Step-By-Step Guide On How To Reduce Taxes for Medical Aesthetic Clinic For USA Companies
Several individuals opt for professional services to enhance their appearance and feel more confident about themselves. Therefore, running a medical aesthetic clinic in the US can be profitable. But more revenue means falling under higher tax brackets. That way, a huge chunk of your profits will be lost. However, proper planning will enable you to reduce your burden, thus allowing you to keep more revenue while still adhering to legal regulations. This guide is going to walk you through step-by-step tax reduction for your medical aesthetic clinic in the US.
Step 1: Choose a Tax-Saving Business Structure
The first and most important decision you have to make about your medical aesthetic clinic is selecting the right business structure. That will affect how you'll be taxed as well as your overall business flexibility.
Some business structures you can choose:
Sole Proprietorship: You can easily establish this one, but you are going to be taxed personally on your income.
Partnership: Shared ownership and profits, but personal tax liability
Limited Liability Company (LLC): -May be taxed as a sole proprietorship, partnership, or corporation. It gives options to minimize tax burdens.
S-Corporation: It has been widely considered perfect for small businesses as it enables income, deductions, and credits of flow-through to the shareholders without being taxed at the corporate level.
C-Corporation: This corporate form separates the business from its owners for liability purposes but may face double taxation—once at the corporate level and again on dividends.
For most medical aesthetic clinics, an LLC or S-Corporation tends to work out better in terms of tax advantages since you can get profits as personal income without going through double taxation.
Step 2: Find Out Deductible Expenses
One of the best methods for tax savings is through allowed tax deductions. Deductible expenses are the expenses of your clinic that you can subtract from your taxable earnings to lower your tax burden.
Here are some of the common deductible expenses for medical aesthetic clinics:
Compensation paid to your employees is fully deductible.
Office rent and utilities, such as electricity and water, qualify for complete deductions.
Supplies and equipment that your clinic needs to operate can be deducted.
Anything that costs money in order to promote your clinic and get patients into your office, including social media posts and website maintenance, can be deducted.
Step 3: Understand Depreciation Benefits and Claim Wisely
Medical aesthetic clinics often possess costly, time-depreciating assets. Depreciation provides a cost spread over the life of an asset. It reduces your taxable income for that period.
There are two basic forms of depreciation:
Straight-Line Depreciation: You determine how much you are permitted to deduct from the cost of this asset by dividing it evenly by its number of useful years.
Accelerated Depreciation: You can claim a larger percentage of the cost in the initial years of the asset life.
Investigate with a tax professional and see which choice will pay off best for your clinic's equipment.
Step 4: Make Use of the Work Opportunity Tax Credit
Hiring qualified employees can benefit not only in terms of operations but also reduce the tax burden of hiring that employee. The Work Opportunity Tax Credit (WOTC) can be categorised as a highly beneficial federal tax credit. It is available to employers who hire workers belonging to certain target groups-including veterans, long-term unemployed individuals, or recipients of other forms of government assistance.
For an aesthetic medical clinic, this may make all the difference between saving thousands of dollars when you hire more employees. The maximum tax credit will depend on the background and working hours of the employees. In general, it is up to $9,600 per employee.
Step 5: Investment in Retirement Schemes for Employees
Providing retirement plans for your employees increases the morale of the workers while providing tax benefits to the clinic. Contributions you make towards employee retirement plans, such as a 401(k) or a Simplified Employee Pension (SEP) IRA, will be considered a business expense which you can subtract from your taxes.
Step 6: Check Out the Benefits of Health-Savings Accounts
Medical aesthetic clinics can also avail themselves of health savings accounts (HSAs), which allow medical savings to be set aside for employees. An HSA is a special, tax-exempt account used to pay or reimburse qualified medical expenses, with benefits in terms of tax savings for employers and their employees.
If your clinic provides a high-deductible health insurance plan, you can pay for HSAs for your employees, and those payments are tax-deductible as a business expense. That not only reduces your taxable income but also saves your employees' funds for future medical costs on a tax-advantaged basis.
Step 7: Employ Your Family Members
Another way of minimizing taxes is taking in relatives who might work with you in your clinic. It can save huge amounts on taxes if done properly with your spouse or even children.
For example, you can claim a deduction for your spouse's compensation. This is an offset, just like any other employee's compensation.
If you hire your children when they are under 18 years old, then their income will normally be not subject to Social Security and Medicare taxes, which therefore lowers the payroll tax costs for your clinic. Hiring and paying compensation to family members helps retain the money in the family while lowering the business's overall tax liability.
Need Help in Reducing the Tax Burden of Your Medical Aesthetic Clinic in the US? Choose SamsCashFlow Agency!
Dealing with the complexities of tax reduction methods may look and feel like a nightmare, especially in a busy medical aesthetic clinic. That is where the value of professional help will stand out. Samscashflow Agency will specifically be there to guide your medical operation across the US in reducing your tax burden while meeting IRS requirements.
By tapping into their vast knowledge of business, Samscashflow can guide you to the right business structure to help you maximize your deductions and discover more avenues for reducing your tax burden. Visit https://www.samscashflow.com/#book and book a call with them now.