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| Life Transitions |
The by Derek Swain, Ph.D.
Transitions in life are often highly stressful experiences, even when they are desired and positive. Change of any sort disrupts our routines and requires us to think and respond to events in novel ways. Individuals vary in their response to transitions in life, depending upon their own unique personalities, the significance of the event, and the contextual issues surrounding them. But, changes in our relationships or careers are two of the areas most likely to cause us distress because they involve so much of our energy and personal identity. Sometimes career change is forced upon us by external events, such as new technology, or by internal issues, such as declining health. This change can be initially traumatic for some but, because there are no alternatives, people eventually accept the change and make adjustments to their lives accordingly. When career change is optional, some people can experience prolonged stress, a chronic experience, as they wrestle with the various options and feel pressured about the optimal time to make their decision. Under this stress, they may find that their work performance suffers, as do their intimate relationships, and they feel alienated from colleagues and other support systems.
In my practice I often see people whose experiences mirror those of professional athletes I studied in examining the experience of retiring from competitive sport. Consistently, people who struggle with their decision in solitude, concerned about the negative evaluations of their colleagues and associates, have a prolonged and difficult experience in decision-making. They not only lack support but they lack valuable alternate perspectives.
"learn to be planful"
Those people who seem to have the most success in easing themselves into retirement from one career are those who learn to be planful, who develop other interests and aspects of their identities, who have the support of friends and loved ones, and who seek the counsel of others, particularly professional advisers whose input and support are confidential and objective.
Dr. Swain is a Registered Psychologist in private practice in Vancouver specializing in career transitions. He can be reached at 604 – 736 – 2535
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| Our Company Is Expanding Again |
We have had so much demand for our services in Alberta that we are currently looking for a special individual well known in that dental community and who exemplifies a high sense of morality and integrity. Here in B.C. we are also expanding and are pleased to announce that Sylvia Wilson , my spouse of 30 years, is currently taking the B.C. Real Estate Course, a requirement for the brokerage business. We’ll properly introduce Sylvia in the next issue.
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| Employee Termination - Know the Ground Rules |
by Pat Madaisky, LLB
One of the most important aspects of a successful dental practice are the employees. However, from time to time it may become necessary for the employer to terminate the employment of an employee. In that regard, it is very important for any employer to have a basic understanding of the general law with respect to employee termination. Employees may be terminated either for cause, or without cause. If an employer wishes to terminate an employee without cause, the employer must give reasonable notice of such termination, or pay in lieu of notice, to the employee. What constitutes reasonable notice depends on numerous factors, including the position of the employee and the length of employment. Failure to give reasonable notice may subject the employer to a damage claim for wrongful dismissal.
The Employment Standards Act of British Columbia (the "ESA") sets out certain statutory minimum notice, or pay in lieu of notice, requirements (currently one week of notice after three months of employment, two weeks after one year, three weeks after three years and one additional week for each additional year, up to a maximum of eight weeks). However these are minimum requirements only. A terminated employee may take the position that they are entitled to a longer period of notice, or pay in lieu of notice. More often than not, the employee will be justified in taking this position. With respect to some employees, especially long term employees, the notice requirement could be substantially longer than the minimum requirements.
Any employee may be terminated "for cause" without notice. A discussion of what constitutes just cause is beyond the scope of this article. Suffice it to say that in British Columbia, it is often very difficult for an employer to establish just cause for terminating an employee without notice. In general, if an employer wishes to terminate an employee for cause without notice, the employee should have received several warnings, in writing, that the employee’s continued course of conduct will lead to termination without notice. Although in reality most warnings of unacceptable or improper employee behaviour are given verbally (if given at all), such discussions should always be followed up in writing, with a copy of the correspondence placed in the employee’s file maintained by the employer.
Much of the uncertainty which arises with employee terminations can be avoided by having all employees sign a written employment contract. One provision of this employment contract should provide that the employee may be terminated without cause upon the employer giving the minimum notice required pursuant to the Employment Standards Act of British Columbia.
This employment contract need not be a comprehensive, expensive, formal contract. A simple one or two page letter from the employer to the employee, setting out the basic terms and conditions of employment ( such as position, hours of work, salary, holiday entitlement, benefits and termination provisions ), which is signed and acknowledged by the employee is generally sufficient.
In most cases, the employer can prepare a standard template of such a letter which can then be modified as necessary for each employee.
Patrick C. Madaisky, LLB, is a lawyer at the law firm of Alexander, Holburn, Beaudin & Lang specializing in providing legal assistance to dental professionals. He can be reached at 604 – 688 – 1351
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| ROI Corporation Seminars |
Timothy Brown , President and CEO of ROI Corporation, spoke at the recent C.D.A. Convention in Halifax. We have received enormous positive feedback from Tim’s speaking engagements across the country.
Once again I will be speaking to the U.B.C. graduating students this year.
If any study club or component society wishes to see the presentation, please call. I am very happy to travel to all areas of the province. The presentation includes information on demographics , selling your practice, associateships, appraisal concepts and misconceptions, actual open market sales figures, transition strategies , cost sharing, and patient count methodology.
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| Canaden and Dental Internet Sites |
Canadian Dentists E-Mail Network
www.Canaden.Com
There are now over 1600 dentists on the Canaden network . Topics recently have included viruses, digital cameras, dental therapists/denturists re substandard services, hygienists lobby for more autonomy. Please join up for both canaden & bcden. They’re free!
Know of a dentist in Alberta well known to his confreres with impeccable credentials and who is looking for a change? ROI Corporation is actively seeking such an individual to represent us there. Please call John Wilson at 604-932-5380.
Thinking of selling your practice?
ROI Corporation wants your listings. There are a multitude of ready & willing buyers out there. Your practice will now be posted on our website immediately enabling us to more effectively market your practice by our team of professionals across Canada.
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| Planning for the Purchase and Sale of a Dental Practice |
by Al Botteselle, C. G. A.
The capital gains exemption of $500,000.00 on qualified small business corporation shares ("QSBC shares") has proven to be a strong incentive to vendors of a dental practice such that today we are seeing far more share sales as opposed to vendors selling the assets of the dental practice. Vendors planning to take advantage of the exemption should be grooming their dental practice well in advance of the contemplated sale date.
Start with a careful review of the balance sheet of the company with your tax advisor. To the extent that there are non dental practice assets they should be transferred to a sister company before a share sale is contemplated.
There are certain exceptions and elections in the income tax act which may be utilized to allow this transfer to occur on a tax free basis. It should be possible to completely segregate the division of the non dental practice assets so that the transaction is not part of a series of transactions involving the sale of shares.
Prior to the sale shareholders loans should be repaid and the maximum dividend obtained on the payment of dividends using the refundable dividend tax on hand ("RDTOH") of the corporation. Similarly, capital dividends should be paid out of the capital dividend account, as they would not be taxable to Canadian resident shareholders.
It is important to monitor the assets of the company to insure they are employed in an active dental practice carried on primarily in Canada and, if necessary, steps should be taken to purify the company prior to the sale. At the point of sale at least 90% of the value of the assets must be employed in an active dental practice carried on primarily in Canada. Provided that more than 50% of the assets of the company have been employed in an active dental practice for two years prior to the sale and that it is possible to purify the company, it should be possible to claim the capital gain exemption.
"...groom your practice several years in advance"
If a sole proprietorship is to be sold it may be possible to transfer the assets of the sole proprietorship to a corporation in exchange for shares and to then sell the shares of the corporation. Provided that the proprietorship was carried on for at least 24 months prior to the sale, and that other tests concerning the qualification of the shares as QSBC shares have been met, then the rollover and sale of the shares should be eligible for the $500,000.00 capital gains exemption.
Consideration should be given to reorganizing the share capital of a company that qualifies as a small business corporation so as to involve multiple family members. This may be accomplished by implementing an estate freeze of the shares held by the dentist. New common shares may then be issued to other family members or to a trust for their benefit for nominal consideration. Provided that the dental office is not sold for a period of 24 months after the shares are issued to family members, and assuming the company increases in value, multiple use of the $500,000.00 capital gains exemption will be available.
If there are several affiliated companies and only one company is to be sold, consideration should be given to combining profitable and loss companies in an affiliated group prior to the sale. This would shelter income arising on an asset sale with the loss carry forwards of the other affiliated companies.
There are many other factors which should be taken into account in determining whether to sell or purchase shares or assets of a dental practice. In addition there are several other income tax planning points which should be taken into consideration at the time of a sale.
Prudent dentists should plan and begin to groom their companies several years in advance of the anticipated sale date.
Al Botteselle is a Certified General Accountant and a partner in Galloway Botteselle & Company, a firm offering specialized services to professionals. He can be reached at 604-736-6581.
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| Look at What You're Missing! |
Hey, all you prospective purchasers out there, wake up and smell the roses. Instead of spending the rest of your life living in unclean air, commuting for hours each day, experiencing road rage and worrying about your family’s safety, move to areas of the province other than the Greater Vancouver Regional District. I know of many professionals, including myself, who enjoy the multitude of benefits of living in the northern parts of our province.
You can own a huge house for $150,000.00 and a camp or summer cottage or ski condo. You can own a floatplane, yacht and even have your own personal hovercraft. Crazy? No way! That’s the norm! Most dentists in these areas live a lifestyle unequalled in any urban environment. They can afford luxuries including the time to smell the roses.
On top of all this you can buy these practices for a fraction of what the same practice would go for in the city.
These practitioners also take home more of their hard earned dollars. Their personal and business overheads are less. We currently have several of these practices for sale and more would be available, except for the fact that many dentists don’t put them up for sale, believing they won’t sell. As a result they hang on forever and quietly fade away.
Think about it! What an incredible opportunity!
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| Licensing of Dentists Across Canada |
According to the College of Dental Surgeons of B.C. the interprovincial barriers to licensing of professionals will be altered dramatically come 2001.
The federal government has realized that interprovincial barriers to the free movement of a skilled work force seriously undermines the nations ability to compete globally.
How will this affect dentistry in B.C.? Will it mean more competition? Will it affect your bottom line? Will there be less associate positions for new graduates? How about practice value?
Well rest easy, it’s good news! Practice values will increase due to increased demand. This may offset the decline in practice value predicted by Timothy Brown due to increased numbers for sale in B.C. Instead of having 1 or 2 dentists interested in your practice, you may have 5 or 6 bidding on it. Buying a practice remains the only way for most professionals to procure patients. Increased competition for practices will affect practice value in a positive way. It’s a myth that there are thousands of dentists out there ready to move to B.C. tomorrow. I travel across Canada on a regular basis talking to many fellow dentists and listen to over 1600 on www.canaden.com. Believe it or not most dentists are happy right where they are.
On the other hand, it may be an opportunity for some dentists to associate, freeing themselves of the many responsibilities of owning a practice. Many would enjoy having a mature dentist join them as an associate who would leave unceremoniously when requested, i.e when the practice is sold.
As to the effect on young graduates, I believe that most of these new dentists seek positions and plan to stay in the Greater Vancouver Regional District. Not the prime location of semi-retiring dentists.
Summing up, dentists in B.C. have nothing to be worried about!
For a related article see the October issue of the Academy of General Dentistry Newsmagazine IMPACT or www.agd.org.
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| Upcoming Events |
| Date |
Event |
| Nov. 1, 1999 |
Victoria & D. D. S. – Infection Control |
| Oct. 29, 1999 |
Vancouver & D. D. S. – Anterior Aesthetics |
| November 26, 1999 |
Vancouver & D. D. S. – Midwinter Clinic |
| March 9 -11, 2000 |
CDA/Pacific Dental Conference |
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