4 Largest Dental & Doctor Practice Tax Myths
The one thing your business can’t escape is paying taxes to the Internal Revenue Service. The amount of taxes paid to the IRS depends on factors such as business structure, number of patients served, payroll taxes and state and federal tax rates. Taxes are one of those things that you tend to think of during tax time. However, the financial decisions you make year-round often affect the total amount of taxes owed.
As a business owner or medical practitioner, you may believe in certain business tax myths that are having an unwanted impact on your business. A knowledgeable Orlando tax accountant can clarify these misconceptions and steer you towards effective tax strategies that can reduce your tax burden.
Myth #1: Cash Payments are Exempt from Taxes
Business owners have the freedom to choose how to accept all types of payments. While most payments you receive are likely to be via credit card, debit card, or check, on occasion, you may accept cash payments. This is fine. Just know that cash payments are fully taxable and should be recorded in your books.
Sure, you may be able to get away with not reporting cash income for a time, but if the IRS grows suspicious of your assets, an audit is going to quickly spot unreported income discrepancies.
Myth #2: All Meals and Entertainment are Deductible
Meals and entertainment expenses are a popular tax deduction for businesses. However, don’t get carried away thinking you can deduct every restaurant meal and every visit to popular attractions during a sales trip or medical conference. The reality is that you can only deduct up to 50 percent of these expenses. Choose wisely.
Myth #3: Joint Returns Always Save Money
If you are married and operating a sole proprietorship, filing a joint return seems like the best choice. It might be, but you won’t know that unless you look at the bigger financial picture. A closer look at your financial situation may find that filing separately offers greater protection for your spouse from certain financial liabilities connected to your business.
Myth #4: Doctors and Dentists Pay Abnormally High Taxes
One myth floating around the medical community is that the average tax rate for doctors and dentists hover around 50 percent. The reality is this rate is nearly impossible to achieve, even for the most successful doctor and dental practitioners. There is a kernel of truth in this myth – your tax rate may be too high based on not knowing the best tax reduction strategies.
How to Reduce Tax Rates for Your Business or Medical Practice
The best way to find out how to reduce your business tax rate is to have a qualified Orlando tax accountant review your financials. Contact CPA Solutions online or at (407) 650-9088 to quickly set up an appointment.