Heading into the 2016 tax filing season, we are faced with fewer unknowns than in prior years. With the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015 on December 18, 2015, many of the more common business tax provisions were either made permanent or extended out for two to five years. Some of the tax provisions were even enhanced to become more taxpayer friendly.
As you close out your veterinary hospital or clinic's 2016 books and records and complete your 2016 tax return(s), here are some notable tax strategies to keep in mind when you consult with your tax advisor:
- Section 179 expensing allows businesses with taxable income an immediate write-off, up to $500,000, on the purchase of qualified new or used property (i.e. - furniture, equipment, off-the shelf computer software, qualified real property, etc.). The deduction begins to phase-out when qualified purchases exceed $2,010,000 (adjusted for inflation).
- Bonus depreciation allows businesses an immediate 50% write-off on the purchase of qualified property. Qualified property generally includes new tangible personal property, off-the-shelf computer software and qualified improvement property. Note that the property must be new.
- De minimis safe harbor election allows businesses to deduct expenses for tangible property that they would have otherwise had to capitalize. For businesses with audited financial statements, the de minimis safe harbor threshold remains at $5,000 per item or invoice. For businesses without audited financial statements, the de minimis threshold was increased from $500 to $2,500. To take advantage of the de minimis safe harbor, there must be an accounting policy in place, as of the beginning of the tax year. Businesses must also follow this capitalization policy for their financial statements. This is an annual tax return election, made by attaching a statement to a timely filed original federal income tax return (including extensions).
- Cost segregation study - do you own real estate that you are looking to renovate or build-out? You should consult with your tax advisor about the advantages of doing a study to identify assets of the building that could be classified as tangible personal property and depreciated at accelerated rates, over a shorter time period.
- Choice of entity - have you chosen the right form of business entity? With the new administrations tax proposals speaking to lowering tax rates for businesses, you should consider revisiting the type of entity your hospital or clinic is operating under.
- Succession planning - have you thought about succession planning? The wrong decision or even the right decision implemented the wrong way can be catastrophic to the survival of your business. What happens with your business has huge emotional and economic ramifications to you, your family, employees and patients. It is never too early to start this process.
Also notable, recently enacted tax law has changed the due dates for certain tax returns this year. Some of the more significant deadline changes include:
|Return Type||Under Prior Law||Tax Year 2016|
|Partnership Form 1065||April 15
September 15 (extension)
September 15 (extension)
|C Corporation Form 1120 (calendar year end)||March 15
September 15 (extension)
September 15 (extension)
|C Corporation Form 1120 (6/30 year end)||September 15
March 15 (extension)
April 15 (extension)
In addition to preparing for the 2016 tax filing season and considering the above strategies, it is important to keep in mind the likelihood for comprehensive tax reform for tax year 2017 and beyond. You should be patient when making important tax decisions for 2017. Steer away from entering into any major transactions based on what the tax law might be. To the extent possible, delay any major changes until tax legislation is passed. Consult your tax advisor when you are considering these decisions.
Veterinary Hospitals Association partners with CBIZ MHM, LLC to provide a variety of supplimentary business services to our members. To talk to a tax professional about your clinics' finances, contact your Inside Account Representative today.
Not a VHA member? VHA can provide your veterinary clinic with valuable group purchasing discounts, reliable and ethical cremation, experienced business services, and quality continuing education. Learn more here and become a member today!
In my years of working with companies and organizations, from topics of leadership to teamwork to customer service, communication (or the lack of) always tops the list of organizational challenges. And it’s no wonder really - communication takes work, energy, and thoughtfulness to be done well. Organizations have to want to be better at it!
In our fun and engaging presentation at the 2016 VHA Expo, we will look at The Ten Commandments of Communication (as compiled by me from my years of experience) covering the 10 Commandments of Communication, including:
- Keep your promises - How many bosses have we worked for who didn’t keep their promises? Critical to their leadership reputation, leaders lose credibility when they don’t follow through with what they say. DWYSYWD (what does this stand for?)
- Keep people informed - Such a simple thing but I can’t tell you how leaders fail to let people know what’s going on. It is respect to keep people informed. When change is prevalent in an organization, fear can rule and rumors grow if we fail to keep people informed. Remind me to tell you my US Navy story of what happens when we fail to keep sailors informed.
- Connect frequently - “Shaking hands and kissing babies” - this is not just reserved for our politicians in an election year. Leadership is relationships. Talk to people, connect with people. This is not wasted time but critical to the social network of leading. How well do you really know your people? Connect - and find out.
Join me on November 3, 2016 at the 2016 VHA Expo and learn the rest of The Ten Commandments of Communication and put them to work for you today!
About the Author:
Ted Schick is a corporate trainer, professional speaker and consultant with his own business, Schick Corporate Learning. A retired naval officer who rose up from the enlisted ranks, Ted has over 30 years’ experience leading people. With over 20 years in teaching, Ted holds a BA Business from the University of Wisconsin, Madison, a teaching certificate from Bemidji State University, and Master of Education from the University of Minnesota, Duluth. Ted is a member and past president of the Lake Superior Chapter of the American Society of Training and Development located in Duluth, MN. Ted is active in his community with 13 years on the Spirit Mountain Ski Patrol and volunteering with local animal humane societies such as Animal Allies in Duluth and Friends of Animals in Cloquet. Ted is also part of the Cloquet Rotary and Mentor Duluth. In his “spare" time, he has been a stand-up comedian, teaches Boot Camp fitness classes in the Twin Ports and is an accomplished triathlete.
July means mid-year marketing reviews for businesses. It’s a perfect opportunity review how the last six months have performed for your business, and if any changes are needed to obtain the goals you’ve set for the rest of 2016.
If you’re looking to add a little boost to your marketing efforts, there are several ideas you can implement:
There are “magic numbers” for every business, no matter what industry they’re in. For veterinary clinics, finding the right magic numbers is critical because they help to quickly diagnose the clinic’s overall business health. Owners that know their performance can easily identify opportunities to improve on, and celebrate where they’re finding the most success.
The three most common financial reports that show these used by veterinary practice owners and managers that show the ‘magic numbers’ are the profit and loss statement, balance sheet, and cash flow statement. Your profit and loss statement shows you how your business is performing overall during a given period of time. Your balance sheet shows you a snapshot of the overall value of the business at that moment. Finally, your cash flow statement displays your changes in assets and liability values over a period of time.
During Global Pet Expo 2015, research firm GfK announced that 35.2% of the US’ 75 million Millennials (people age 18-34) own a pet, compared to 32.8% of Baby Boomers (age 51-70). Millennials like to try the latest technology, will spend more on their pets (including veterinary care and pet services), and are likely to use social media to connect with brands, services, and read online reviews before making their purchase decision (source).
Social media is a powerful tool your clinic can utilize to create, maintain, and grow relationships with clients in your community. It allows you an easy opportunity to organically connect one-on-one with clients to earn their trust, business, and loyalty. However, if you don’t think your clients are on social media, consider this: During the fourth quarter of 2015, Facebook was accessed by close to 1.59 billion users on a monthly basis.
In today’s digital world, a website is a must-have for business success. Claiming your space in the internet and having a digital footprint is vital to competing in the industry and being found by local clients. But it isn’t enough to just have a few web pages and photos haphazardly thrown up – there needs to be a reason why visitor come to your site, stay on your site, and ultimately make the decision to visit your clinic.
To have a successful website, there are a few things that every veterinary clinic must have present:
#1 – Basic Information is Easy to Find
If your basic information – location, phone, and hours – aren’t easy to find, you will lose potential patients quickly. In addition to having a Contact Us page with this information easily accessible, also include your location, phone number, and hours on the homepage above the fold. Above the fold simply means before the user scrolls down. Additionally, put this information in the footer of your website so it is visible across every page they visit.
It is necessary when determining a pricing structure for your clinic that you take multiple factors into account. It is easy to choose one mark-up method and to apply that across the board, but there’s more to it than that.
The categories to be considered are:
- Service Fees, including Shopped and Essential
- Inventory Fees, including Shopped, Standard, High-Cost, and Infrequent
The very first thing to consider when pricing services is to realize that the purpose of your pricing system is to maximize value, not cost. Your clients will shop around for some services based on price. If your goal is to offer the lowest price, then your job is easy. Cut everything by 50% and you are done. Literally.
Study after study has shown that consumers seek value over savings because they understand that “you get what you pay for.” When presented with four coffee makers priced $20, $30, $40 and $50, most shoppers will purchase the $40 unit, because they demand quality but aren’t going to “waste money” on the top of the line model. They do not recognize much difference in quality between the two top models and thus the perception of value is automatic. “I saved $10!” It is precisely the same with veterinary care; they want the best medicine possible but not at a good price. Hovering around the 80th percentile for your market will maximize your profit while helping create a perception of value for your clients.
The most successful interviewee you will ever meet is the one that is most experienced. Unfortunately, the experience they are bringing to the table is not necessarily work experience but interview experience. These are the folks that jump from job to job, are never satisfied where they are at, or are so miserable to work with that they have trouble holding a job for longer than it takes to get to know them.
Through constant interviewing they’ve learned what questions to expect, what order to expect them in, what the interviewer wants to hear and so on. Using a traditional interview style makes it impossible to weed out the truly exceptional candidates from the truly exceptional interviewee. We in turn become conditioned to expect certain answers and reactions in the interviewing process.