The Performance Doctor: Keep Your Money Safe

If you haven’t heard this quote before, you haven’t had an in-depth conversations with your accountant on how to maximize your revenue, and reduce your tax liability.

I may just be in time to save you some headaches.

Let me preface what I am about to share with you.

I am not a CPA, nor have a degree in finance, tax law, or accounting. Everything that I have learned, has been through my own research of the law and some heated conversations with various accountants.

If you are an associate or legally a W-2 employee, you are most likely in the “sweet spot” of tax law, where you are not getting railed by taxes and, if any, you are getting some money back in April.

If you are an entrepreneur, you are either paying a sh** ton of taxes, or very little dependent on 1) how your company is set up legally, 2) how much expenses you incur a year, 3) where you invest your money, 4) how you handle debt, and 5) how your CPA sets up your legal entity in the eyes of the IRS.

Which one are you?

Regardless, the following advice is for you.

The tax code is meant to help small, medium and large businesses make a profit by offering credits, deductions and exemptions to businesses. In some cases it’s more beneficial to some than others, but that doesn’t mean you can’t benefit from the tax code.

Understanding the tax code is relatively easy.

Knowing all the loopholes, and how every law may or may not serve you and your business is where things get a bit tedious.

This is where a good CPA comes into play.

All CPAs are accountants but not all accountants are CPAs.

There are key differences between the two, but the bigger one is the legal representation with the IRS.

Don’t hire the first CPA!

Take your time and interview 3 or 4 different CPA firms. Make sure you discuss your financial goals with them, and how they will help you get there.

You want to make sure you are a good match together. Yes.. it’s tedious, but you don’t want to end up with a $20,000 tax bill because your CPA did not fill out a tax form properly, or did not tell you about a rule that changed.

Yes, you pay them… but they all have different degrees of involvement.

All CPA’s play with the same federal tax law. Not all play at the same level.

Some are more conservative, and other may push the boundaries successfully.

For every 1000 CPAs, you’ll probably find 2-3 who’ll push the boundaries of the law - usually a bit more expensive.

This is why it’s important that you find someone that will work with your financial goals.

Sorry to break it to you, but yes, you will end up paying taxes to an extent if you are making a profit.

Helping patient’s is a great feeling, but being financially stable while helping patients is even a better feeling.

The good thing is that everything you spend in financial services can be expensed at the end of the year. If you spend $6,000-8,000 to make $100,000 then you really only pay taxes on $94,000-92,000.

This is not even taking into consideration other business expenses!

As long as the expenses are spent on services like: monthly bookkeeping services, quarterly assessments, internal audits, and/or tax preparation.

I’m an associate, I probably don’t get to claim these expenses correct? That’s probably right, remember I am not a tax lawyer or CPA. However, if you have a side-gig there’s potential you could take advantage of some, if not all, types of expenses as a small business owner.

I know many who’ve enjoyed doing their own taxes for the last several years, claiming they much rather save the $350.00 than pay them to an accountant. Most likely missing out on deductions and credits (specially as W2s) that could potentially reduce their tax liability and if any, increase their tax return significantly.

Here are some questions to ask when interviewing CPAs:

1. Business Structure and Formation:

• What is the best legal structure for my business (sole proprietorship, LLC, etc.)?

• What licenses and permits are required for my business in my state?

• What are my tax obligations under this structure (sole proprietorship, LLC, S-corp, etc.)?

• What are the pros and cons of each business structure?

• How can I protect my personal assets? 

2. Tax Planning and Compliance:

• What are my federal and state tax obligations?

• What tax regulations should I be aware of in my industry?

• How do I handle estimated tax payments?

• What records do I need to keep for tax purposes?

• What business expenses are deductible?

• How can I optimize tax deductions?

• What are the implications of the new Tax Law?

• When do I need to start paying estimated taxes?

• What accounting software do you recommend? 

3. Financial Management:

• What financial metrics should I track?

• How can I build a cash reserve?

• How do I create a budget?

• How do I ensure my business is financially healthy?

• What are the best strategies for increasing profitability? 

4. General Business Advice (some are industry specific):

• What are the common issues in my industry?

• How can I avoid red flags on my tax returns or audits?

• How can I prepare for tax season?

• How long should I keep my business records?

• How do you stay up-to-date with tax law changes?

• What is your experience with small businesses and your industry? 

I’ve been approached about putting together a few business resources for our colleagues and I would like your input on this.

Please hit reply and let me know which one you’d be more interested in:

• Options for employment after graduation (w-2, 1099, LLC)

• Finding a space to practice, negotiating terms and structuring a contract

• Strategies to maximizing your space and revenue

• Marketing for local growth and sponsoring events

Until next time,

In health and strength,

1. Join over 260 Certified Dry Needling Practitioners and enroll in an upcoming Dry Needling Course

2. Enroll in our upcoming Extremity Rehabilitation Masterclass. Master diagnosis, treatment and rehabilitation protocols for Upper and Lower Extremity injuries and dysfunctions.