The Annual New Midwifery Practice Review Checklist
A practical, step-by-step checklist for new midwifery practices to review taxes, finances, and compliance annually, with realistic 2026 figures.
Running a new midwifery practice means wearing many hats, and taxes are one of the least glamorous but most critical. An annual review ensures you’re not overpaying, missing deductions, or facing penalties. This checklist walks you through the key tax and financial tasks for your practice, with concrete steps you can take this week.
1. Reconcile Your Books
Before any tax planning, your financial records must be accurate. If you use accounting software like QuickBooks or Xero, reconcile all bank and credit card accounts for the year. If you’re still on spreadsheets, now is the time to upgrade to software; it costs $30-$60/month and saves hours.
- Match every transaction to a receipt or invoice.
- Categorize expenses correctly: supplies, rent, marketing, continuing education, etc.
- Flag any personal expenses mixed with business ones; separate them now.
2. Review Your Business Structure
Your entity type (sole proprietorship, LLC, S-corp) affects your tax bill. Many midwives start as sole proprietors, but as income grows, an S-corp election can save on self-employment tax. However, it adds payroll costs. Review with your CPA: if your net profit exceeds $60,000, an S-corp might be worth it, but the extra compliance costs $1,000-$2,000/year.
- Confirm your structure is still optimal for your revenue.
- If you changed structure mid-year, ensure all filings are correct.
3. Maximize Retirement Contributions
Retirement plans reduce taxable income. For 2026, a SEP IRA allows contributions up to 25% of net earnings, max $69,000. A Solo 401(k) allows up to $69,000 plus a $7,500 catch-up if over 50. Even a small contribution helps.
- Set up a SEP or Solo 401(k) before December 31 to deduct for the current year.
- Contribute a fixed percentage each month to avoid a year-end cash crunch.
4. Claim All Deductions
New practices often miss deductions. Common ones for midwifery:
- Home office: If you use a dedicated space, the simplified method gives $5 per square foot, up to 300 sq ft ($1,500 max).
- Supplies and equipment: Birth kits, monitors, office furniture, and computers are deductible. Section 179 allows expensing up to $1,220,000 for equipment in 2026.
- Professional expenses: Licenses, malpractice insurance, continuing education, and memberships (e.g., ACNM) are fully deductible.
- Marketing: Website, social media ads, and printed materials.
- Vehicle: If you drive to home births or meetings, track mileage. The 2026 rate is $0.70/mile. Keep a log.
5. Handle Quarterly Estimated Taxes
If you’re a sole proprietor or S-corp owner, you must pay estimated taxes quarterly. For 2026, the IRS requires payments in April, June, September, and January. Underpayment penalties apply if you miss.
- Calculate your estimated tax using Form 1040-ES, or have your CPA do it.
- Set aside 25-30% of each paycheck for taxes.
- Use the Electronic Federal Tax Payment System (EFTPS) to pay online, free.
6. File and Pay on Time
For a calendar-year practice, your personal tax return is due April 15, 2026. If you need more time, file Form 4868 for an automatic 6-month extension, but pay any owed tax by April 15 to avoid interest.
- If you’re an S-corp, your corporate return (Form 1120-S) is due March 15.
- Pay any balance due via EFTPS or credit card; note processing fees.
7. Prepare for State and Local Taxes
State taxes vary widely. Some states have income tax, others don’t. You may also owe sales tax on products like herbal supplements or birth kits sold to clients.
- Check your state’s department of revenue for filing requirements.
- Register for sales tax if you sell physical products; rates range from 0% to 8%.
- File state returns quarterly or annually, depending on volume.
8. Document Everything for the Next Year
A clean record-keeping system saves time and stress. Scan receipts into a cloud folder (e.g., Google Drive) or use apps like Expensify ($5-$18/user/month).
- Create a folder for each tax year: income, expenses, deductions, and filings.
- Keep records for at least 7 years in case of audit.
- Set reminders for quarterly tax deadlines and annual reviews.
Checklist Summary
- Reconcile all bank and credit card accounts
- Review business structure with a CPA
- Set up and fund a retirement plan
- List all potential deductions and gather receipts
- Calculate and pay quarterly estimated taxes
- File federal and state returns on time
- Back up digital records securely
FAQ
Q: What if I missed a quarterly estimated tax payment?
A: Pay as soon as possible. The IRS charges interest and penalties, but filing late is worse. You can also adjust your withholding for the rest of the year to avoid underpayment penalties.
Q: Can I deduct my home office if I also have a clinic space?
A: Yes, if you use the home office exclusively and regularly for business, even if you have another location. The key is that it’s your principal place of business, or you meet clients there.
Q: How much should I set aside for taxes as a new practice?
A: A safe range is 25-30% of net profit for federal and state combined, but it depends on your bracket and state. Your CPA can give a precise figure.
Q: Do I need to charge sales tax on prenatal vitamins?
A: It depends on your state. Some states exempt medical supplies, others don’t. Check your state’s rules or ask your accountant.
The Bottom Line
An annual tax review isn’t just about filing; it’s about keeping more of what you earn. By following this checklist, you’ll stay compliant, avoid penalties, and maximize deductions. Set aside a half-day each year, ideally in January, to run through these steps. If numbers aren’t your strength, invest in a CPA who knows small practices; it’s worth the $300-$500 for peace of mind.