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Compendium
September 2021
Volume 42, Issue 8

Employee Retention Tax Credit Can Be a Boon to Local Dental Practices

Sean Manning, CPA, CFE

As widespread economic hardships spread across industries in the past year, dentistry was among the most heavily impacted by the onset of the COVID-19 pandemic. More than a year beyond the start of the crisis, there are still relief opportunities open to dental practices because of those effects.

"Extraction by phone call is not the easiest," Curtis Smith, DMD, says of the pandemic conditions of spring 2020, allowing himself a joke now that the stress of that period has eased.

Smith's practice, Pioneer Valley Dental, outside of Salt Lake City, Utah, is one of the thousands of practices that were thrust into uncertainty once health concerns and government mandates either drastically reduced patient visits or, in some cases, forced closures.

Like many practices, Smith's practice usually had about 100 to 130 patients on a daily basis in pre-pandemic days, he says. And like most other practices, it had to close at the beginning of the pandemic and into April, aside from emergencies. Thankfully, he says, for his business and staff, the practice has been busy since reopening.

These fluctuations have opened the door for financial relief programs to serve as a significant lifeline to dental practices nationwide. Some of these programs, however, are still relatively unknown despite the ongoing opportunity they may provide. One such program is the Employee Retention Tax Credit (ERTC).

The ERTC has been in existence since the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law early in the pandemic. However, it was largely ignored because most business owners assumed it could not be used if they had received a Paycheck Protection Program (PPP) loan as well. That all changed just before the calendar flipped to 2021. Now, businesses that were required to be either partially or fully closed, or saw a significant reduction in revenue, can still be rewarded for keeping their staff intact.

Although roughly 90% of dental practices reported that kind of closure or drop in revenue, studies show employment in the industry remained around 98% of pre-pandemic levels.1 That means the industry could be especially well qualified for the ERTC.

Entering the second half of 2021, there are likely many dental practices throughout the United States that could still qualify for and benefit from the credit. The ERTC has been adjusted a couple of times, and the latest updates have extended the relief program through the end of 2021. This ensures that meaningful dollars are still available to dental practices in need. Because there is still hesitancy among patients to return to the dentist, being proactive with regard to taking advantage of financial opportunities could make a difference for a practice's bottom line. Local payroll service providers can assist in educating small businesses like dental practices on the prospects of programs like the ERTC.

"I really think education is key when it comes to navigating all these programs and their updates," Smith says. "I didn't qualify for the ERTC because we were actually fortunate enough to bounce back quick enough, meaning we were somewhat lucky. But it was nice to know it was available. There is a real business side to dentistry, and it's important for owners to build that knowledge base."

Finding relief programs moving forward can not only make up for some lost revenue over the past year but could set practices up for success moving forward, allowing for necessary investments that may have seemed impossible considering recent circumstances.

"Our employees are very important to us, and they are why patients have been coming to us for years," Smith says. "Sadly, some people have had to have emergency procedures because they put off treatment for the year. But now that we see increased traffic, we've been able to add to our staff again. We take excellent care of our employees and want to continue that moving forward."

Disclosure

Dr. Curtis Smith's son, Austin, is owner of a local branch of Payroll Vault.

About the Author

Sean Manning, CPA, CFE
Chief Executive Officer and Founder, Payroll Vault (payrollvault.com), a payroll service provider for small business

References

1. Gurenlian JR, Morrissey R, Estrich CG, et al. Employment patterns of dental hygienists in the United States during the COVID-19 pandemic. J Dent Hyg. 2021;95(1):17-24.

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