Chiropractic practices, like any other business, face many financial responsibilities. Among these, tax planning and preparation play a crucial role in ensuring the health of their operations. However, many chiropractors rely solely on Certified Public Accountants (CPAs) who prepare their taxes at year-end. This approach is reactive rather than proactive—essentially, it’s addressing yesterday’s problems rather than anticipating and preparing for tomorrow’s challenges.
This is where the need for a tax consultant comes into play. A tax consultant, such as an accountant, CPA or tax attorney, can provide chiropractic offices with expert accounting services and help navigate the complex world of taxes. They are able to anticipate potential issues and provide advice tailored specifically to the needs and circumstances of your practice. By doing so, they can often save you more money than what they charge in fees.
The Tax Subluxations
Just as chiropractors address subluxations in their patients, chiropractic practices too can experience ‘tax subluxations’. These refer to the lack of effective tax planning that can lead to financial strain on the practice. A tax consultant can help adjust these subluxations, identifying areas where the practice may be overpaying and suggesting ways to reduce this burden.
Strategies for Tax Savings
1. Plan for Tomorrow, Not Yesterday
One of the key benefits of working with a tax consultant is their ability to help you plan for the future. Many chiropractors end up preparing for yesterday’s taxes instead of planning for tomorrow’s. This approach often leads to missed opportunities for minimizing tax liabilities and maximizing financial growth. A tax consultant can help you develop a proactive strategy, considering future changes in tax laws and your practice’s growth plans.
2. Use a Financial Advisor, Not Just a Tax Preparer
While tax preparers focus on filing your returns accurately, they typically don’t provide the comprehensive financial advice that a financial advisor or tax consultant can offer. A tax consultant considers all aspects of your financial health, including investments, retirement planning, and business growth strategies, and how these can be optimized for tax savings. They can help you understand how different financial decisions will impact your tax situation, allowing you to make informed choices that align with your long-term goals.
3. Turn Your Practice into a Business
Many chiropractors operate as sole proprietors. However, incorporating your practice can offer significant tax advantages. For example, corporations can deduct the full cost of benefits like health insurance and retirement contributions, which are limited for sole proprietors. Moreover, corporations may enjoy lower tax rates on retained earnings. A tax consultant can guide you through the process of incorporation and help you understand the tax benefits and obligations that come with it.
4. Beware of Common Tax Traps
Chiropractors often fall into common tax traps, resulting in overpayment. These include not understanding the complex tax laws, failing to keep accurate records, or not taking advantage of all available deductions and credits. For instance, many chiropractors overlook deductions for business expenses like continuing education, equipment purchases, and office rent. A tax consultant can help you avoid these pitfalls and ensure you’re not paying more than necessary.
In conclusion, hiring a tax consultant can be a sound investment for chiropractic practices. They can provide valuable advice, help avoid common tax mistakes, and ultimately save money by reducing your tax liability. So, rather than seeing it as an additional expense, consider it a strategic move towards ensuring the financial health of your practice. Remember, the goal isn’t just to minimize taxes, but also to maximize the overall financial performance of your practice. With a tax consultant by your side, you’ll be well-equipped to achieve this balance.