As a medical professional in the Seattle area, there are a few considerations when selecting the business entity you will operate under:
- Sole Proprietorship – when operating as a sole proprietor, you pay self employment tax of 15.3% on profits.
- LLC – this option can be taxed as a Sole Proprietorship or as an S Corporation
- Partnership – two or more owners share in profits and losses
- C Corporation – you’ll pay tax at the Corp level and on dividends
- S Corporation – you’ll avoid double taxation and save on Self Employment Tax
There are finer details to work out, so when it is time to select an entity under which to operate, be sure to consult a professional and disclose the details of your unique circumstance.
One common deductions for medical professionals is the Auto Deduction
- Standard Mileage Deduction
- As of 2011 $.51 per mile
- Business travel expense miles include meeting with clients, trips to the bank, post office, etc.
- Actual Expense Method
- Deducting the business portion of actual expenses to operate your vehicle
- Expenses such as gas, repairs, oil changes, loan interest, tires, etc.
Note: that once you elect to utilize the Actual Expense Method, you cannot revert back to the standard mileage deduction.
Home Office Deductions
- Calculate the deduction using the square foot method – this method determines what is deductible of mortgage interest, property taxes, insurance, rent, etc. by establishing the percentage of square feet your office occupies versus the square feet of your entire home.
Equipment Expenses Deductions
- Lease – deductible as incurred
- Own – depreciated over a useful life
These are just a few of the considerations that commonly affect doctors and those that work in the medical profession.
When you need answers and you need direction in taxes and accounting related to a medical profession, seek the counsel of a certified public accountant that is versed in your needs. Seek the Counsel of a CPA Huddleston Tax CPAs.