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  • Private practice

    I started my part time 100% virtual private practice last December. I don’t have any patients in my private practice. Zero income but as a corporation I should be compliant with the rules of the state of California. It means submitting too many forms and paying the registration fees. I am not sure what can I report as my expenses? I put my license and DEA and board renewal fees and whatever I bought for the business. What else can I report as expenses? Can I report my internet bill? I use it for home and office both. How much of that should be written as the office expenses?
    my tax guy said he will charge me 50$ per hour to reconcile expenses. I am not sure if I should be paying additional money for this service? He said as a business owner I should be aware that I need accounting services. I had zero income last year so I was wondering if I should pay additional money for accounting services on top of everything else? What would you do?

  • #2
    From a do it yourselfer , paying for good advice is usually worth more than it costs. You can get average advice on the internet for free.

    A business with no income may be considered a hobby, but I suspect not in your case. Start up costs may be attributed differently for tax purposes than ongoing costs. But like others said on the forum , I will put the following disclaimer " I am not a tax advisor or accountant" , just a doc who has started a few businesses in the past and pays a lot of taxes.

    A side note, an accountant that charges $50 is a good bargain, but I would not shop for good deals on accounting advice. Quickbooks or any other accounting program is good for tracking expenses but it is different than "advice" that you will need with your business

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    • #3
      [QUOTE=Random1;n319359]From a do it yourselfer , paying for good advice is usually worth more than it costs. You can get average advice on the internet for free.

      :A business with no income may be considered a hobby"
      IRS consider a business that is not making money for 3/5 years a Hobby as per my knowledge. I am not a tax professional but knowledge from WCI blogs and podcasts. So please talk to an accountant for better advice. Here is the link from IRS.

      https://www.irs.gov/pub/irs-news/fs-07-18.pdf

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      • #4
        Clarification: the business in California could not be a hobby and I believe there are much better options for “hobby “ . I opened the practice in December 2021 and I think it’s normal not to have patients immediately.
        accountant didn’t tell me he will charge 50$ for advice. He said 50$per hour for expense reconciliation. Does it translate to advise? I don’t know.
        Legal expenses is something that I should know. My question is what expenses are reportable/ acceptable for a business?

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        • #5
          “ I was wondering if I should pay additional money for accounting services on top of everything else? What would you do?”

          Your accountant is justified charging $50/hr for bookkeeping services. Probably will have someone in the office do the work.

          The bigger question is profitability of the part time business. Bookkeeping is a cost of doing business. I suggest you use this as a learning opportunity for exactly what is needed.

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          • #6
            You have a part-time practice with no income and no patients? That doesn't sound like a practice to me.

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            • #7
              I'll defer to others on the startup costs but the bookkeeping shouldn't be overly difficult to do yourself with a small telemed practice. I keep a fairly simple spreadsheet for expenses and payments. Your accountant can advise about payroll, assuming you actually make any money...

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              • #8
                Unfortunately that’s the case for now . I don’t think I should close the practice after two months or pay additional money for the services that doesn’t seem will make any difference. I don’t think the accountant will sit down with me and teach me tax savings for 50$per hour.
                Originally posted by CordMcNally View Post
                You have a part-time practice with no income and no patients? That doesn't sound like a practice to me.

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                • #9
                  Originally posted by Olagh View Post
                  Unfortunately that’s the case for now . I don’t think I should close the practice after two months or pay additional money for the services that doesn’t seem will make any difference. I don’t think the accountant will sit down with me and teach me tax savings for 50$per hour.
                  He is not teaching you tax savings. He is teaching you bookkeeping or telling you what he needs to prepare all the reports that you have signed up for and have no books or data to give him.
                  In other words, tell you how to dig yourself out of a hole. Do you know what to file to close the practice?
                  Full disclosure: "I started my part time 100% virtual private practice last December." There may be absolutely nothing to do. From an accountant's point of view it is "prepared by client" schedules and data needed to prepare the filings required. It might be as simple as turning off the computer.

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                  • #10
                    How long can the business show losses and still get tax benefits or write offs?

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                    • #11
                      Originally posted by nastle View Post
                      How long can the business show losses and still get tax benefits or write offs?
                      Maybe make a business plan to be profitable pronto rather than focus on showing losses as long as possible or asking for experiences with failing practices?

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                      • #12
                        Originally posted by Hank View Post

                        Maybe make a business plan to be profitable pronto rather than focus on showing losses as long as possible or asking for experiences with failing practices?
                        Ideally yes but what’s the harm in sharing some tips

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