The Annual New Fertility Clinic Review Checklist
A practical annual review checklist for new fertility clinics to manage taxes, compliance, and finances. Covers key steps, deadlines, and FAQs.
Running a new fertility clinic means balancing patient care with the business side, and taxes are a big part of that. An annual review helps you catch issues early, avoid penalties, and keep more of your revenue. This checklist walks you through the essential steps to review your clinic’s tax and financial health, with realistic timelines and costs.
Why an Annual Review Matters
New fertility clinics often face unique tax challenges: equipment depreciation, lab supplies, and payroll for specialized staff. An annual review ensures you’re not overpaying taxes or missing deductions. It also keeps you compliant with federal, state, and local requirements, which can change yearly. The goal is to identify problems before they become costly.
The Annual Review Checklist
1. Reconcile Your Books Monthly
Before the annual review, ensure your books are current. Reconcile bank statements, credit cards, and loans every month. This takes 2-4 hours per month if you use accounting software like QuickBooks or Xero, or $200-$500 per month if you outsource to a bookkeeper. Catching discrepancies early prevents headaches at year-end.
2. Review Your Entity Structure
Your clinic’s entity type (LLC, S-Corp, C-Corp) affects your tax rate and liability. Review it annually with your CPA. For example, an S-Corp can save on self-employment taxes, but requires reasonable salary for owners. If your revenue has grown significantly, consider if a change is beneficial. Costs for entity changes range from $500 to $2,000, plus legal fees.
3. Track Equipment and Depreciation
Fertility clinics use expensive equipment like ultrasound machines and incubators. You can depreciate these over their useful life (5-7 years for most medical equipment). Review your depreciation schedule to ensure you’re claiming the correct amounts. Section 179 allows you to deduct the full cost of qualifying equipment in the year of purchase, up to $1,160,000 for 2026, but this changes annually. Keep records of all equipment purchases and disposals.
4. Maximize Deductions for Lab Supplies and Consumables
Lab supplies, culture media, and disposables are deductible as business expenses. Track every purchase, and consider using a dedicated credit card for supplies to simplify tracking. In 2026, the standard mileage rate is $0.70 per mile for business use of your vehicle, but for supplies, you can deduct actual costs or use a per-item method. Review your expense categories to ensure nothing is missed.
5. Review Payroll and Contractor Payments
Payroll taxes are a major expense. Ensure you’re classifying workers correctly: employees vs. independent contractors. Misclassification can lead to penalties. For contractors, you must issue Form 1099-NEC if you paid them $600 or more in a year. Review your payroll reports for accuracy, and consider using a payroll service ($50-$150 per month) to avoid errors.
6. Check Retirement Plan Contributions
If you have a retirement plan like a 401(k) or SEP IRA, review contributions. For 2026, the 401(k) contribution limit is $23,500 (under 50) or $30,000 (50+), and SEP IRA limits are up to 25% of compensation, capped at $70,000. Contributions reduce taxable income, so ensure you’re maximizing them if cash flow allows.
7. Verify Sales Tax Compliance
Some states require sales tax on certain medical services or products, like fertility medications sold at retail. Check your state’s rules. If you collect sales tax, file returns on time (monthly, quarterly, or annually). Use sales tax software like Avalara or TaxJar to automate this, costing $30-$100 per month.
8. Prepare for Estimated Tax Payments
If you’re a pass-through entity (LLC, S-Corp), you may need to make estimated tax payments quarterly. For 2026, the federal rate is 21% for corporations, but pass-through rates depend on your personal bracket. Penalties for underpayment are based on the current IRS rate, which is around 8% for 2026. Calculate your estimated payments with your CPA to avoid surprises.
9. Review Insurance Policies
Insurance premiums are deductible, but review your coverage annually. Malpractice insurance for fertility clinics ranges from $10,000 to $30,000 per year, depending on location and claims history. Ensure you have adequate coverage and that you’re not overpaying. Shop around for quotes every few years.
10. Plan for State and Local Taxes
Beyond federal, you may owe state income tax, franchise tax, or gross receipts tax. For example, Texas has a franchise tax, while California has a $800 minimum franchise tax for LLCs. Review your state’s requirements and budget for these costs.
11. Document Everything for Audits
Keep records for at least 7 years: receipts, contracts, payroll records, and tax returns. Use cloud storage like Dropbox or Google Drive for easy access. In case of an audit, organized records save time and money. Consider a document management system if you have high volume.
12. Schedule a Year-End Tax Planning Meeting
Meet with your CPA in November or December, not April. This allows time to make strategic moves before year-end, like purchasing equipment or deferring income. CPAs charge $150-$400 per hour, but a 1-hour meeting can save thousands.
Tax Deadlines to Mark on Your Calendar
| Deadline | What’s Due |
|---|---|
| March 15 | S-Corp and partnership tax returns (Form 1120-S, 1065) |
| April 15 | Individual tax returns (Form 1040) and C-Corp returns (Form 1120) |
| April 15 | First quarter estimated tax payment |
| June 15 | Second quarter estimated tax payment |
| September 15 | Third quarter estimated tax payment |
| January 15 | Fourth quarter estimated tax payment (for prior year) |
| January 31 | W-2 and 1099-NEC forms to employees and contractors |
Note: Deadlines may shift if they fall on a weekend or holiday. Always verify with the IRS or your CPA.
FAQ
How much should I set aside for taxes as a new fertility clinic?
As a rule of thumb, set aside 25-35% of your net income for federal and state taxes, depending on your entity type and bracket. A CPA can give a more precise estimate based on your situation.
Can I deduct the cost of starting my clinic?
Yes, startup costs up to $5,000 are deductible in the first year, but the deduction is reduced if your startup costs exceed $50,000. Remaining costs are amortized over 180 months. Keep all receipts for legal fees, marketing, and equipment.
What’s the biggest tax mistake new clinics make?
Mixing personal and business expenses. This complicates bookkeeping and can trigger audits. Use separate accounts and credit cards for your clinic.
Do I need to charge sales tax on IVF cycles?
Most states exempt medical services from sales tax, but some tax tangible goods like medications. Check your state’s department of revenue. If you’re unsure, consult a tax professional.
The Bottom Line
An annual tax review is not optional for a new fertility clinic. It protects your cash flow and keeps you compliant. Use this checklist as a starting point, but tailor it to your specific state and situation. Work with a CPA who understands medical practices, and schedule your review before year-end to maximize benefits. The time and money you invest now will pay off in peace of mind and savings.