Three most common problems surrounding dental payroll

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Handling payroll is one of the most arduous tasks a dentist/owner has to deal with on a regular basis. Doing it yourself eats up valuable time that would be better spent treating patients. I recently spoke to Jamie Scherban, Senior Business Consultant at Paychex to discusses the most common problems dentists face regarding payroll.

When I started out back in 1983, there was no punching in or punching out. My office worked on the honor system. This worked well until I got into trouble with a disgruntled employee.

I then moved to sign in sheet to a punch clock – both of which also got me into trouble. Obviously administration was not part of what I was taught in dental school. And it showed as I made mistake after mistake until I finally outsourced this part of my practice to someone who knew what they were doing.

A dentist with 6-10 employees can spend anywhere between two to four hours a week focusing on payroll. “Our job is to give that doctor the ability to earn as much as they can based on the hours they work,” according to Scherban. “They should be focusing on their practice rather than focus on this stuff.”

When Scherban comes into a practice, any practice, he generally finds them making the same three mistakes that cost them time and money.

1-Incorrect setup

Did you set up the business correctly with the state and IRS? Even with existing businesses a lot of the time taxes are filed incorrectly because they were set up incorrectly. This results in late filings, penalties and notices from the tax man.

2-Filing taxes on time

Dentists are generally very good at being dentists. However when it comes to general administration duties like payroll tax filing – things can get overlooked. So taxes are not filed on time.

3-Managing employees

How do you manage benefits and time off? How do you track who punched in? Did they punch out?
This takes time away from the core business of being a dentist. So finding a solution that takes these issues off the table reduces the stress and makes the workplace run more smoothly and with less conflict.

In the end it is your responsibility to ensure that everything is properly tracked. If you choose to do it yourself, you are going to spend less time with billable patients which will cost you money. So it just makes sense to outsource this type of admin to a company such as Paychex, so that you can strike one of the least interesting tasks off your to-do list.

Dental associations need more business education programs

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As a dentist it’s very unlikely clinical skills are your biggest challenge. Dental schools are very good at teaching the mechanics of our profession.

What they are not so good at is preparing us for running a business.

For most of us it’s a trial by fire. The average dental graduate comes out of school with a mountain of debt.

According to the American Dental Education Association (ADEA), the average debt per graduating senior is $287,331 (according to a 2017 survey).

That’s a big hole to dig yourself out of.

And starting a practice of your own isn’t cheap either. According to Bank of America, the average cost to set up a dental practice is just over $400,000.

That’s just the start up costs. Let’s say you’ve managed to secure financing and open your doors. Being a dentist today is not the same as it once was. Where we once were able to grow our business over decades, today there is increased competition from Managed Service Organizations and Dental Service Organizations that can leverage their size and buying power to negotiate better deals than a single dentist can hope to get in their wildest dreams.

At this point you might be thinking that there is really no hope. But that’s not the case. These organizations got where they are in the marketplace because they identified the lack of business experience most dentists bring to the table.

As a working “wet-finger” dentist myself, I believe it is the responsibility of  local, state and national dental associations to help their members learn more about what they are facing and give them the tools to compete against these MSOs and DSOs so they can continue to thrive and grow.

In addition to one-on-one coaching and consulting for dentists, I regularly offer free webinars to dental associations to bring attention to this issue. If you are in a leadership position at your association send me a note and let’s talk about a free session for your members.

If you are a member, make an introduction. Connect me with your programming or education person and I’ll do my best to set something up so you and others in your dental community can learn more about MSO’s, DSOs and corporate dentistry.