SVA's 2021 Tax Year Review: Veterinary Industry

SVA's 2021 Tax Year Review: Veterinary Industry

With the 2021 tax season behind us (for most), SVA’s veterinary industry group leaders got together to discuss questions and issues they experienced with their clients, as well as share recommendations for the upcoming year.

Was there a common problem or issue veterinary clients had in 2021?

Hiring and retaining staff was the most common problem for SVA veterinary clients in 2021. Many practices had problems with staff burnout and retirements, leaving them short-handed.

Also, many smaller practices are having difficulties competing with larger national groups as they have the financial means to pay associates and techs higher wages than many smaller practices can offer.

Keeping good employees comes with a price. Start by researching wages in your marketplace to see where your practice compares. If you are falling short of the average, you will always have difficulty keeping employees. Look for ways to offer competitive wages as well as additional benefits such as hiring and retention bonuses to keep employees around.

It may not be feasible for a smaller practice to pay the same as larger national groups, but by closing the wage gap and adding additional benefits, you may be able to keep good employees and maintain your practice’s profitability.

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Were there common questions asked by veterinary clients regarding their 2021 return?

Many veterinary practices experienced substantial profitability in 2021. In most cases, a large increase in profitability means excess cash. A common question SVA’s experts received was: “What do we do with our excess cash?

There are a variety of options to answer this question. Here are a few suggestions:

Retirement Plan

Put some of this cash towards the practice owner’s retirement plan.

Pay Debt

You may use this opportunity to pay off debt early.

Purchase New Equipment

Were you planning to buy new equipment prior to the pandemic? Now may be the time to use this excess cash to replace old equipment or buy new equipment to expand the services your practice offers.

Employee Benefits

As stated above, hiring and retaining employees is a problem for many vet practices. Any excess cash could be set aside for employee hiring or retention bonuses, or to increase current employee wages.

With so many possibilities, the best course of action is to sit with an advisor and determine the best option(s) for your excess cash to get the greatest benefit from it.

(Download Video Transcript)

Looking ahead to 2022, what recommendations does SVA have for veterinary practices?

Year-long tax planning is always recommended for all businesses. This allows practices to keep up to date on where they stand financially and make smart decisions month to month.

Research employee wages to ensure your practice is competitive. Look at possibly adding hiring and retention bonuses as well as additional fringe benefits to keep staffing levels optimal.

Talk to an Advisor

SVA’s veterinary experts use their extensive knowledge to assist clients with these issues and more. Reach out to one of our professionals today to learn more.

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© 2022 SVA Certified Public Accountants

Biz Tip Topic Expert: Nathan Dreikosen, CPA

Nathan Dreikosen, CPA

Nate is a Manager at SVA Certified Public Accountants focusing on the healthcare, dental, and veterinary industries. He works with practices in the southern Wisconsin and Fox Valley areas to manage cash flow, assess financial performance and growth, and evaluate expenditures. He also has experience in designing compensation models, tax planning, and providing guidance on tax implications for clients. He works with corporations, partnerships, and individuals of all sizes and ownership structures.

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