January is the most important month of the entire tax year for healthcare business owners, even though most people don’t realize it. By the time April arrives, the outcome of your tax return is largely locked in. What actually determines whether you overpay or keep more of your money happens right now, while the books are still open and strategic decisions can still be made.
For Direct Primary Care practices, dentists, chiropractors, and mental health clinics, January is when tax season stops being reactive and becomes proactive. This is the window when clean financials, thoughtful planning, and the right conversations with your CPA can save you tens of thousands of dollars.
Why January Matters So Much for Medical Practices
Healthcare practices don’t look like typical small businesses. You collect revenue through memberships, insurance reimbursements, and cash payments. You manage payroll, contractors, technology platforms, and often multiple legal entities. You may own your building, lease equipment, or operate a management company alongside your practice. All of that complexity shows up in your tax return, and January is when it gets sorted out.
If your books are incomplete, if accounts aren’t reconciled, or if transactions are miscategorized, your tax return will reflect those errors. Worse, they tend to result in higher taxable income, missed deductions, and unnecessary risk with the IRS. When January is handled well, everything that follows becomes easier, faster, and more accurate.
The First Thing Every Practice Should Do in January
Before anyone can talk about taxes, the financial story of your practice for 2025 has to be finalized. That means closing the books. Revenue must be fully recorded. Expenses need to be properly categorized. Payroll and contractor payments must be reflected accurately. If any of that is incomplete, your CPA is forced to guess and guessing almost always leads to overpaying.
Once the books are closed, the next step is reconciliation. This is where your bank accounts, credit cards, and payment processors are matched against what your accounting system says happened. It is the only way to confirm that what you think you earned and spent is actually what happened. Reconciliation catches missing deposits, duplicate expenses, and errors that quietly distort your tax return.
January is also when tax documents start flowing in. W-2s, 1099s, interest statements, equipment purchase records, retirement contributions, and healthcare deductions all begin to arrive. These are not just administrative paperwork, they are the raw materials that determine your taxable income and the deductions you are allowed to claim. If anything is missing or incorrect, it must be fixed now, before filing begins.
Preparing Your Practice for Tax Filing
For healthcare business owners, tax filing is never just about filling out forms. It is about making sure the structure of your business and the way you pay yourself are working in your favor.
If your practice is an S-Corporation, the split between your salary and distributions matters. Set it too low and you invite IRS scrutiny. Set it too high and you overpay payroll taxes. January is when those numbers can still be reviewed and adjusted before they become permanent.
This is also the time to look at retirement and healthcare contributions. Many practice owners don’t realize that contributions to Solo 401(k)s, employer plans, and certain health benefits can be finalized after year-end but before the return is filed. These are some of the most powerful tools available to reduce taxable income but only if they are used intentionally.
Equipment and technology purchases deserve the same attention. Whether you invested in medical equipment, computers, office upgrades, or clinical software, those purchases may qualify for special depreciation or expensing that can significantly reduce what you owe. Without a strategic review, those deductions often get mishandled or missed entirely.
This is why January should include a strategy conversation with your CPA. Not a data-dump of documents, but a real review of what your numbers mean, what your tax exposure looks like, and what can still be done to improve the outcome before anything is filed.
The Mistakes That Cost Practices the Most
The biggest tax mistakes don’t come from complicated loopholes. They come from waiting too long. When March arrives and everything is rushed, the opportunity to plan has already passed.
Messy or DIY bookkeeping is another silent killer. If your books are not accurate and reconciled, your tax return cannot be either. That’s how income gets overstated and deductions disappear.
Another common issue is 1099 compliance. If you paid contractors, whether it was billing services, IT support, marketing agencies, or consultants, those payments must be reported correctly. Missing or incorrect 1099s can lead to penalties and, in some cases, the IRS disallowing the expense entirely.
The most costly mistake of all, however, is treating tax filing as a mechanical process instead of a financial strategy. When there is no planning, you simply accept whatever the software calculates. Practices that approach taxes this way consistently leave money on the table.
The January Advantage
The practices that get ahead in January experience a very different tax season. Their returns are cleaner. Their cash flow is more predictable. Their tax bills are lower. And their financial decisions are made with clarity instead of urgency.
Ready to go into tax season with a plan instead of a guess? The Goodman CPA team works with DPC practices, dentists, chiropractors, and mental health providers every day to turn messy financials into clear, strategic tax outcomes. If you’d like a second set of eyes on your numbers or want to understand where you may be leaving money on the table schedule a conversation with us. A short call now can make a meaningful difference in what you keep this year and how your practice grows going forward.