Healthcare professionals about to dive into practice are typically elated. After many years of study, setting up shop to serve your own patients is a very welcome relief.
To help you navigate this new chapter, below are some tips to help you manage the ins and outs of your new work life and lay a solid financial foundation that will serve your practice well for decades to come.
Get a handle on the numbers
As healthcare pros transition into running their own busy practices, they’ll quickly find themselves in the trickier financial reality associated with entering a new income bracket.
Quite often, a medical residents’ salary is earned by new doctors in only a couple months. And with the higher salary comes a much higher rate of taxation.
A key piece of knowledge to determine is: How much tax will you have to set aside in order to avoid getting hit with a nasty surprise at the end of the year?
Empower yourself through working with a tax professional who can give you the insights you need early so that you can plan ahead.
Note: The payment due date for taxes is April for sole proprietors.
Set up a solid bookkeeping system
As a self-employed individual, there are special deductions available to you that you’ll want to take advantage of. To stay on track, it’s important to set up a solid system of organization from the get-go.
There are lots of small steps you can take to make the bookkeeping easier. For starters, on a daily basis, be sure to keep all your receipts and invoices. If you don’t keep these, you’ll miss out on a lot of possible deductions.
For example, conference-related spending, certain auto-related and meal-related expenses (so long as these costs are incurred in the course of earning your income).
In addition, get a dedicated business credit card to organize any work-related spending.
Remember: It’s not a question of if you’ll be audited, but when. Keeping a paper trail is half the battle.
Pick the right bank
Many healthcare professionals aren’t aware of the financial incentives many banks offer to MDs, dentists, and veterinarians. From day-to-day banking options to bigger transactions such as loans, shop around to secure the option that will suit you and your practice best.
To discuss an action plan for setting up your practice for financial success, contact Jonathan Tucker at 1-800-845-0540 or email [email protected].
Jonathan Tucker, CPA, CA, LPA, is Managing Director of Tucker Professional Corporation, a practice that provides tax, accounting, and advisory services for health professionals.