CPA Services for NJ Medical Practices & Healthcare Professionals
Physicians, dentists, and other healthcare professionals are among the highest-earning professionals in New Jersey, and among the most overtaxed, often because their practice entity structure and compensation planning have not kept pace with tax law.
CPA Services for Medical Practices
Tax preparation and planning for NJ medical practices covers solo practitioners and group practices alike. Key strategies include maximizing the Section 199A QBI deduction, implementing S-Corp structures where appropriate, and setting up defined benefit plans that can shelter large amounts of income.
Whether you are a solo practitioner operating as a sole proprietor or a multi-physician group practice operating through a professional corporation, effective tax planning and return preparation can make a significant difference in your bottom line.
Common Tax & Accounting Challenges for Medical Practices
Healthcare professionals face unique tax challenges, from practice entity structure and physician compensation planning to retirement accounts and the QBI deduction.
- Determining the optimal entity structure (PC, PLLC, S-Corp, or C-Corp)
- Qualifying for the QBI deduction despite the 'specified service trade' limitation
- Setting reasonable W-2 compensation as an owner-employee
- Maximizing retirement contributions (SEP-IRA, Solo 401(k), defined benefit plan)
- Managing NJ CBT on professional corporation income
- Deducting medical equipment under Section 179 or bonus depreciation
- Handling buy-in and buy-out transactions for group practices
- Tracking and deducting continuing medical education (CME) costs
- Planning for practice sale and goodwill allocation
- Managing payroll for support staff
What Monaco CPA Provides
Tax preparation, planning, and compliance services tailored to your industry.
S-Corp & Entity Planning
Analysis of PC, PLLC, and S-Corp structures to minimize self-employment tax and NJ CBT while maintaining professional liability protection.
QBI Deduction Analysis
Medical practices are 'specified service trades' under IRC § 199A, but strategic planning can still capture partial QBI benefits at certain income levels.
Retirement Plan Setup
SEP-IRA, Solo 401(k), and defined benefit pension plan analysis for physicians who want to shelter significant income before year-end.
Practice Tax Preparation
Annual tax return preparation for professional corporations, S-Corps, and partnerships, plus personal returns for physician owners.
Payroll & Compensation Planning
Optimal W-2 salary setting for owner-physicians, payroll compliance for staff, and NJ SUI/SDI registration.
Equipment Depreciation
Section 179 and bonus depreciation planning for diagnostic equipment, office furniture, and technology purchased by the practice.
Free Tool
See If S-Corp Election Makes Sense for Your Medical Practices Business
Most medical practices owners make the switch somewhere between $60K and $80K in net income. Use the free calculator to compare sole prop SE taxes vs. S-Corp payroll taxes, including NJ compliance costs.
Calculate Your S-Corp Savings"I've been working with Greg Monaco, CPA for a few years now, and he's honestly saved me real money with both personal tax help and crypto tax stuff. He answers quickly, breaks things down in a way that's easy to understand, and you can tell he actually cares about doing right by you."- Dylan P.
These testimonials reflect individual client experiences and do not guarantee similar outcomes. Results vary based on each client's specific facts and circumstances. No client was compensated for providing a review. Tax savings and outcomes depend on individual tax situations and are not typical of all client experiences.
Frequently Asked Questions
Can a medical practice qualify for the QBI deduction?
Medical practices are classified as 'specified service trades or businesses' (SSTBs) under IRC § 199A, which limits, but does not completely eliminate, the QBI deduction. For 2025, the QBI deduction begins phasing out at taxable income of $197,300 (single) / $394,600 (MFJ) and is completely eliminated above $247,300 (single) / $494,600 (MFJ). Physicians below those thresholds may still qualify for a partial or full 20% deduction.
What is the best entity structure for a solo physician?
A professional corporation (PC) or professional limited liability company (PLLC) taxed as an S-Corp is typically the most tax-efficient structure for solo physicians earning over $150,000-$200,000 in net income. The S-Corp election allows the physician to split income between W-2 salary (subject to FICA) and distributions (not subject to FICA), reducing self-employment tax significantly.
How much can a physician contribute to a retirement plan?
A physician with an S-Corp can contribute up to $70,000 to a SEP-IRA or Solo 401(k) in 2025 ($72,000 for 2026), plus catch-up of $7,500 for ages 50+ ($8,000 for 2026) or $11,250 for ages 60-63 under SECURE 2.0. A defined benefit pension plan can shelter significantly more, sometimes $200,000+ per year, for physicians in their 50s and 60s who want to accelerate retirement savings.
What about group practices?
Yes. This practice covers multi-physician and multi-provider group practices organized as partnerships, S-Corps, or C-Corps - including partnership returns, K-1 issuance, and coordinated individual returns for multiple partners.
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IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.