Common Tax Strategies We Review for Healthcare Clinics & Independent Pharmacies

Most healthcare owners are familiar with a handful of tax deductions. Fewer realize how many coordinated strategies can work together to reduce taxes, improve cash flow, and support long-term growth.

In our experience working with healthcare clinics and independent pharmacies, the issue is rarely that opportunities don’t exist. It’s that planning happens too late, or in isolation, without tying decisions back to the financial statements and how the business actually operates.

Below is a high-level overview of the areas we routinely review with healthcare clients throughout the year.

Owner Compensation & Personal Planning

How owners are paid often has the biggest impact on taxes, yet it’s one of the least revisited decisions.

Common strategies we review include:

• Employing children to shift income within the family

• Home office deductions when properly structured

• Health Savings Accounts (HSAs)

• Retirement plans such as 401(k), profit sharing, and cash balance plans

• The Augusta Rule, when appropriate

• Accountable plans to reimburse owners tax-free for legitimate business expenses

These strategies are not aggressive or unusual. They simply require coordination and follow-through.

Business Structure & Income Strategy

Healthcare businesses are affected by revenue timing, reimbursement delays, and rising operating costs. The way income is recognized and structured matters.

Areas commonly reviewed:

• Entity structure optimization

• Qualified Business Income (QBI) deduction eligibility

• Cash vs. accrual accounting decisions

• Income timing and deferral strategies

• Bad debt write-offs and documentation

• State and local tax considerations for multi-location practices

Two healthcare businesses with similar revenue can have very different tax outcomes based solely on these decisions.

Assets, Equipment & Real Estate

Healthcare practices reinvest constantly, but many don’t plan purchases with tax impact in mind.

Typical planning areas include:

• Section 179 and bonus depreciation

• Cost segregation for owners of medical or pharmacy buildings

• Depreciation of equipment, fixtures, and technology

• Software and system implementation costs

• Inventory valuation and write-downs for obsolete or slow-moving items

For pharmacies especially, inventory strategy can impact both cash flow and taxable income.

Credits & Compliance-Driven Opportunities

Certain credits and deductions are frequently overlooked or underutilized in healthcare settings.

Examples include:

• Research & Development (R&D) tax credits

• ADA compliance for physical locations and websites

• Continuing education, licensing, and credentialing costs

• Fringe benefits for owners and key employees

These opportunities often exist regardless of business size, but they require awareness and documentation.

This Matters More in Healthcare

Healthcare clinics and independent pharmacies do not operate like typical small businesses. Revenue timing is unpredictable. Reimbursements are delayed.

Margins are compressed. Labor and inventory costs fluctuate.

That environment creates two common problems:

1. Taxes are calculated after the year ends, when options are limited

2. Financial decisions are made without understanding their tax impact

Compliance keeps you current. Planning helps you make better decisions.

What Proactive Tax Planning Actually Looks Like

Proactive tax planning is not a once-a-year conversation.

It typically includes:

• Quarterly reviews of financial statements

• Adjustments to owner compensation before year-end

• Intentional timing of equipment and technology purchases

• Coordinating retirement contributions with cash flow

• Identifying credits and deductions early enough to use them

For healthcare owners, this also means factoring in reimbursement timing, staffing decisions, inventory levels, and expansion plans. Those operational choices often matter more than any single deduction.

The Bigger Picture

Many of the strategies listed above are well-established and widely accepted. The difference is whether they’re reviewed together, in context, and early enough to matter.

Tax savings don’t come from one deduction. They come from alignment between how the business operates, how owners are paid, and how decisions are made throughout the year.

That’s the difference between tax preparation and tax strategy.

If you have questions about this topic, speak with your CPA or accountant. And if you need guidance or a second opinion, you’re always welcome to contact us.