Budgeting as a business is hard enough. And budgeting as a medical practice presents its own set of challenges.
Now that tax season has crashed down upon us, it’s time to start going over last year’s expenses, costs, and Uncle Sam debts. As you go over last year’s files, don’t forget you’re eligible for specific deductions and write-offs.
Here’s what you need to know about taxes for your healthcare practice so you can plan ahead for 2020 and file strong for 2019.
Track those expenses.
It’s easy—so easy—to lose track of the small (and sometimes large!) purchases that keep your practice going. So take note of every single time someone runs out for pens, paper towels, gloves, insurance, all of those day-to-day necessities for doing work in a clean and maintained environment.
But don’t rely just on the IRS’s expense categories for your tracking. These can be limiting because they’re supposed to be applicable to a broad spectrum of businesses. It’s better to maintain a list specific to your practice. This will come in handy—and not just for when you go to claim your expenses. You’ll also be able to gauge your overhead for the coming year. What are you spending money on? What can you spend less on?
Pay the taxman.
Taxes are due quarterly, and how much you need to pay is determined by, yes, your profits, but also your profits from the previous year. So make sure you’re paying the proper amount each quarter—or you could get fined come tax season.
Deduct what you can!
There are several deductions and write-offs that could benefit your practice in not-insignificant ways. Here are a few:
- The Backdoor Roth IRA
An IRA to Roth IRA conversion is a strategy that can get you around the Roth IRA income limitations. This will save you money in the long run because it allows you to shelter your retirement investments from future taxes. It works like this: Put, for example, $5,000 into a nondeductible IRA for you and another $5,000 for your partner. Then convert them to an IRA. Sneaky, but it’s legal.
2. Your own insurance
Just because you work in a medical practice doesn’t mean you necessarily know all the loopholes to paying for healthcare. Medical expenses not covered by your insurance can be paid with pre-tax cash. through a Health Savings Account or a Flexible Savings Account. So pay down your deductible, yes, but also stock up on pre-tax supplies.
3. Interest on your mortgage.
Mortgage interest is tax-friendly, as they say, and so if you’re overwhelmed by other debts—school loans, credit card debt, even a car payment—it might be advantageous for you to remortgage your building at a lower interest rate than those other loans (if you can). That way you can take the tax perks on the mortgage and pay off those other loans, too. (Plus, consolidation is usually a relief.)
4. Donate to charity
You already do so much good for so many people. But if you’re doing charity (for government-recognized organizations), there’s quite a bit you can write off: the donation of valuables or belongings, your gas mileage to and from the organization, and donated cash itself. This applies to corporate giving, too, so there’s a lot of great reasons to keep doing good.
Write-offs can help balance out your tax bill, but if you’re stressed about money this tax season, there are other options to free up cash to pay your business expenses.
A business debt consolidation loan from BHG—specifically for healthcare professionals—can put more money in your pocket, fast. You can get rid of high-interest revolving debt with one affordable fixed payment a month, and save yourself the headache of juggling multiple due dates and falling prey to late fees.