Finance & Enjoyment Blog

Year End Financial Planning for Your Practice

The end of 2015 is rapidly approaching. And, with the yearend come deadlines in the midst of the holiday madness. As a successful medical practice, what should you do at year end to prepare for 2016? Your Denver CPA have put together some tips to help you as we approach yearend that will help set you up for success in 2016.

Accelerate Expenditure – Avoid a Low Cash Balance

Some practices that are typically cash-based versus accrual-based will use cash to maximize expenditures to limit taxation. Such things could be staff and physician bonuses, medical supplies, office supplies or equipment. While handing bonuses in cash is a good way to lower taxable income, you can run the risk of leaving your practice cash poor going into the New Year. Avoid putting yourself in a position where you have to borrow to pay out bonuses because you depleted your cash reserves before the year is over. As such, many practices will defer pension or retirement plan contributions to the New Year in order to save cash reserves. You will have to balance what you can and cannot do, as too large a contribution that is paid out at a later date can put you in a cash bind later on.

Look Out For Tax Deductible Items

Business gifts to colleagues or customers are tax deductible up to $25 per recipient per year. But, be aware that monetary gifts, including gift cards, to employees in excess of $25 per year are taxable to the employees and will need to be included in their W-2s. Other deductible items include:

  • Office supplies
  • Financial management agreements
  • Advertising (including business cards, website)
  • Credential and licensing expenses
  • Rent for office
  • Life insurance
  • Meals at 50%
  • Also, if you are throwing a holiday party for the office, those expenses can be 100 percent tax deductible.

    Project Your 2016 Income

    By taking some time to access your income and cash flow at the end of the year, you can project and plan your financial situation for 2016. In reality this is more about projecting your cash reserves for next year, versus actual income. Remember that you anticipated cash collections are based on several factors, including fee schedules, payer mix and volume. These do change overtime, especially fee schedules as it relates to Medicare. Take these into account as you plan.

    Take Advantage of the Slow Time December can be a slow time, so take advantage of it for some administrative housekeeping. This is an opportunity to update practice policies and processes and finalizing your 2016 business plans.

    How to Use this Information

    If you have any questions about yearend planning, give a call at 303-815-1100 or contact us online. We are more than happy to answer any questions you may have so you can have a successful 2016!


    Posted in Time Management and Organization »



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