It’s time again to start thinking about the upcoming tax season. What do medical practices need to remember during this time? We’ve put together some important tips to help.
First, have an accountant lined up who knows the ever-changing tax landscape and what a medical practice needs to handle each time tax season comes around. If you don’t have a trusted bookkeeper and accountant, see out a referral from someone you trust.
To be prepared for all the revenue info you’ll need, remember to stay on top of necessary tax documents year-round. A great way to keep things organized is having a folder for every month to keep each relevant tax receipts and documents well-organized and easy to find for the accountant.
The State of Minnesota has a 2% tax on medical services reimbursement. This is a significant practice expense that applies to all payments except federal payers and senior programs. Proper insurance library setup and management as well as front desk staff training ensure that you are not paying a 2% tax on payer revenue that is non-taxable. When in doubt, an internal audit is in order to ensure proper payment. Other states have similar taxes which the same concept applies.
There should also be an efficient system set up year-round so you can be responsible for the accuracy of your information presented to the IRS. While it’s important to have a tax advisor, you should also be using an efficient medical billing and management service to ensure your revenue is moving at an accurate and efficient pace. A poor or inaccurate revenue cycle management will only cause you more problems when tax season comes around as you struggle to collect unpaid accounts.
Finally, take account of any applicable work-related expenses or charity efforts. These will all be applicable in your tax forms and could end up as reductions. Even if you have not done much in the way of tax deductible charitable gifts this year, consider starting that in a year of higher income to reduce your taxes.
Some applicable work-related expenses might include:
- Any license renewal fees, professional dues, or union fees
- Subscriptions to medical journals, and other industry related magazines
- Malpractice and professional liability insurance
- Specialized equipment that could include handheld devices, stethoscopes and other equipment used in the medical arena
- Mileage between office locations
- Meals with clients
- Parking receipts
Overall, it’s most important to get an accountant figured out so that your taxes are put together by an expert. If you’ve had any issues this year with profitability due to billing issues or inefficiency, Outsource Receivables can improve your medical billing so you’ll have better profits for the next tax season.