7 Things to Know Before You Start a New Podiatry Practice

2026-08-21

Learn the 7 tax essentials for starting a podiatry practice, including entity choice, deductions, payroll, and quarterly payments.

Starting a podiatry practice is exciting, but the tax side can trip you up if you’re not prepared. Here are seven things you need to know before you open your doors, so you can avoid costly mistakes and keep more of what you earn.

1. Your Business Entity Affects Your Tax Bill

The structure you choose (LLC, S-corp, or sole proprietorship) directly impacts how you pay taxes. Most podiatrists start as an LLC or S-corp. An LLC gives you liability protection with pass-through taxation, meaning profits and losses go on your personal return. An S-corp can save you self-employment tax, but requires you to pay yourself a reasonable salary and file payroll. Sole proprietorships are simplest but offer no liability protection. Compare options with a CPA before registering.

2. You Must Pay Self-Employment Tax

As a practice owner, you’re responsible for both the employee and employer portions of Social Security and Medicare, totaling 15.3% on your net earnings. This is in addition to income tax. For 2026, the Social Security wage base is projected at $176,100. If you’re an S-corp, you’ll pay this only on your salary, not on distributions, which is why many choose it. Plan for this by setting aside roughly 30% to 35% of your net profit for federal taxes.

3. Quarterly Estimated Taxes Are Mandatory

The IRS expects you to pay taxes quarterly, not once a year. Deadlines are April 15, June 15, September 15, and January 15. If you miss these, you’ll face penalties and interest. Calculate your estimated payments using Form 1040-ES, or work with your accountant. A good rule: pay at least 100% of last year’s tax liability (110% if your income is over $150,000) to avoid underpayment penalties.

4. 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 this phases out dollar-for-dollar once your total startup costs exceed $50,000. Costs include market research, legal fees, and office setup. Any remaining amount is amortized over 180 months. Keep all receipts and track expenses from day one, even before you see your first patient.

5. Equipment Purchases Offer Big Tax Breaks

Section 179 and bonus depreciation let you deduct the full cost of equipment in the year you buy it, rather than depreciating over years. For 2026, Section 179 allows up to $1,220,000 in deductions, with a phase-out threshold of $3,050,000. This covers podiatry chairs, X-ray machines, and computers. Bonus depreciation is 80% for 2026. Plan major purchases strategically to maximize these deductions.

6. Home Office Deductions Are Possible, But Strict

If you use part of your home exclusively for administrative work, you may qualify. The simplified method gives you $5 per square foot, up to 300 square feet, for a maximum of $1,500. The regular method calculates actual expenses like utilities and rent. You must meet the exclusive and regular use tests. If you see patients in your home, that’s a different set of rules. Consult your tax pro to avoid red flags.

7. Payroll Taxes Are a Separate Beast

If you have employees, you must withhold federal income tax, Social Security, and Medicare, and pay your share. You’ll need an EIN, and you’ll file Form 941 quarterly. Payroll tax deposits are due semi-weekly or monthly, depending on your liability. Missed deposits can trigger severe penalties. Use a payroll service like Gusto or ADP, which costs $40-$80/month, to stay compliant.

FAQ

Q: Can I deduct health insurance premiums for myself?

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’s the best entity for a new podiatrist?

An LLC is common for simplicity, but an S-corp can save on self-employment tax once your net income exceeds $50,000-$60,000. Discuss with a CPA to see which fits your situation.

Q: How do I track business expenses?

Use accounting software like QuickBooks or Xero, which cost $30-$100/month. Set up separate bank and credit card accounts for the business. Categorize expenses monthly to stay organized.

Q: When should I hire a tax professional?

Hire a CPA before you register your entity. They’ll help with structure, estimated payments, and deductions. Expect to pay $300-$500 for initial setup and $1,500-$3,000 annually for ongoing tax prep.

The bottom line

Tax planning is not optional when starting a podiatry practice. Choose your entity wisely, set aside money for quarterly payments, and track every deductible expense. Work with a CPA from the start to avoid surprises. With these seven points in mind, you’ll be ready to focus on your patients, not your tax bill.