I attended a Super Bowl party and was talking with a new dental practice owner. She is about three weeks into dental practice ownership, so we were talking about business in general over a bowl of chips and buffalo chicken dip.
I looked around the room as she mentioned that there were a bunch of neighbors, existing patients, and potential patients at the party. We started talking about good dental accounting and I asked if she was deducting her meal and drinks as a business deduction. She was hesitant, wasn’t sure how to answer, so we dug into that a bit while I informed her it was a legitimate business expense - but it’s changing.
Let’s take a look at the IRS definition of meals deducted at 50% for business purposes: Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered “lavish or extravagant.” The buffalo chicken dip was good but certainly not lavish. The meals may be provided to a current or potential business customer, client, consultant, or similar business contact.
Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event. Remember, for 2018 and moving forward, a dental business cannot deduct the cost to entertain business colleagues, customers, or potential customers. Only the meals can be addressed now.
As one of her neighbors cozied up to us, complaining about the Rams offense, I told her that I definitely recommend keeping the receipts for all business expenses and I have a very cool method to capture, store, and share those instantly with modern technology. It’s the little things you improve in a practice that make all the difference in profit and efficiency over time. Take a minute to brush up on new tax laws and make sure your dental office accounting is up to speed.