Year-End Financial Moves for Physician Micro-Business Owners

As a physician micro-business owner, the end of the year is a pivotal time to pause, assess, and take action on your financial decisions. It's an opportunity to not only wrap up the current year but also to set a solid foundation for the next. With the right strategies, you can optimize your tax liabilities, streamline your financial planning, and position your business for growth. Let’s dive into the critical areas you should address as the calendar year winds down.

1. Tax Planning: Your Biggest “Expense”

Let's face it—taxes might not be the most exciting topic for many of us. However, considering that taxes often represent our largest "expense," investing some time in planning can lead to substantial benefits. By dedicating just a bit of effort upfront, you can significantly impact your financial situation for the better.

That’s why I meet with my CPA 3x per year for tax planning, and always schedule a meeting in November or early December prior to the tax year coming to an end.

Tax planning is a crucial exercise that often doesn't receive the attention it deserves, especially for high-income and high-net-worth individuals like yourself. It's important to approach tax planning proactively, rather than as a once-a-year retrospective analysis during tax filing. Filing your taxes should be seen as the culmination of thoughtful and strategic tax planning efforts throughout the year.

If your accountant doesn’t do tax planning with you and you are a physician doing any independent professional work, reach out to me. I can connect you to a CPA in our SimpliMD professional network who can help you save money on taxes and provide regular tax planning.

If you haven’t done that yet, I highly recommend it. A quick review of this year’s taxes can help you put a plan in place for next year. There are several smart moves you can still make before December 31 to lower your tax liability:

• Figure out capital gains or passive income: Assess your portfolio to understand what your gains or passive income look like for the year. If you’ve had significant capital gains, consider strategic ways to offset them, such as reinvesting in tax-advantaged opportunities.

• Max out tax-advantaged accounts: This includes your 401(k), IRA, or HSA. Maximizing these contributions not only helps with retirement planning but also reduces your taxable income.

• Harvest investment losses: If you’ve experienced losses in your portfolio, now’s the time to harvest them to offset any gains. This can make a substantial impact on your overall tax liability.

• Make charitable donations: Giving back is a win-win for your community and your finances. Donating appreciated stocks, for instance, is a tax-efficient way to support causes you care about while potentially lowering your tax bill.

These seemingly small actions can add up to significant savings, allowing you to reinvest in your business or personal goals.

Tip:

Even if you have a CPA, make sure you understand your tax strategy. It’s your money, and being proactive in your tax planning is key to long-term success.

2. Evaluate Your Revenue Streams

Take a moment to analyze all your income sources from your professional micro-business. Have you diversified enough to withstand unexpected disruptions? If you’re relying solely on one stream of income, such as locums or telehealth, now might be the time to explore job stacking or launching an additional service line, like a cash-based clinic.

Read More: Job Stacking for Doctors: A Modern Approach to Work-Life Balance

Ask yourself:

• Are my current income streams sustainable?

• Should I expand into directorships, telemedicine, consulting, legal case reviews, or offering specialized treatments?

Take the Leap!

SimpliMD offers a course, Creating a Practice Without Walls, where you’ll learn how to craft a flexible micro-corporation that allows you to thrive in the marketplace. Start building a diversified income strategy today by signing up for this course today!

3. Maximize End-of-Year Tax Deductions

Reducing your tax liability before December 31st can have a significant impact on your financial health. Some strategies include:

• Invest in equipment: If your practice needs updated technology or office supplies, purchasing them before year-end can count as a deduction.

• Contribute to a SEP IRA or solo 401(k): As a micro-business owner, maximizing retirement contributions is not just a smart financial move—it’s a tax-saving one, too.

• Prepay expenses: Consider prepaying for next year’s business expenses, such as malpractice insurance or software subscriptions.

Tip:

Consult your CPA or financial advisor to ensure you’re capturing all eligible deductions.

4. Review and Revise Your Budget

Now is the time to look at your 2024 budget. A solid financial plan is the backbone of your micro-business, yet many physicians skip this critical step. My wife and I set aside time every year to do a business retreat and discuss our personal and professional goals/plans/budgets—and are doing this right now. I have created a free a simple guide for you to do this yourself called The Dare To Dream Guide For Doctors. Make sure to check it out. Here’s how to approach it:

• Compare actual vs. projected expenses: Did you spend more on marketing than planned? Less on staffing?

• Adjust for growth: If you’re expecting to expand your services or hire additional help, budget accordingly.

• Set realistic savings goals: Allocate funds for emergencies, expansion, and retirement.

Streamline Your Budgeting

Save hours with SimpliMD’s Business Plan Bundle, which includes a Micro-Corporation Budget Template that takes the guesswork out of financial planning.

5. Optimize Your Business Structure

Is your current business entity—LLC, S-Corp, or sole proprietorship—serving your needs? The right structure can save you thousands in taxes and protect your personal assets. Reevaluate:

• Are you taking advantage of the tax benefits that come with an S-Corp election?

• Is your LLC offering sufficient liability protection?

Read More: Professional Micro-Corporations: Should I Start A PC or a PLLC?

If you’re not sure, schedule a consult with SimpliMD for only $99 to align your business structure with your long-term goals.

6. Conduct a SWOT Analysis

A Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis is an incredibly powerful tool that can profoundly guide your business decisions. This strategic planning framework allows you to take a comprehensive look at the internal and external factors affecting your organization. By meticulously identifying areas for improvement and growth, you gain invaluable insights into how best to navigate the competitive landscape. With this clear understanding, you can prioritize your resources more effectively, ensuring that time, effort, and capital are allocated in ways that bolster strengths and capitalize on opportunities while mitigating weaknesses and threats. Ultimately, a SWOT analysis enables businesses to craft more informed strategies tailored to their specific circumstances and objectives.

For example:

• Strengths: Your specialized skills or a loyal patient base.

• Weaknesses: Outdated marketing strategies or reliance on one revenue source.

• Opportunities: Emerging telehealth markets or unmet community needs.

• Threats: Increased competition or regulatory changes.

Plan Strategically

Download SimpliMD’s Business Plan Bundle, which includes a SWOT analysis template designed specifically for physician entrepreneurs.

7. Plan for Growth in 2024

The end of the year presents an ideal opportunity to thoughtfully map out the goals and aspirations you want to pursue in the upcoming year. As one chapter closes and another begins, it's a time for reflection on past achievements and lessons learned, allowing you to set a clear direction for future endeavors. Some ideas to consider when planning your goals include taking stock of personal growth areas, identifying career milestones you wish to reach, or exploring new hobbies that could enrich your life. Additionally, think about how you can contribute positively to your community or make strides in improving your health and well-being.:

• Expanding your service offerings to include cash-based specialty care.

• Hiring a virtual assistant to streamline administrative tasks.

• Upgrading your marketing strategy to attract high-value patients.

Get Personalized Guidance

SimpliMD offers a personalized micro-business consult for only $99. This consult includes a one-year SimpliMD membership (valued at $2500) filled with business products designed for physicians like you.

Your Next Steps

The end of the year can feel overwhelming, but with the right focus, you can turn it into a powerful launching pad for 2024. Take control of your financial decisions now, and set your business up for long-term success.

1. Book a Personalized Micro-Business Consult: For $99, SimpliMD will provide a tailored roadmap for your micro-business success, plus a one-year membership packed with $2500 worth of resources.

2. Take the Course: Enroll in Creating a Practice Without Walls to design a micro-corporation that empowers you in the marketplace. Everyone who takes this course loves it’s practical nature and associated value added tools.

3. Download the Business Plan Bundle: Get the tools you need—a SimpliMD Business Plan Template, Micro-Corporation Budget Template, and SWOT analysis template—to simplify and optimize your planning.

Start today. Your future self will thank you.