By Mark E. Battersby

It might come as a surprise to many chiropractors but Uncle Sam wants to see your practice prosper. After all, the more prosperous the practice, the more taxes it will pay. That is why the government, through tax laws, allows a tax deduction for many expenses that improve business.

Uncle Sam will pickup a portion of the tab for attending a trade show or convention because it is highly likely that anyone attending will benefit and be in a better position to help the practice grow — and pay more taxes. Even the expense of exhibiting or otherwise participating in a trade show or convention can become a tax deduction.

Although a tax deduction for convention or trade show attendance must be related to the business, more leeway is granted to those exhibitng and promoting their chiropractic practices via shows and special events. That can mean a tax deduction for the expenses of participating in a variety of shows, fairs and even charity events.

Let’s look at a number of tax deductions:

• Advertising. Like trade show and convention attendance, advertising expenses are tax deductible so long as they are reasonable and bear a reasonable relation to the practice — such as advertising for the purpose of developing goodwill.

Best of all, the cost of advertising is tax deductible when paid or incurred even if the advertising program extends over several years or is expected to result in benefits extending over a period of years.

• Trade shows. Deductions similar to convention expense write-offs are available when you have a promotional or sales booth at a show or other event. In other words, the expenses of exhibiting or selling at a trade show or other event are also tax deductible business expenses.

Remember, however, not all of the costs of participating in or selling at a show or other event can be labeled “convention expenses.” Some of those costs will fall into the category of sales expenses, others into the “advertising” category. Some might require capitalization and can only be written-off over a period of several years.

Expenses incurred in creating an unique display or booth, for example, may not qualify for an immediate tax deduction but may qualify to be depreciated.

•Celebrations. Every chiropractic practice can benefit from an “open house” or grand opening celebration. While the costs of that celebration are often considered to be "start-up" costs and must be written-off or amortized over 60 months, the cost of an anniversary celebration are legitimate marketing costs or business expenses and immediately deductible.

So, throw a party and invite current, past and prospective patients to enjoy your anniversary bash. After all, Uncle Sam is picking up part of the tab.

• Games and contests. From naming a mascot to guessing the number of jelly beans in a jar, contests are a proven means of attracting attention. But they pay off big only when they are properly promoted and ethically managed.

Be sure your prizes are first rate and that you get the word out in a timely and professional manner. And remember, once again, Uncle will pick up part of the cost.

Before sponsoring any contest or giving away any prizes, however, make sure that you contact both the Federal Trade Commission (FTC) and your licensing board. A lawyer familiar with the chiropractic industry and games or promotions as well as your secretary of state's office can ensure the legality of your event.

While the expenses of running a contest or promotion are generally tax deductible business expenses, fines and penalties that result when you don't know the rules, are not always tax deductible.

• Coupons. To keep and attract patients, you may need an incentive. A coupon or introductory offer, a free service or a discount on your normal fees can be the nudge to draw prospective patients to your chiropractic practice. Coupons can help you reach many goals: introducing a new service, increasing repeat business, besting the competition and more.

You cannot, of course, deduct a discount. That discount after all is merely a revised or different selling price for your products or services. Like lost sales, there is no deduction for discounts.

However, the cost of printing and promoting the coupon program is a legitimate business expense — and yet another timely tax deduction.

• Gift certificates. Do you offer your patients gift certificates? Many chiropractors don't, not realizing how this can boost the income of the practice. Properly used, gift certificates are like money in the bank for your practice since the recipients often don't redeem them 'til months later.

Remember, however, that the sale of a gift certificate is handled for accounting and tax purposes depends on the method of accounting used in your chiropractic practice.

If you use the cash method of accounting (in which all money received is income when it is received and all expenses are deductible when paid), record the sale of gift certificates as income.

If you use the accrual method of accounting, you don’t receive taxable income until the gift certificates are redeemed or expired.

Many practices that employ gift certificates as part of their marketing programs have found that it pays to keep a log to record the number, date of sale and the dollar amount of each gift certificate sold. Be sure to note when the certificate is received. Avoid cash refunds.

State on the certificate that if more than $5 in change is due, it will be issued in the form of another gift certificate. And, finally, don't buy generic gift certificates. These can easily be duplicated. Invest in custom-designed certificates — after all Uncle is allowing you to deduct the cost from the profits this promotion produces.

Uncle Sam allows many practice-related expenditures to be deducted as “promotional” expenses. Will you take advantage of these tax breaks to promote your chiropractic practice and, hopefully, increase both your profits and your partner’s tax revenue?

Mark E. Battersby is a tax and financial advisor, freelance writer, lecturer and author with offices in suburban Philadelphia. He can be contacted at 610-789-2480.

Disclaimer: The author is not engaged in rendering tax, legal or accounting advice. Please consult your professional advisor about issues related to your practice.