Have you just started a chiropractic practice? Unsure of where to begin with your financials? The financial part of your business is often complex and many DCs often avoid dealing with them.
While treating your patients is always the first priority, making sure your ducks are in a row with the financial part of your business is critical to building a thriving practice. Here is a quick guide for a few common aspects of the financials side of running a chiropractic practice.
Do your homework
One of the first places to start is educating yourself on the basics of financial systems and language. While school may have taught you how to be a great chiropractor, they most likely did not give you comprehensive business or financial education. Get a book on starting a business that goes over the financial aspects in depth.
Learning the terminology of lenders or business partners outside the industry is key to getting them to understand what you need. Most people in that field do not have an extensive (or any) knowledge of chiropractic care. Speaking their language and understanding their world means you can get ahead and also know when something isn’t a good deal.
Writing a robust and organized business plan is the next best place to start. Having this is in place from the beginning of your practice increases the odds of success and helps you stay on track with your goals. A good business plan includes:
- An estimate of your start-up costs
- Determining whether you can make a profit
- Competitive analysis of your local market
- Creating an ideal patient profile and determining who you are trying to target (pain management, pregnancy, low-back injury, etc.)
- A baseline marketing strategy with a budget
- Budgeting any modalities, extra services or employees
- Outlining potential problems and their solutions to avoid blunders up front
There are many business plan templates that you can find online for free. Filling one out before you begin your practice can help establish your financial goals and outline many of your costs up front. Realizing the expenses up front and taking the time to work through your business ideas can help set you up for success down the line.
Preparing for small business loans
A small business loan proposal is a key part of most practices starting out. This is a quick overview of what you need to know about a small business proposal.
Pull your own credit score: There are a variety of free services that allow you to pull your current credit score. Pull it and then review it for accuracy. You want to know before you apply for a loan if you have any fraudulent or inaccurate charges on your credit. Outline any issues or discrepancies, if there are any, in your business plan. It’s especially important to do this if you’ve had any outstanding circumstances that may have impacted your credit. For example, if a family member got sick so you got behind your car payment, etc. Having explanations and reasoning behind any credit problems helps lenders look more favorably on you.
Write a loan proposal: Working with banks as a small chiropractic practice can be really difficult or fairly straightforward. The difference being how prepared you are. Here are some basic things that a loan proposal should have so you can be prepared when applying for a loan.
- Business records: This includes your aforementioned credit report tax returns, business credit, current debts, value of assets and projected profits.
- Your business plan: All the more reason to create a robust business plan. They are critical to an accurate loan amount
- Information about your collateral and capital (if applicable)
- Personal financial information
- Anything you may be asked on a loan application (i.e. business name, number of employees, business debt, etc.)
This is not a comprehensive list but it’s a good place to start. There are many helpful resources out there about small business loans and the requirements for each type (startup/existing/etc.) A good resource to start with is the Small Business Administration’s (SBA) website. They have an extensive library of resources on small business loans as well as launching and managing your business.
No matter what business you own, doing taxes is usually a hassle. It’s even more of a hassle if you are not prepared or think you can leave filing your taxes until the last minute. While that can (sometimes) work for your personal taxes without consequences, filing business taxes are more complex.
There are many types of business taxes, tax structures, regulations and requirements. In addition, there are also state and local tax requirements depending on where your practice is located. Start by familiarizing yourself with these systems before diving in.
For chiropractic practices, the most common tax structures are partnerships, limited liability corporations (LLC), and sole proprietorships. Each of those structures comes with its own set of tax rules and regulations. Which structure you come under dictates how you file and pay your taxes.
In addition, you may be responsible for paying other taxes. These could include, state and local taxes, self-employment taxes and employee taxes.
If you are uncomfortable or unsure of how to do your own taxes, it may be worthwhile to hire a CPA or other tax professional. This is especially critical for chiropractors who are starting a new practice or making significant changes to an existing practice. Consulting a professional (even just once) to build a robust tax plan and explain the basics can be a highly beneficial investment — especially since the consequences of getting it wrong are so high.
Getting a chiropractic practice started is a lot of work on the financial side of things but a little planning and organization, and a little outside help if needed, can go a long way to keep you on track.