You’re going about your day. Then suddenly, you get a brilliant idea: “We should have an espresso bar!” It SEEMS like a brilliant idea. I mean, who doesn’t love freshly-made espresso in the morning?
When the team asks how much it cost, you say, “It’s a write off! The government will pay for it.” Here’s the problem: a lot of dentists think they know what a write off is when they actually don’t.
Many dentists think a write off means the government will subtract the cost of a business expense from their income taxes. So, if a scanner costs $10,000, they think the government will subtract $10,000 from their taxes. This is NOT TRUE! Your taxable income reduces by $10,000, not the taxes themselves.
The scanner isn’t free. You’re still paying for it. The government just reduces your taxes by a little bit. So, the question is . . . do you still need that espresso bar?
This short video explains the difference between good write offs and bad write offs (and what write offs actually are).