7 Mistakes New Podiatry Practices Make in Their First Year

2026-08-21

Avoid common tax and business errors that cost new podiatry practices thousands. Learn practical fixes for each mistake in your first year.

Starting a podiatry practice is exciting, but the first year is also when costly mistakes happen, especially around taxes and business setup. Many new owners focus on clinical care and neglect the financial side, leading to penalties, missed deductions, and cash flow problems. Here are seven common mistakes and how to avoid them, with concrete steps you can take this week.

1. Choosing the Wrong Business Structure

Many new podiatrists default to a sole proprietorship or a simple LLC without considering the tax implications. As a sole proprietor, you pay self-employment tax on all net earnings (15.3% in 2026), plus income tax. An S-corporation can save you thousands by letting you take a reasonable salary and distributions that avoid self-employment tax, but it requires payroll and extra paperwork.

What to do this week: Consult a CPA who works with medical practices. Ask if an S-corp election makes sense for your projected income. If you expect net earnings above $40,000, the savings often outweigh the costs ($1,000-$2,000 per year for payroll and tax prep).

2. Not Tracking Mileage and Auto Expenses

Podiatrists often travel between clinics, to hospitals, or to nursing homes. The IRS mileage rate for 2026 is $0.70 per mile. If you drive 10,000 miles for business, that’s a $7,000 deduction. But without a contemporaneous log, you lose it.

What to do this week: Download a mileage tracking app like MileIQ or Everlance ($60-$100/year). Log every business trip from day one. Also, keep receipts for tolls, parking, and car washes.

3. Mixing Personal and Business Expenses

Using the same credit card or bank account for personal and business purchases creates a bookkeeping nightmare and raises red flags in an audit. It also makes it easy to miss deductible expenses.

What to do this week: Open a separate business checking account and a business credit card. Use them exclusively for practice expenses. Set up automatic transfers for your salary or owner’s draws.

4. Overlooking Home Office Deduction

If you manage your practice from home, you may qualify for the home office deduction. The simplified method gives $5 per square foot, up to 300 square feet, for a maximum of $1,500. The regular method can yield more, but requires more paperwork.

What to do this week: Measure your home office space. If you use it regularly and exclusively for business, calculate both methods with your CPA. Keep a floor plan and photos as evidence.

5. Ignoring Quarterly Estimated Taxes

New practice owners often forget that taxes are pay-as-you-go. If you owe more than $1,000 at tax time, you may face penalties. In 2026, the federal underpayment penalty is around 7% of the unpaid amount, plus interest.

What to do this week: Use Form 1040-ES to calculate your quarterly payments. Pay online via the IRS Direct Pay system. Mark your calendar for April 15, June 15, September 15, and January 15. Your CPA can help you set the right amount.

6. Failing to Depreciate Equipment Correctly

Podiatry equipment, like lasers or digital X-ray machines, can cost $20,000-$100,000. Section 179 allows you to deduct the full cost in the year you place it in service, up to $1,220,000 in 2026. Bonus depreciation is also available at 80% for new equipment. But if you don’t track the placed-in-service date, you miss out.

What to do this week: Create an asset list with purchase dates, costs, and in-service dates. Review with your CPA to decide whether to take Section 179 or depreciate over time.

7. Not Hiring a Tax Professional

Trying to save money by doing your own taxes is a false economy. A CPA who specializes in medical practices can find deductions you’d miss, ensure compliance, and save you from costly mistakes. Fees range from $500-$1,500 for a simple return, but the savings often exceed that.

What to do this week: Interview three CPAs. Ask about their experience with podiatry or other medical practices. Check references. Hire one before the end of the year to plan your tax strategy.

FAQ

Q: When should I make the S-corp election? A: Ideally before your first year ends, but you can file Form 2553 within 2 months and 15 days of the start of the tax year. If you miss that, you may have to wait until next year.

Q: How much should I set aside for taxes each month? A: A good rule is 25%-30% of your net income for federal and state taxes, plus self-employment tax. Your CPA can give a precise percentage based on your situation.

Q: Can I deduct health insurance premiums? A: Yes, if you’re self-employed, you can deduct premiums for yourself, your spouse, and dependents, as long as you’re not eligible for an employer plan. This deduction reduces your adjusted gross income.

Q: What records should I keep for an audit? A: Keep all receipts, bank statements, and mileage logs for at least 3 years, but 6 is safer. Store them digitally with a service like Dropbox or QuickBooks.

The bottom line

The first year of your podiatry practice sets the tone for your financial health. Avoid these seven mistakes by choosing the right structure, tracking expenses, paying estimated taxes, and working with a CPA. Take one action this week: schedule a consultation with a tax professional. It’s the best investment you can make for your practice’s future.