Accounting and tax for medical practices
A practice needs financial information that explains its operations and supports its owners’ decisions. We handle the accounting and tax work alongside the people already running the practice.
Explain what the practice is earning
A busy schedule does not by itself explain the practice’s financial results. Collections, payroll, overhead and equipment costs need to be understood alongside owner activity. Reports should distinguish operating expenses, including compensation for services, from owner distributions and loan repayments.
We reconcile the financial records and prepare the reporting agreed with management. The work should make changes in the results easier to understand and provide a reliable basis for tax preparation and the planning questions that follow.
Before another physician becomes an owner
Suppose a group practice is considering admitting a physician as an owner. The proposed terms change how the physicians share overhead and receive compensation, while the practice must retain cash for payroll and other operating needs.
The practice needs a comparison of compensation, overhead allocations and cash retained under the current and proposed arrangements. The incoming physician separately needs to understand the buy-in, any financing and personal tax consequences. Existing owners need to see how the new arrangement changes their shares and cash distributions; each party’s work is scoped separately.
Compensation, distributions and tax payments
Payment labels alone do not determine tax treatment. We work from the practice’s entity type and agreements to distinguish pay for services, profit allocations, distributions and debt repayments, then explain the company and owner consequences of the proposed arrangement.
Where owners separately engage us for personal tax work, the analysis can account for their other income and estimated payments. The practice’s engagement does not automatically cover every physician’s household.
Work with the practice’s existing team
An additional location, a partner transition or a property-owning entity can change the accounting and tax work. We identify the relevant records and consider the proposed change with management and its retained advisors before it is implemented.
The result can be a focused comparison of the tax and cash consequences, the preparation of related returns, or continuing accounting support. The engagement specifies which of those responsibilities we undertake.
We can coordinate financial information with the practice manager, bookkeeper, payroll provider and other authorized professionals. Medical operations, billing administration and healthcare legal requirements remain with the practice and its responsible specialists. Do not send patient information with an initial inquiry.