February 3, 2009
Tax experts stress the economy this year
Pay attention to practice management, they say
By: Timothy Kirn
For The VIN News Service
With a new president in the White House, nobody is quite sure what
veterinarians can expect with regard to their taxes, except that they
could go up in the long term. And the economy is down, which
undoubtedly will have a negative effect on some DVMs.
Though the future is uncertain, business experts are giving general advice.
is a good time for veterinarians to expend the effort to improve their
practice management, and let the taxes be what they may, advises Jon
Dittrich, a veterinary practice consultant based in Knoxville, Tenn.
the short and the long run, the practice that reduces overhead,
improves its reputation and visibility and increases its efficiency is
going to be ahead, especially given the uncertainty in the economy and
the government, Dittrich says.
Improving income and
profitability produces benefits that continue into the future. But working to reduce one’s taxes is a one-time return, Dittrich adds.
“From a personal standpoint, my goal every year is to pay more taxes, because that means I made more money,” he says.
or postponing receipt-of-income in a particular year or quarter, to
keep taxes lower, is often a good idea. But with state and, perhaps,
federal taxes likely to increase, it is not a good strategy now, says
David MIttenthal, a certified public accountant who works in South
“It may be better to pay the taxes this year, before they go up,” Mittenthal says.
of this year's lone bright spots for veterinarians is the federal tax
code’s Section 179 Deduction, says Gary Glassman, a certified public
accountant based in East Haven, Conn. Previously, Section 179 only
allowed small businesses to deduct $125,000 for financed or leased
equipment purchased or leased in that tax year. However, the Economic
Stimulus Act of 2008 increased the amount that can be deducted to
Until recently, it was expected that President
Barack Obama would push to raise the tax income rate for those earning
more than $250,000 a year, an increase that would have affected many
practice owners. But Glassman says most experts now predict that
federal tax rates will not rise until 2010, across all income brackets.
That's because nowadays, stimulating the economy has become a first priority for
The same cannot be said for state tax rates,
however, Glassman notes. Many states have serious budget troubles, and
they do not have the same interest in spurring economic growth, he says.
that taxes are unlikely to go up in the near term, Glassman, like
Dittrich, predicts the economy will have a bigger detrimental effect on
income. He recommends that veterinarians look to improve the efficiency
of their practices to optimize earnings. Specifically, he says
practices need to be aggressive about sending client reminders for
vaccinations and routine exams and advises owners to review their
collection policies and, perhaps, consider developing alternative
payment methods when necessary.
Economists, he adds, have noted
that the current recession initially was driven by home foreclosures
and now is being exacerbated by employee layoffs. That's a recipe for a
long recession, Glassman says.
“We definitely think there is
going to be some downturn in income for many veterinarians, if not now,
in the near term,” he warns.
VIN recently hosted a Rounds for
members discussing President Obama's tax proposals made during his
campaign for office.
VIN News Service commentaries are opinion pieces presenting insights, personal experiences and/or perspectives on topical issues by members of the veterinary community. To submit a commentary for consideration, email firstname.lastname@example.org.
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