patients for today. It will also give you, this is the cool thing I love about it, it will give you the patient's name. It'll tell you the last time the patient was in. It tells you if the patient has a balance due. We need to address that. It will tell me what treatment has been diagnosed in the past that has not been accepted or done. And the cool thing about is it will tell me how many of the family members haven't been it.
So wouldn't it be great to know your 9:00 hygiene appointment for Mrs. Wiederman. So hey, Lynn, you know, it's great to see you, but, you know, we checked out, you know, neither Art nor Nathan nor Forrest, that's my family, by the way, if you haven't heard it before. They haven't been in in the last year. How are they? Are they okay? We're real concerned. We'd love to see them. You know and that elicits a response, so that's additional production. So we get to know what's going on with the patient before they even walk in the door.
So in the morning huddle, three things we want to accomplish. Number one, what happened yesterday? Okay. What did we do well? Did we meet our goal? We had 16 hygiene appointments scheduled. How many of them showed up? 16. Celebration, folks. Party time. That's great. Catch somebody doing something right. Don't catch him doing something wrong. Okay and then what didn't go as well. Well, you know, we had these two patients we talked about and they didn't accept treatment. Alright. And there was, you know, 8000 dollars treatment. Why didn't they accept treatment? What happened? What can we improve upon? How can we turn this into an opportunity? Can we get back to them? What was the blocking point for them to not accept the treatment? So we have to talk about that.
Number two. You know, what providers are working today? What doctors are working, what hygienists are working? And, you know, what patients are we seeing? So for the fact of the matter is where we use this for? Number one, we use it for who's going to ask for a referral. Now, folks, you know, you don't want to ask probably every single time for a referral because then you sound desperate. But, you know, you want to ask for a referral maybe once a year, I think. And this is a great way to ask for a referral, by the way, because I teach this in my courses when I talked about the numbers of a practice.
So the best way to ask for a referral is to ask somebody, how did it go today? Alright. There's a couple things. Number one. If they say this is the worst dental office on the planet, I'm never coming back and I'm reporting you to the Department of Public Health, then you know you've got a problem. Probably not going to say anything. If you hear them go, oh, my God, you guys are wonderful. I love coming to this office. You take such good care of me. Thank you. What a perfect opportunity to ask for a referral. And here's how you ask for a referral, folks. Well, Mrs. Smith, first of all, I want to tell you that when we saw your name on the schedule today and our morning huddle, everybody just smiled because we love when you come in. We have gotten to the point in our lives that we only want to deal with nice people. And you are nice people. I have used that in my life and it works, if it's genuine.
Okay. Now, Mrs. Smith, I want to let you know you may not know this, but, you know, we pride ourselves at Wiederman Dental Care at giving the best possible care to help improve the quality of your life in the area. And we're very proud of what we do. And I'll tell you what, any friend of yours, is a friend of ours. I don't know if you're aware, but we're always accepting new patients. And if you were so kind, here's a couple of our cards to refer some of your friends. We would be honored. We would be humbled. And we will take really good care of them. That took, what, 15, 20 seconds. And you can shorten it or do whatever you're both comfortable with.
So who's going to ask for that referral? Maybe it's the doctor, because maybe that doctor knows the patient and because they go to church with them. Maybe it's the hygienist because their kids play together on a little league team. I don't know, whoever it's going to be, you figure that out in the morning huddle. Who's going to ask for the referral? Who's got outstanding treatment? Well, if we have somebody who's got 15,000 dollars of outstanding treatment, you think you want to put a little more time in the doctor's schedule today? Maybe an extra five or 10 minutes for him or her to spend with that patient, to talk about that. That's why it's so important. So. Number one, we're going to talk about what happened yesterday.
Number two, we're going to talk about what is happening today, okay? And what uncompleted treatment do we need to reschedule? So if we had those two patients on Tuesday, actually four patients in my example who didn't show up, there were two cancelations and two no shows. We talked about what that is. If we have those four patients, who is going to reschedule them?
So what are we going to do? So, Stephanie at the front desk, remember, I've stopped picking on Susie, because I've been picking on Susie for almost two years on this podcast. It's now Stephanie. So, Stephanie, so when are you going to be making those phone calls? Okay. And we set up hot times in our practice to make those phone calls. And we need to get them with scheduled. Oh, Mrs. Smith, you called and we know you couldn't come in and we understand and, you know, life happens, but want to make sure we get in and we've got an appointment available for you in about a week with Barbara, the hygienist, and she's wonderful or whatever it is. Okay.
So we've got to reschedule those cancelations and no shows, because that's going to get away from you. I'll bet you that if you go into the software, you're going to find hundreds and hundreds of cancelations over a year or two. Hopefully not, because we want to keep cancelations and no shows under between five and 10 percent of your total number of appointments. But we've got to get them rescheduled. Every patient that we lose goes out that back revolving door that we talked about a couple of weeks ago.
And then the last thing we talk about is prepare for tomorrow. What's the schedule look like tomorrow? What's our goal for tomorrow? Well, okay, so doctor’s goal is to produce 4500 dollars a day. Okay. So, Stephanie, what is doctor scheduled for tomorrow, Wednesday. Today's Tuesday. Okay. What's he scheduled for or she scheduled for. Oh well it's a kind of light schedule. We're only about 2000. Hmm. So can we go into our metric software and can we go to the uncompleted treatment plan reports?
And some of this software now has some artificial intelligence in it that will actually tell you which patients that are unscheduled, have unscheduled treatment, actually have the best opportunity to be, to accept treatment. The ones that pay on time, the ones that have accepted treatment in the past. Those are the people you want to call. So you might have that list.
So maybe Stephanie takes 30 minutes, goes through the list and tries to fill up the schedule with the uncompleted treatment plans and maybe people who cancel treatment, maybe we call them up. So we look at tomorrow. So we look at yesterday. We celebrate yesterday. We work on what we were gonna do that's gonna be better hopefully. We look at today. We look at who we're going to ask for referrals. We look at who we're gonna be, hopefully getting some same day dentistry.
Here's another thing you can do with that. So let's say, for example, that I have a patient who has basically I'm doing an SRP in the right quadrant. Right bottom quadrant. I'm doing an SRP. Well, what if that patient also has uncompleted treatment that we have a composite restoration that needs to be done on that, in that same quadrant? Well, wouldn't it be nice to be able to, since we already got that patient numbed up, to look at what that patients got going on and maybe the hygienist says, you know, calls the doctor and doctor says, hey, listen, Mrs. Smith, we know you're doing this today and we've got this quadrant root planing and it's really going to help you. But while we've got you numbed up, we've got this composite restoration we've been talking about. And if we did that while you were here, it's not going to take that long. And we already got you numbed up.
Oh, sure, doc, go ahead and do it. You just added maybe another 300 dollars of production, which isn't going to take you a long time. These are the ways that you build your 2000 dollar days to 5500 dollar days or 4500 dollar days. And these are the things you need to be doing. And if you're not working, and remember I'm just a silly old CPA who talks about letters - PPP, EIDL, HHS, ESPN, HBO, you know, that's all I talk about. And I talk about sports, I talk about golf. I know enough about dental management after 36 years to be dangerous. I'm not a dental consultant. I don't play one on TV, but I talk the language. And if you need a dental coach to help you with some of these areas, I have seen over and over and over again where you bring in a really good coach and the team buys into it and the doctor buys into it, and that coach can help grow a practice's top line and bottom line, incredibly.
Between that and using these metrics tools that we've just been able to start using in the last five years or so, you've got some great opportunities, but you've got to want to do it. And folks remember the definition of insanity, that's doing the same thing over and over again and expecting a different result. Now, think about this way. You've got all this uncompleted treatment plans, all this work. But what are you saying? We need new patients. We need to do marketing. We need to spend money on upgrading our website, we need to do, we need to send out mailers and spend thousands and thousands of dollars. No, you don't. No, you don't.
Most of you, if you're getting, I don't know, 10 to 20 new patients a month in your practice, you're doing fine. But look at your uncompleted treatment plan reports. There is tons of work in there that is slipping through the cracks. We see it every single day. So don't, the answer is not, I need new patients. Yes, you need new patients. You absolutely need new patients. But you need to make sure that those new patients don't walk out the door. And how many of them, one of the metrics that we talked about the last time was, if I get 20 patients in a month and only seven of them are scheduled for a future appointment after they leave their first visit, it's a waste. I wasted 13 of them. 13 new patients who are not rescheduled, who may never come back to my dental office again. So. Well, that's my story. And I'm sticking to it. And we're about at the end. I want to give you a little more information.
Again, folks, if you want to get a hold of me in my office in Tustin, my number is 657. 279.3243. My email is firstname.lastname@example.org. Make sure if you're interested in the Research and Development Income Tax Credit, put December, I think it's Wednesday, December 9th on your calendar. We'll get you out the links. If you're interested in participating in this series, send me an email. We'll put you on the list. We'll get you the links. They're going to be the second Tuesday of every month. They're all going to be virtual. Virtually everything's going to be virtual for the next probably next year. That's what the dental societies have told me, that there's some people, I guess, doing some live courses. But I think that's the exception rather than the rules.
So if you are interested in the dental Research and Development credit, go to website www.eidebailly.com/dentalrd. If you have not looked at Decisions in Dentistry magazine, please go to the website www.DecisionsinDentistry.com. If you want a complimentary consultation with someone from the Academy of Dental CPAs, you can get that through their website on the podcast page. If you're not working with a dental specific CPA, call me if you're in Southern California. The Academy of Dental CPAs is in the rest of the country. 23 others, other than my firm, 24 CPA firms that work with over 10,000 dentists. And we've got your back and we're going to help you with the PPP forgiveness and the HHS.
Not going to guess who's going to win the election on Tuesday, but we're going to talk to you about all the year-end tax planning and everything that you need to do to meet your goals. And folks, I know the dental profession has been very resilient and they've really come out of this thing better than most professionals, better than most businesses. I mean, God bless the restauranteurs in this country. God bless the hair salons and the nail salons and the gyms. My heart goes out to these people. Their lives have been just absolutely blown up in the last eight months.
Fortunately, the dentists have done well. They have survived. They've gotten back to 80 to 100 percent of where they were. Here's the good news for 2021 folks. When I talked to Dr. O'Loughlin, who you'll hear next week, the 11th, she used the number 75 to 80 percent of patients dental office. In some of our offices, it's better some it's about that. Here's the good news. Once there is a vaccine and basically mitigations for this horrible virus and people are feeling comfortable, taking them, that other 20 to 25 percent of your patients who have been sitting on the sidelines, they're going to call you. And that's good news and something to look forward to.
So with that, folks, do not forget to listen on November the 11th. Don't forget to like our podcast. Don't forget to like on Eide Bailly's Linked In, Twitter and Facebook and Instagram accounts and go to our website www.EideBailly.com. Subscribe to the podcast. And if you do any of those things, you will be put in the running for a $100 Visa gift card.
And with that, I will bid you adieu for the evening. I wish you all Godspeed. And remember, my five-word saying is failure is not an option. I will not allow it on this podcast. So this is Art Wiederman for the Art of Dental Finance. That's our podcast for the Art of Dental Finance and Management. You'd think by now I'd learned the name of my own podcast. So we'll see you next time, folks. Bye bye.