As a doctor, a significant part of your day is spent attending to patients, prescribing medications, administering treatment, diagnosing conditions, and following up on patients. But just like other people, doctors must also pay taxes, plan their finances, and maintain books. However, doing all those by yourself would cost you a lot of time, which you might better employ in helping individuals.
Moreover, doctors and healthcare professionals have unique accounting requirements, and hiring experienced accounting services for doctors is the best way of meeting them successfully. Without a structured accounting and bookkeeping service, one might pay more tax than usual or fail to file the tax forms on time. Maintaining the financial data clearly is vital to avoid facing tax penalties.
Having an experienced accountant to take care of your finances also helps a person make the correct financial decisions and provides valuable insights into their business. However, if you still aren’t convinced about the need to hire an accountant, continue reading to know the services they provide and how you can benefit from those.
Ways in which an accountant can help
The healthcare industry has special financial requirements, some of which are mentioned below.
Income recognition
Most doctors cannot determine whether they should record the income when they receive it or include it as billed. An accountant will help clear one’s doubts on that issue while helping one choose between cash and accrual option for tax purposes since that affects the tax liability at every year’s end.
QBI deduction
QBI refers to Qualified Business Income, a deduction that allows self-employed individuals like doctors to deduct 20% of their total income. Also known as 199A deduction, it is applicable for specified services businesses, like healthcare. Your accountant will help the client calculate the exact deduction amount and provide other essential information.
1099 vs W-2 employee
Once you expand your business, hiring other doctors or healthcare professionals will become necessary. People must know the difference between these as they affect their tax rates and carry several legal implications.
Even though the accountant will tell a fellow the difference between these, here’s what they should know. W-2 employee refers to an individual on one’s payroll, while 1099 refers to non-payroll workers.
Form W-2 applies to payroll workers, while Form 1099-MISC is relevant for non-payroll staff. It is necessary to fill out the forms while providing the correct information.
Medical billing
It is the process in which a doctor should submit a claim to the patient’s insurance company to receive payment for the medical services offered. The confusion arises when they must choose between billing or not billing insurance, knowing when to recognize an income, and outsourcing their medical billing.
Tax planning
You must have a structured planning process to avoid paying excessive taxes. An accountant will keep you updated on your tax-related information and suggest ways of saving on taxation in the future.
Payroll processing
Payroll processing can be tedious, especially for doctors who cannot hire an HR manager because of their limited budget. Hiring a bookkeeper is the best option under such circumstances, as they will manage your payroll processing, tax, and 1099 filings.
Basic accounting services
A bookkeeper provides essential accounting services like exact financial data, management financial reports, and customizable insights that help you know your business’s strengths.
These are all crucial reasons behind hiring accounting services for doctors and receiving the benefits of expert financial advice. An experienced bookkeeper will handle your tax returns, submitting forms, and other financial requirements efficiently.
