Gary I. Glassman, CPA, is a member of the Veterinary Economics Editorial Advisory Board who has worked exclusively with veterinarians for more than 20 years. He specializes in accounting, tax planning, and practice transitions and is a partner with Burzenski and Co. P.C. in East Haven, Conn.
Many practices are set up as S corporations for tax reporting purposes, enabling owners to receive dividend payments that aren't subject to Social Security tax. Doctors usually receive these payments when the practice pays for veterinary services and management.
The Internal Revenue Service (IRS) cares about accurate classification of employees and independent contractors, but so does your state unemployment tax department. No one ever thinks he or she will get audited, and many practitioners are surprised to learn that state unemployment departments often audit more frequently than the IRS.
Looking to reduce your tax burden? Well, in 2004, you can expense up to $102,000 of new or used equipment purchases. A 50 percent bonus depreciation expense also is available in 2004, but it will expire at the end of this year unless congress extends the provision. Bonus depreciation applies to new equipment purchases and to leasehold improvements for those who own a practice but not the real estate.
You know the benefits of offering a complete in-house lab. You--and anxious pet owners--can get quick answers on complex cases, and you can begin treatment immediately rather than hospitalizing the patient until you receive test results the next morning. In addition, owning high-tech gadgets lets you practice high-quality medicine.