Veterinary practice owners are facing an evolving business landscape that demands strategic planning and foresight. Effective planning will ensure owners stay ahead in tax planning and financial management.
Here are some key strategies and observations to consider as you plan for tax year 2024.
The growth of your practice might not always be reflected in your compensation. It's important to ask yourself whether your salary as a practice owner has kept pace with the growth of your business.
This is not just about fair compensation, but also about preparing for the IRS's increasing scrutiny in this area. Consider what an associate would earn in your place – this can be a good benchmark for your own salary.
If you own the property where your practice is located, a reevaluation of rent against fair market values may be necessary. This ensures compliance and prepares your practice for a seamless transition when the time comes.
An organized financial report is the backbone of any successful business. Clear divisions in your reporting structure for revenue, expenses, and compensation help in making informed decisions.
Alongside this, a meticulous approach to inventory management at the year's end is indispensable. Accurate counts are more than just a number; they reveal insights into your practice's efficiency and areas needing improvement.
As mundane as it may sound, preparing for 1099 filings well in advance can save you from last-minute hassles. Similarly, retirement planning shouldn't be an afterthought. Whether it's a 401(k) or a Simple IRA, maximizing your contributions not only secures your future but also offers current tax advantages.
Regularly revisit your fee structure. With rising operational costs, your fees need to be in line with the market and your expenses. Additionally, judicious investments in equipment can lead to enhanced productivity and service offerings, aligning with both your practice's growth and tax benefits.
Outsourcing back-office tasks like bookkeeping or payroll can be a strategic move, allowing you to focus more on your practice and less on administrative burdens. Equally important is the culture within your practice.
A positive, nurturing environment is a magnet for retaining and attracting skilled staff, a challenge that continues to grow in the industry.
With tax laws constantly evolving, the importance of staying informed cannot be overstated. The upcoming expiration of the current tax law at the end of 2025 calls for a proactive approach to adapt your financial strategies accordingly.
Keeping an eye on individual tax opportunities, such as employing family members or exploring Roth IRA options, can also provide significant advantages.
By focusing on these areas, veterinary practice owners can position themselves for a more profitable and efficient 2024, while being prepared for potential changes in the tax landscape.