Running a medical practice requires a lot of unexpected financial work. Opening your own practice may be a daunting task, especially when it comes to handling patient billing, insurance, payroll, and other monetary issues. One aspect that many physicians overlook is the tax aspect of operating a medical practice.
If you are a partner at a medical practice or are starting your own practice, talk to our Sacramento medical practice tax attorneys to see how our services could benefit your practice. Our tax attorneys have a strong understanding of the federal and California tax codes and work to help our clients maximize profits, avoid overpaying tax, and protect themselves during tax audits. For a free consultation with our Sacramento tax attorneys, call the NewPoint Law Group, LLP today at 1-800-358-0305.
Tax Attorneys for Doctors and Medical Practices
Many small practices have less than 5 physicians, a few nurses, and a few office staff members. Even smaller practices may have as few as one doctor and just a couple other members of the staff. While some of your staff may take responsibility for billing and payroll, and some things may be outsourced to accountants or payroll firms, you are likely responsible for own for taxes. Having a tax professional review your tax situation can help prevent overpaying taxes, stop you from underpaying taxes, and help avoid potential tax audits
There are multiple tax complications that a medical practice faces. First, your practice is a business, and you are required to pay taxes on any profits. You may also be required to collect and pay taxes for some services rendered. As a business, you also need to pay standard taxes like payroll taxes. Understanding these taxes is important, because underpayment can lead to audits or tax penalties.
You may be entitled to certain tax deductions and credits that can help save you money on taxes. If your practice qualifies under certain definitions, it may be entitled to certain deductions as a hospital or clinic, which are based on its benefit to the community. There are also other business deductions that many people miss. Most necessary business expenses can be written off, which could include some expenses necessary to a medical practice. You may also be entitled to deductions for energy efficiency, hiring veterans, and other business decisions.
In addition, organizing your practice as a professional corporation (P.C.), limited liability partnership (LLP), or limited liability corporation (LLC) may change how your practice is taxed, potentially saving money on taxes.
Tax Audit Defense for Private Practices
If your medical practice faces financial problems or tax issues, it can cause serious problems. Not only is your professional status and livelihood at stake, but your patient’s continuity of care and your employees’ jobs are also at risk. Ensuring that your practice avoids tax penalties and potential tax audits is important. A tax attorney can help protect your tax record by guiding you through your taxes and helping to ensure you pay every penny of required taxes.
If the IRS audits you, it may not be your fault. Many IRS audits are initiated because of algorithms that check your tax returns against the expected, average tax return. Just because your return deviated from this standard does not mean that your taxes are wrong, but it may trigger an IRS investigation. A tax attorney can help gather the proper evidence and prove your taxes were correct in this kind of audit.
For a more serious audit, the IRS may want to fully investigate your records and delve into your tax history. In this kind of audit, the IRS may find back taxes or serious underpayment issues which could lead to tax penalties and interest payments on back taxes. Hiring an attorney to help defend you during an audit means that your attorney can go before the IRS on your behalf and work to prove your taxes were correct. If they were not correct, an attorney can negotiate with the IRS to promptly correct tax errors, potentially negotiating reduced penalties.
Local and State Taxes for Doctors
Remember that state and local governments also collect taxes. In some municipalities, there are important taxes assessed against medical practices and other small businesses that you may overlook if you only consider federal taxes. There are also many potentials for underpayment or missed tax credits with California State taxes. It is important to have an attorney review your situation to and help optimize your taxes.
Medical Practice and Physicians Tax Lawyers in Sacramento
If you are a partner at a medical practice or are considering opening your own private practice, talk to a tax attorney. Failing to properly pay your taxes or mishandling your taxes can damage your business and financial situation. For a free consultation with a tax attorney who may be able to help with your medical practice’s taxes, call The NewPoint Law Group today at 1-800-358-0305.