Veterinary Hospitals Should Consider These Financial Issues as the Pandemic Wears On
During the pandemic, some veterinary hospitals have been busier than ever. Dealing with full appointment books each week can make it difficult to find time to review the financial aspects of the business. However, it’s imperative that you review the financial statements and use them to make informed business decisions. Here are a few other financial issues your hospital should consider:
- Clients’ financial concerns. Since many government benefits have now stopped or been reduced, pet owners may begin to struggle to meet their financial obligations. This could result in a slowdown of appointments or clients who need financing assistance with their bills. If you haven’t already, you may want to think about establishing a relationship with a vendor that can offer them assistance with an extension of credit. It’s important for hospitals to prevent extending credit to customers themselves.
- 2020 tax liabilities. With many hospitals generating higher revenue, it’s important to remember that higher income can result in a larger tax liability. If you don’t typically review your tax liability with your CPA prior to Dec. 31, we suggest you reach out and discuss the tax implications you should expect in April 2021. This will help you anticipate how much you should set aside to pay your tax liabilities in 2021.
- Paycheck Protection Program (PPP) uncertainty. As the guidance currently stands, the expenses that are utilized to claim PPP loan forgiveness will not be deductible for tax purposes. Therefore, the amount of the PPP loan that is forgiven will increase taxable income. While there have been rumors that additional guidance could be issued to change this interpretation, it’s best to include the potential tax liability related to the PPP loan when considering your hospital’s upcoming cash needs.
Even though the veterinary industry has been able to generate strong revenue growth this year, please be sure to exercise caution when making decisions for your hospital. By taking the time now to review potential hurdles, you can prepare your hospital for continued success in the future. For more information on how you can navigate these changing times, visit our COVID-19 Resource Center or contact KSM’s veterinary consulting team.
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