Year-End Tax Planning for Physicians

3 Conversations to Have with Your Accountant Now 

You’re reviewing patient schedules, managing your team, and thinking about how you want your practice to grow next year. Somewhere on that list is getting everything ready for tax season. 

But if your plan is to wait until your accountant requests your documents, I encourage you to move that conversation up. 

Now is the time for a year-end tax check-up. 

For physicians, weight loss practice owners, and entrepreneurial practitioners, a meeting with your accountant before year-end can help you anticipate your tax bill, evaluate opportunities, and protect the cash your business needs. 

You work too hard to be surprised by a tax obligation you could have planned for months earlier. 

And this doesn’t have to become another overwhelming project. Start with current financial information and three focused conversations. 

1.  “What am I projected to owe, and am I setting aside enough?” 

A profitable year can feel wonderful until you discover your tax payments haven’t kept pace.

Perhaps you added medical weight management, introduced a membership program, increased surgical volume, or started earning consulting income. Those changes can affect your tax picture. 

The reverse matters, too. If revenue declined or expenses increased, your previous estimates may need another look. 

Your accountant needs a current picture of your business, along with a reasonable projection for the rest of the year. 

Ask for an updated estimate of your federal and state tax obligations that considers both your practice and your household income. This is particularly important if you have several income sources, such as practice earnings, hospital employment, speaking fees, or another business. 

Numbers to have ready

• Year-to-date revenue, expenses, and net profit.
• Expected revenue and expenses through December.
• Estimated tax payments already made, including amounts and dates.
• Payroll withholding from your most recent pay stubs.
• Other income and significant household income changes. 

Then ask: “Based on these numbers, do we need to adjust my remaining estimated payments or withholding? How much additional cash should I reserve?” 

There are two questions to answer here: Are you paying enough throughout the year to avoid an underpayment penalty, and are you setting aside enough to cover your eventual balance? 

Those amounts may differ. The IRS explains that estimated taxes cover income tax and, when applicable, taxes such as self-employment tax. www.irs.gov 

You want to leave this conversation with a dollar amount and a payment plan. “It should be fine” is much less useful than knowing what to transfer into your tax reserve and when. 

2.  “Which financial decisions deserve attention before year-end?” 

This is where proactive tax planning for physicians and practice owners becomes especially valuable. 

You may have decisions coming up about retirement contributions, equipment purchases, compensation, or other business expenses. Discussing them now gives your accountant time to evaluate the options before you commit. 

For example, if you’re considering new equipment for your weight loss practice, bring the cost, expected purchase date, and anticipated date you’ll begin using it. Ask how the purchase would affect both your taxes and your cash flow. 

And remember: a tax deduction does not make a purchase free. 

If the practice doesn’t need the equipment, or the purchase would leave you struggling to cover payroll, a potential deduction doesn’t solve that problem. 

It is important to make purchasing decisions because they support patient care, operational efficiency, or a sound growth plan (with the tax impact included in the decision). 

Retirement planning belongs in this conversation as well. Ask whether your current plan still fits your business, what additional contributions may be possible, and what those contributions would mean for eligible employees. Establishment and contribution deadlines vary by plan and circumstances, so have your accountant or plan administrator identify the deadlines that apply to you. www.irs.gov 

If your practice is taxed as an S corporation, include a review of your owner salary and distributions. 

Numbers to have ready

• Retirement contributions made so far this year.
• Owner wages and distributions to date.
• Planned equipment purchases and other significant expenses.
• Expected year-end bonuses or compensation changes.
• Cash available to fund these decisions. 

A helpful question is: “Which actions make financial sense for my practice, what would the actual tax benefit be, and when do I need to act?” 

Ask for specific deadlines. Put them on your calendar, assign responsibility, and make sure someone follows through. 

3.  “Are my books accurate, and will I have enough cash?” 

Before you make decisions based on your financial reports, you need confidence in the numbers. 

Have your bank and credit card accounts been reconciled? Are expenses categorized correctly?

Are there transactions your bookkeeper has been waiting for you to explain? 

This is the time to resolve those questions. 

In my work with weight loss practices, I encourage owners to understand how money moves through their business. You don’t need to become your own accountant. You do need reports you can use to make decisions. 

And as always, remember that your checking account balance, business profit, and taxable income are different numbers. 

You may see money in the bank that will soon be needed for payroll, vendor payments, taxes, or services patients have already purchased. Loan payments, equipment purchases, and owner distributions can also affect cash differently than they affect taxable income. 

If your practice offers prepaid weight loss programs, annual memberships, or treatment packages, flag those arrangements for your accountant. Ask how the payments should be recorded and treated under your accounting method. 

Numbers to have ready

• A current profit-and-loss statement and balance sheet.
• Business bank balances, including any tax reserve.
• Outstanding loan balances and scheduled payments.
• Unpaid bills and upcoming payroll obligations.
• Expected patient and insurance collections.
• Prepaid program or membership amounts, where applicable. 

Then ask: “After our taxes, retirement contributions, planned purchases, and operating expenses, how much cash should remain available?” 

That answer helps you decide what the business can comfortably support as you head into the new year. 

Your Year-End Tax Check-Up: Make It Happen Soon 

Here’s the action I’d like you to take: schedule a planning appointment with your accountant before the holiday rush. 

When you request the meeting, be clear about what you need: “I’d like to review my projected tax liability, any decisions we should make before year-end, and how much cash I need to reserve. What reports would you like me to send in advance?” 

Next, ask your bookkeeper to bring your financial reports current. Gather your payment records and list any major changes in your business or household finances. 

Leave the meeting with three things in writing:

1. What you need to pay or reserve.
2. What actions you need to complete.
3. When each payment or action is due. 

You don’t have to know every tax rule to lead a financially healthy practice. You do need to ask questions early enough to use the answers. Taking care of your practice’s finances deserves a place on your calendar. Make the appointment now so you can head into tax season with a clearer picture and fewer surprises. 

Your accountant is an essential partner in tax planning. Understanding your practice’s revenue, expenses, and profitability helps you make better decisions all year long. If you’d like help identifying where your weight loss practice is losing money, and/or where opportunities for growth exist, I’d love to connect. Schedule a Practice Strategy Call