The Annual New Ot Practice Review Checklist
A practical annual review checklist for new OT practices covering taxes, compliance, and financial health. Steps, deadlines, and realistic costs for 2026.
Running a new occupational therapy practice means wearing many hats, and one of the most critical is staying on top of your annual financial and tax review. This checklist walks you through the key steps to ensure your practice is compliant, profitable, and ready for the year ahead. It covers tax deadlines, expense tracking, retirement planning, and more, with realistic figures for 2026.
Why an Annual Review Matters
An annual review is not just about filing taxes. It is a chance to catch errors, identify deductions, and plan for growth. For a new OT practice, it can mean the difference between a surprise tax bill and a manageable one. The IRS expects you to report income accurately, and missing deadlines can cost you penalties and interest. A structured review helps you stay organized and proactive.
Step 1: Confirm Your Business Structure and Tax Deadlines
Your business structure determines your tax forms and deadlines. Common structures for OT practices include sole proprietorship, LLC, S-corp, and C-corp. Each has different filing requirements.
- Sole Proprietor or Single-Member LLC: File Schedule C with your personal return (Form 1040). Deadline: April 15, 2026.
- Partnership or Multi-Member LLC: File Form 1065. Deadline: March 15, 2026 (extension to September 15).
- S-Corp: File Form 1120-S. Deadline: March 15, 2026 (extension to September 15).
- C-Corp: File Form 1120. Deadline: April 15, 2026 (extension to October 15).
If you need more time, file Form 4868 for an automatic 6-month extension for personal returns, but note that any tax due is still payable by the original deadline.
Action this week: Verify your business structure with your CPA or tax professional. Mark all relevant deadlines on your calendar.
Step 2: Gather and Organize Financial Documents
Collect all income and expense records for the past year. This includes:
- Bank and credit card statements
- Receipts for supplies, equipment, and software
- Invoices and payment records (from clients, insurance, etc.)
- Loan statements and interest paid
- Mileage logs for business travel
- Home office expense records if applicable
Use accounting software like QuickBooks or Xero to keep everything in one place. If you haven’t been tracking expenses consistently, now is the time to reconstruct a ledger from your bank statements.
Action this week: Create a folder (physical or digital) for each category: income, expenses, deductions, and tax documents. Scan paper receipts into PDFs.
Step 3: Review Deductions and Credits
New OT practices often miss valuable deductions. Common ones include:
- Home office deduction: If you use a dedicated space exclusively for business, you can deduct $5 per square foot (up to 300 sq ft) under the simplified method, or actual expenses.
- Equipment and supplies: Computers, therapy tools, furniture, and office supplies are deductible. Section 179 allows you to deduct the full cost of qualifying equipment in the year purchased, up to $1,160,000 for 2026.
- Software and subscriptions: Practice management software, EHR, and professional memberships are deductible.
- Continuing education: Courses, conferences, and certification fees are deductible.
- Retirement contributions: SEP IRA contributions are deductible up to 25% of compensation, max $69,000 for 2026.
- Health insurance premiums: If you are self-employed, you may deduct premiums for yourself, spouse, and dependents.
Action this week: List every business expense you had in the last year. Compare against the IRS Publication 535 to see what you might have missed.
Step 4: Reconcile Your Books
Reconcile your bank and credit card statements with your accounting records. This ensures that every transaction is accounted for and helps catch errors or fraudulent charges. Use your accounting software’s reconciliation feature or do it manually.
Action this week: Set aside two hours to reconcile the last month of the year. If you are behind, work backward month by month.
Step 5: Estimate and Pay Quarterly Taxes
If you are self-employed, you must pay estimated taxes quarterly. For 2026, the due dates are:
- Q1: April 15, 2026
- Q2: June 15, 2026
- Q3: September 15, 2026
- Q4: January 15, 2027
To avoid penalties, your payments should cover at least 90% of your current year’s tax liability or 100% of the previous year’s liability (110% if your AGI was over $150,000). Use Form 1040-ES to calculate.
Action this week: If you haven’t made Q1 payment, do so now. Calculate your expected income for the year and adjust your quarterly payments accordingly.
Step 6: Review Retirement and Health Savings Options
Contributing to a retirement plan not only secures your future but also reduces your taxable income. Options include:
- SEP IRA: Easy to set up, contributions up to 25% of net earnings, max $69,000 for 2026.
- Solo 401(k): Allows employee and employer contributions, total up to $69,000 (plus $7,500 catch-up if over 50).
- Health Savings Account (HSA): If you have a high-deductible health plan, you can contribute up to $4,150 for self-only or $8,300 for family in 2026, and deduct those contributions.
Action this week: Talk to a financial advisor or your CPA about which plan fits your practice. Set up automatic contributions.
Step 7: Check for State and Local Obligations
Besides federal taxes, you may have state income tax, sales tax (if you sell products), and local business licenses. Each state has different rules. For example, some states require annual reports and franchise taxes for LLCs and corporations.
Action this week: Search your state’s revenue department website for annual filing requirements. Note any deadlines and fees.
Step 8: Plan for Next Year’s Tax Strategy
Use this review to plan ahead. Consider:
- Accelerating expenses: If you expect higher income next year, buy needed equipment before year-end to increase deductions.
- Deferring income: If you expect lower income next year, delay invoicing until after January 1.
- Hiring a professional: If your tax situation is complex, a CPA can save you money and stress. Fees for a CPA to prepare a small business return range from $300 to $1,000, depending on complexity.
Action this week: Schedule a meeting with a tax professional to discuss your 2026 strategy.
FAQ
Q: What if I miss the April 15 deadline? A: File for an extension using Form 4868. This gives you until October 15, but you must pay any estimated tax due by April 15 to avoid penalties and interest.
Q: Can I deduct the cost of my therapy equipment? A: Yes, under Section 179, you can deduct the full purchase price of qualifying equipment in the year you put it into service, up to the annual limit.
Q: How much should I set aside for taxes? A: A common rule is to set aside 25% to 30% of your net income for federal and state taxes. Your actual rate depends on your bracket and deductions.
Q: Do I need to file quarterly if I have an S-corp? A: S-corp owners who receive a salary have payroll taxes withheld, but you may still need to make estimated payments for your share of profits. Check with your accountant.
The Bottom Line
An annual review is essential for the financial health of your new OT practice. By following this checklist, you can avoid penalties, maximize deductions, and set yourself up for success. Start with the steps you can do this week: confirm your structure, gather documents, and review your deductions. If you feel overwhelmed, invest in a good CPA; the cost is worth the peace of mind. Your practice is your business, and treating it with the same rigor as your clinical work will pay off in the long run.