If you’re like many pharmacy owners across the country who managed to throw a profit only to have it wiped away by Uncle Sam, you should start planning ahead now to get a different result come next April 15th.
“Tax planning should be a year-round process, it’s not too early to begin developing a strategy to minimize taxes for 2019. Our team of pharmacy accountants and tax professionals are already collaborating with pharmacy owners for tax year 2019”, says CEO, Chris Fleming of Rx Advisors.
Begin planning now to reduce the amount of tax you owe next April 15th. To get started, consider the following:
Meet with your accountant
Taking time to talk with your accountant could be the most significant planning you do all year. It may seem simple yet, most overlooked or is often performed after year-end when it’s too late. You need to share your intentions and challenges for the pharmacy, both long and short-term.
You may be planning to buy a new delivery vehicle, adding employees, getting that USP 800 room or expanding your facility. Whatever you’re planning; you should share it with your tax advisor in order to maximize the tax advantages.
Review Financial Statements
Take time to understand your businesses financial statements (balance sheet, profit & loss, etc.) and work with your accountant to make sure items are accurate, like inventory, accounts receivable and accounts payable. Get into the habit of reviewing these statements monthly as they measure the financial health of your pharmacy and reveal trends that may need to be addressed.
If you are inexperienced at reading and understanding financial statements, ask your accountant to explain them to you. There’s also vast amount of educational information online. A small investment of time can make a big difference in the success of your pharmacy.
Review the Business Structure
Over time, as a pharmacy grows and tax laws change; the original business structure may no longer be the most beneficial. If the overall business structure is not periodically reviewed, the owner(s) may be paying more in income taxes than necessary. Because changes to the business structure can impact so many aspects of your business, be sure to get your accountant and attorney involved.
Tax Cuts and Jobs Act
Get up to speed on the most significant change in tax legislation since the Tax Reform Act of 1986 was signed into law.
You probably heard about it, it’s called the Tax Cuts and Jobs Act (TCJA) and most components of the legislation took effect during tax year 2018. Talk to your tax advisor and find out how it impacted your 2018 tax return and what you should know for the 2019 tax year and beyond.
For the best tax planning consider a firm that specializes in the pharmacy industry. There are deductions and credits available to pharmacies that most local accounting firms are not aware of.
For peace of mind, let’s make sure you’re getting the best service from your accounting firm. Right now, our confidential income tax review is FREE until the end of May. That's a $1,500 value!