7 Things to Know Before You Start a New Plastic Surgery Practice

2026-08-21

Starting a plastic surgery practice? Learn 7 tax essentials, from entity choice to deductions, to avoid costly mistakes and save money.

Starting a plastic surgery practice is exciting, but the tax side can trip you up if you’re not prepared. You need to know the key tax issues before you open your doors, so you can structure things right from day one. Here are 7 things to know before you start, with concrete numbers and steps you can take this week.

1. Your Business Entity Choice Affects Your Tax Bill

The legal structure you choose determines how you pay taxes and your personal liability. For plastic surgeons, the most common options are:

Sole Proprietorship: Simplest, but you’re personally liable and pay self-employment tax on all profits. Not recommended for a practice with significant risk.
LLC (Single-Member or Multi-Member): Offers liability protection. Single-member LLCs are taxed as sole proprietorships by default, but you can elect S-corp status.
S-Corporation: Popular for practices because you can split income into salary and distributions, potentially saving on self-employment tax. You must pay yourself a reasonable salary (typically $150,000-$250,000 for a plastic surgeon) and the rest as distributions, which avoid FICA taxes.
C-Corporation: Rare for private practices due to double taxation, but may be useful if you plan to reinvest heavily or go public.

Action step this week: Meet with a CPA who specializes in medical practices. Ask them to run projections for S-corp vs. LLC to see which saves you more.

2. You Must Pay Estimated Taxes Quarterly

The IRS expects you to pay taxes as you earn income. As a practice owner, you’ll need to make quarterly estimated tax payments. For 2026, the due dates are:

April 15
June 15
September 15
January 15 (of the following year)

Each payment should cover your income tax plus self-employment tax (15.3% for Social Security and Medicare). If your practice is an S-corp, you’ll also have payroll taxes withheld from your salary.

Action step: Set up a separate bank account for taxes and transfer 25-30% of every deposit into it. This prevents a cash crunch at payment time.

3. You Can Deduct Startup Costs, But There’s a Limit

You can deduct up to $5,000 in startup costs in your first year, but the deduction phases out dollar-for-dollar if your total startup costs exceed $50,000. The remaining costs must be amortized over 180 months (15 years). Startup costs include:

Market research
Legal and accounting fees
Employee training
Initial advertising

Action step: Track every startup expense from day one. Use a separate credit card or account for these costs to make tracking easy.

4. Equipment and Leasehold Improvements: Depreciation vs. Section 179

Your surgical equipment, computers, and furniture are capital assets. You can depreciate them over time, but Section 179 lets you deduct the full cost in the year you place them in service, up to a limit. For 2026, the Section 179 limit is $1,220,000, with a phase-out threshold of $3,050,000. This means you can deduct the full cost of most equipment immediately, which can significantly reduce your first-year tax bill.

Leasehold improvements (like building out your OR) are different. They are generally depreciated over 15 years, but you may qualify for bonus depreciation (100% for qualified property through 2026, but check with your CPA as rules change).

Action step: Before buying equipment, ask your CPA whether to use Section 179 or bonus depreciation. Sometimes it’s better to spread deductions over years to avoid losing other credits.

5. You Must Handle Payroll Taxes Correctly

If you have employees (nurses, front desk, etc.), you must withhold federal income tax, Social Security, and Medicare from their paychecks, and you must also pay the employer portion of Social Security and Medicare (7.65% each for employee and employer). You’ll deposit these taxes via the Electronic Federal Tax Payment System (EFTPS) on a semi-weekly or monthly schedule, depending on your liability.

Common mistake: Not depositing payroll taxes on time. The IRS can penalize you up to 100% of the unpaid tax if it’s deemed willful. Use a payroll service like ADP or Gusto (cost: $50-$150/month) to avoid errors.

Action step: Set up your EFTPS account now, even before you hire. It takes a few days to activate.

6. Track Mileage and Other Deductions from Day One

You can deduct business mileage for travel to your practice, hospital rounds, or meetings. The 2026 standard mileage rate is 67 cents per mile (projected, but confirm with IRS). Keep a log with date, miles, and purpose. Other often-missed deductions include:

Continuing medical education (CME) costs, including travel and lodging
Professional liability insurance premiums
Medical license fees
Dues to professional organizations
Business meals (50% deductible)

Action step: Download a mileage tracking app like MileIQ or QuickBooks Self-Employed. Start logging all business trips immediately.

7. Sales Tax on Cosmetic Procedures: Know Your State Rules

Some states impose sales tax on cosmetic procedures (e.g., New Jersey, New York, and Texas have debated this). For example, New Jersey charges 6.625% sales tax on cosmetic surgery that is not medically necessary. Other states, like California, exempt all medical services. You must collect and remit sales tax if your state requires it, or you could face audits and penalties.

Action step: Check your state’s Department of Revenue website or ask your CPA whether cosmetic procedures are taxable in your state. If yes, set up your billing system to add sales tax automatically.

FAQ

Q: Can I deduct the cost of my own plastic surgery practice’s equipment? Yes, you can deduct or depreciate equipment used for your practice. Section 179 allows immediate expensing up to $1,220,000 for 2026, subject to phase-out. For example, if you buy a $500,000 laser, you can deduct the full amount in that year, reducing your taxable income substantially.

Q: What is a reasonable salary for an S-corp plastic surgeon? Reasonable salary varies by region and experience, but typically ranges from $150,000 to $250,000 for a full-time surgeon. Your CPA can help you justify the amount to the IRS. Paying too low a salary can trigger penalties.

Q: How do I handle taxes if I’m a solo practitioner? As a solo practitioner, you can operate as a sole proprietor or single-member LLC. You’ll report income on Schedule C and pay self-employment tax. You can also elect S-corp status to save on self-employment tax, but you’ll need to run payroll for yourself.

Q: Are there tax credits for hiring staff? Yes, you may qualify for the Work Opportunity Tax Credit (WOTC) if you hire from certain target groups (e.g., veterans, long-term unemployed). The credit ranges from $1,200 to $9,600 per employee, depending on the group and hours worked. Check with your state workforce agency.

The bottom line

Starting a plastic surgery practice involves many tax decisions that can have long-term consequences. Choose your entity wisely, set up a tax savings account, track expenses diligently, and consult a CPA who understands medical practices. By taking these 7 steps, you’ll avoid costly mistakes and keep more of your hard-earned revenue. Start with the action steps this week, and you’ll be on solid tax footing from day one.