Top Strategies for Aesthetics Practices to Save Money on Taxes

Aesthetics practice business owners end up paying a big chunk of their earnings in taxes. And often, more than they should. It happens because of unfamiliarity with tax-saving strategies.

If you are involved in the aesthetics industry, such as owning medical or dental aesthetics clinics, the tax-saving strategies we will unveil can be a lifesaver. These can help you save money on taxes legally and reduce tax bills significantly.

1) Select the Right Entity

Tax saving starts with the selection of the right business entity. Because it decides how your tax amount is calculated and what benefits you can get. Selecting the right entity can lead to significant tax savings.

As an aesthetics business owner, you can be self-employed or form an LLC, S-Corp, C-Corp, etc. You can change the structure of the business for tax optimizations. However, it depends on the current status of the business and various technical factors.

To select the most tax-efficient structure for your business, you must consult a tax advisor. After a detailed evaluation of the business, an entity can be selected.

2) Apply Bonus Depreciation

Bonus depreciation is extremely helpful for the owners of medspas & dental spas. It reduces tax bills by a great amount. 

It allows them to deduct the whole value or significant portion of the acquired assets in the year they are acquired.

The Tax Relief for American Families and Workers Act 2024 has extended 100% depreciation. Which means businesses can deduct 100% of the cost of the asset from taxable income.

Suppose you have bought a laser machine or dental implant system for aesthetic treatments. You can save money on taxes by deducting the whole cost of the machine in the tax year.

It applies to all the qualified assets placed in service after 31st December 2023. And they should have a recovery period of less than 20 years.

Some of the eligible assets are:

• Machinery (such as lasers and piezoelectric surgery unit)
• Furniture
• Computers and software
• Equipment

Any eligible asset you have bought for the aesthetic practices can be deducted from taxable income. Make sure to consult a tax advisor before benefiting from 100% tax depreciation.

Even if the assets are bought through a loan, they can be depreciated. And their interest can also be deducted from taxable income.

3) Offer Employee Benefits

Employee benefits, such as 401(k) plans and Health Saving Accounts (HSA), can help reduce tax bills. As an aesthetics business owner, you can set up retirement and health insurance plans for yourself and your employees.

If you have already done it, it is great. Otherwise, you can set it up any time of the year. The amount contributed for these purposes can be deducted from the taxable income, which reduces the tax amount. But keep in mind that the amount contributed should be reasonable and not exceed the compensation of the employees.

It’s a win-win for both. Employees can benefit from health insurance and retirement plans. At the same time, you can earn tax benefits. Most importantly, the withdrawal of the amount is also tax-free.

4) Education Deduction

Aesthetics business owners, dentists, and doctors upskill with time by doing new courses and getting enrolled in training. If you do so, you can enjoy an extra tax benefit. The amount you spend on courses, training, and education can be deducted from the taxable income. Thus, it reduces the tax bills to a certain extent.

You can also provide training and courses to your employees, such as injectors and assistants. It not only improves your services, but also helps you reduce tax bills. But keep in mind that education should be relevant.

5) Interest Deduction

Business owners often take out loans to purchase equipment, set up a clinic, buy furniture, etc. They need to pay interest on that amount regularly.

This interest for the loan used specifically for the business can be deducted from the taxable income. It is a business expense that can reduce tax bills.

6) Deduct Cost of Improvements

A medical or dental aesthetics clinic requires improvements or renovation over time. It is possible for them to deduct the cost of improvement to the interior of the building through Qualified Improvement Property (QIP).

These improvements can be:

• Interior renovation, such as paint
• Plumbing systems
• Electrical systems
• HVAC
• Security systems, etc.

For instance, you invest in security camera systems for the security of the facility. The entire cost of this improvement can be deducted from taxable income.

It can help reduce tax bills by a great amount. Clinic owners often neglect this deduction or don’t know about it, which is why they end up paying more taxes than they should.

7) Deduct Marketing Expenses

For the promotion of aesthetic services, businesses spend a massive amount on marketing. They build their websites and social media pages and then opt for advertising campaigns and influencer marketing.

A big chunk of the income goes into performance marketing to bring new customers on board and brand awareness. However, this cost is a business expense and can be deducted from taxable income.

8) Travel Expense Deduction

If you visit different cities, states, or countries for business, whether it be meetings or practice, you can deduct the cost of the travel. It is a business expense, so the cost of tickets, accommodation, meals, and other things can be deducted.

Clinic and medspa owners often use their own vehicles for business purposes. In that case, they can deduct the expense of gas and maintenance. Similarly, if your personal cell phone is used for business, a portion of the bill can be deducted. These deductions reduce the taxable income.

Get Personalized Tax-saving Strategy for Your Aesthetics Practices

Tax-saving must be done the right way to prevent penalties and other consequences, which is the reason consulting a tax advisor is mandatory.

For maximum tax savings in your aesthetics business, get a personalized tax strategy. It involves a detailed evaluation of the businesses and implementation of strategies that can be helpful in reducing tax bills.

At FCF Consulting Partners, we specialize in strategic planning and management of tax in the aesthetics industry. We offer strategic tax planning, tax plan implementation, and tax preparation. We analyze your business and plan & implement tax-saving throughout the year.

Book a free 30-minute tax analysis session for your aesthetics practice to understand how to reduce your tax bills and how much money the strategies could save you.

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