StudentDC Interactive

There is a little-known section of the IRS Code that gives small businesses a break on equipment purchases. It’s called Section 179. Here is how it works:

If you buy equipment for your practice, up to $500,000 this year, you could deduct a portion of the cost, up to $125,000 on your taxes. Here is more detail on what equipment can qualify, from Crest Capital:

“Tangible Goods financed by Equipment Loans or by most types of Equipment Leases (Non-Tax or Capital Leases) qualify for this deduction. Examples of Non-Tax (Capital) Leases include a $1 Purchase Lease, an Equipment Finance Agreement (EFA), and a 10% Purchase Upon Termination (PUT) Lease.”

The “catch,” if there is one, is that the total cost of the equipment you want to expense can’t be more than your total taxable income. To see how this deduction might affect your new practice, click on this link for a deduction calculator:

http://www.crestcapital.com/tax_deduction_calculator

For more information on this and other tax questions for your small business, check out my favorite tax link: www.taxgirl.com.

And of course check with your tax advisor. This is one of those things you can’t make a New Year’s resolution about. You just need to do it now.

The question of the day was:  I am ready to start my practice, but I really don’t want to have to pay a CPA.  Can’t I do my taxes myself with good accounting software?

I’m always curious why chiropractors think they can do it all themselves.  You were trained as a chiropractor, not an accountant.  Even if you are starting out your chiropractic practice as a sole proprietorship, you need an accountant, and you REALLY need a CPA.  So what’s the difference?

An accountant or bookkeeper can do your monthly/quarterly accounting and help you with payroll taxes and some other tax filing, but a CPA has to keep up to date with tax issues and is able to go with you to the IRS if you get audited.  If you think taxes aren’t complicated, here is a site that lists federal, state, and local taxes, called “Tanned Feet.” 

By the way, a CPA is not a financial planner, although many can give you tax advice.  A financial planner can help you figure out how to set up pension and profit sharing plans, and 401k’s and all that tax-shelter stuff.
Here is my suggestion:  Find a local CPA who has a bookkeeper on staff, someone who can help you with QuickBooks or other financial software.  At some point when you start to make lots of money, start looking for a financial planner too.