For owners of private medical practices, being able to plan taxes effectively is vital to the financial health of the business. Keeping up-to-date with tax regulations and taking advantage of tax-saving strategies like healthcare expenses, business deductions, and contributions to retirement plans is crucial, and an experienced tax preparation service in Fort Lauderdale can prove to be an invaluable ally. Top of Form
Here’s a brief guide to tax planning as a medical practice owner:
Correct documentation
For any medical practice owner, filing the right documentation is central to an accurate tax return:
- Profit and loss statements (P&L)
- Balance sheet
- Bank statements
For sole proprietors and single-member LLCs:
- Schedule C (form 1040)
For partnerships and multi-member LLCs:
- Business income, deductions and P&L (form 1065)
- Schedule K-1 (form 1065)
For S-Corporations:
- Business income, deductions and P&L (form 1120-S)
- Schedule K-1 (form 1065)
For C-Corporations:
- Business income, deductions and P&L (form 1120)
Expenses and deductions must be well documented, and include such paperwork as:
- Rent of office
- Payroll
- Insurance
- Marketing
- Medical supplies
- Professional services (legal, accounting)
- Equipment and software
- Continuing medical education (CME)
For your estimated quarterly tax payment records, you must be able to provide all necessary receipts, confirmation emails, or IRS account transcripts.
Should you have taken out a business loan or used a credit card to support your practice, you’ll need to provide monthly statements from lenders, along with summaries of year-end interest.
If you have a qualifying home office, you must provide the utility bills and square footage, along with rent or mortgage statements.
Records and receipts must also be provided of any medical expenses or health savings accounts (HSA).
As a doctor with your own medical practice, here are some key deductions you may be able to claim that could help reduce your taxable income:
- Office rent, lease, and utilities
- Medical equipment and office supplies
- Employee payroll and benefits
- Malpractice and liability insurance premiums
- CME conferences and courses
- Advertising, website expenses, and marketing
- Interest deductions for student loan
Examples of tax loopholes for doctors
With guidance from a specialist tax preparer, the following tax loopholes for doctors may help reduce your tax liability:
- Maximizing HSAs for medical expenses that are tax-free
- Retirement account strategies such as SEP IRAs, Solo 401(k)s, and defined benefit plans
- Real estate investment options, such as a depreciation deduction on rental or business properties or a 1031 exchange
For self-employed doctors, S-Corp election benefits
Electing for an S-corp structure helps to lower self-employment taxes, as your salary is only considered as part of your business income, while the rest is classified as distributions.
Determining how income is taxed, what deductions you’re eligible for, and how your profits are distributed, a tax planning in Miami service can help you select either a limited liability company (LLC), S-Corp, or C-Corp.
By using the services of a specialist tax preparer or accountant, doctors with their own medical practices no longer have to worry about IRS compliance, can reduce their taxable income by maximizing deductions, learn how to reinvest their savings back into their practices, and provide their patients with enhanced levels of care.
