Now that the traditional summer season is behind us and we approach the year's final quarter, here are a few necessary items for you to consider.
1. Fee Increases
Historically, most veterinary practices only implement fee increases once per year. You should consider multiple fee increases this year due to increased staffing, lab, and supply costs.
As always, first check to see if your fee schedule is competitive, reflects the level of service you are providing, and is aligned to the incurred costs. Start with your top ten services and compare them to your market fees.
If you haven’t implemented a fee increase since early in the year, do so as soon as possible and then consider additional fee increases in early 2023.
2. Retention Bonuses
Many practice owners struggling to attract and retain key staff have implemented retention bonuses. A good practice is once the first retention bonus is announced, you should provide some type of timeline and expectation for receiving the next bonus.
Make sure you follow through on this timeline/expectation and always put the next phase of incentives in place to keep the momentum going.
3. Estimated Tax Payments
Depending on your entity structure, it is likely you are making quarterly federal and state estimated tax payments during the year. These amounts would typically be based on 2021 taxable income.
Regardless of if you have already made your third quarter payments, now is the time to evaluate if you need to increase or decrease your fourth quarter payment. This will avoid a surprise under/overpayment when you file your 2023 income tax returns.
In addition, if you have equipment needs, consider buying the equipment this fall to take advantage of accelerated depreciation and potentially reduce your federal and state income tax liabilities.
4. Retirement Deferrals
As your income has grown over the last few years, you may have considered updating your retirement plan. If you are planning on making a change for 2023, now is the time to connect with your retirement plan administrator to ensure everything is in order and any required notices are delivered timely to your staff. You will also need to coordinate any change in deferrals, etc. to your payroll provider before the beginning of 2023.
In tandem, consider whether it would make sense to employ your spouse and/or children in the practice. This can be a significant tax planning opportunity, along with allowing family to participate in the practice retirement plan and/or make individual retirement plan contributions on an annual basis.
While staff retention/recruitment and rising costs have been an enormous challenge this year, 2022 is proving to be another very profitable year for many veterinary practices. A few key adjustments can potentially make a very good year even better.
Reach out to SVA and let’s chat about your practice needs.
© 2022 SVA Certified Public Accountants