How to Calculate Cost of Goods Sold for Your Dental Office
Cost of Goods Sold (COGS) is a required question in the EIDL application
Due to the overwhelming need for dental practices to file applications for the EIDL (Economic Injury Disaster Loan Emergency Advance) through the SBA, we have received questions about how to calculate the cost of goods sold for a dental practice. This is something that you must provide on the application form to be eligible for the up to $10k advance. Obviously, you are not in business to sell a product and may not think you have cost of goods sold at all. However, you are providing a service, so you are really calculating the cost of service provided.
The question is – what expenses do you incur that relate directly to the dental service you are providing? Typically, the dentist(s) (salary & payroll taxes), the dental supplies & tools, implants, small dental equipment and the laboratory fees would be considered part of your cost of goods sold. These expenses can be found on your profit and loss statement.
You may be wondering about the expensive dental chair, dental operatory light and other equipment you use to see patients. Are these a part of your cost of goods sold? The short answer is no. These expenses, in addition to marketing & advertising, staff payroll, continuing education and rent are essential for your business and would be considered supporting costs, but not a part of your cost of goods sold. Although these items are directly related to providing the services, most large equipment over $2,500 is capitalized on your balance sheet and not recorded as an expense at all. When looking for the cost of goods sold, you are focusing on the profit and loss statement and expenses that are listed there. For smaller dental equipment or tools under that $2,500 threshold, you would count them as cost of goods sold.
If you have any questions as you navigate through these unprecedented times, please feel free to email us at firstname.lastname@example.org or call at 844-475-7272.
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Katina Peters, Jami Johnson and Jaime Staley are the owners of PJS & Co. CPAs. Their passion for leveraging numbers to drive business forward is one of the many common factors that brought them together. They believe CPA firms should operate differently and deliver more to their clients.
Not only do we operate 100% in the cloud and work to continually stay on top of the latest technology, our team challenges the status quo by pushing each other and our clients to look at accounting in a more proactive and strategic way. The numbers don’t just tell a story of the past, they can be used to make valuable decisions for the future of your business and ultimately reach your goals. We think differently and get results.
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