A Practice That Looks Fine on Paper
Picture a psychiatric practice in your specialty, in your region, billing roughly $1.4 million a year.
Three providers.
Clean books.
An accountant who says everything looks fine.
The owner, call her Dr. M, takes a reasonable salary and pays her taxes on time; she sleeps well most nights.
On paper, she is winning.
On paper is exactly where the problem lives.
Because in a single working session, a CFO could walk into Dr. M’s practice and surface roughly $94,000 the practice did not know it was leaving on the table.
Not from working harder.
From looking differently.
Finding One: A Profit Leak Her P&L Cannot See
Dr. M pays herself a $280,000 salary from her S corporation.
Clean, simple, and approximately $18,000 more in payroll tax than she needs to pay.
A defensible reasonable-salary-plus-distribution structure would shift a meaningful slice of that compensation out of payroll-tax territory and into ordinary distribution territory; same money in her pocket, materially less to the IRS.
Her accountant did not flag it because compliance work is backward-looking; it records what you did.
A CFO is forward-looking; he asks whether what you did was the right thing to do in the first place.
Surfaced value: roughly $18,000 per year.
Finding Two: A Cash Problem Wearing a Revenue Costume
Dr. M’s revenue is growing.
Her bank balance is not.
She has quietly convinced herself this is a revenue problem and has started shopping for marketing help.
It is not a revenue problem.
Her days in accounts receivable are sitting at 52, against a healthy benchmark closer to 32 for her specialty.
That twenty-day gap, on $1.4 million in annual collections, is roughly $76,000 of her own cash sitting in insurance-company limbo at any given moment; cash she is currently financing with a line of credit at an interest rate she would rather not discuss out loud.
Fix the billing rhythm, free the cash, retire the line.
Nothing about the practice itself has to change.
Surfaced value: roughly $76,000 in freed working capital, plus the interest she stops paying on it.
Finding Three: A Tax Decision Being Made Backwards
Dr. M plans to make a retirement plan contribution in the fall, once she sees how the year goes.
That sentence, said aloud in May, is the sound of a deduction being left to chance.
A properly structured plan, decided in Q2 and funded on a schedule, would lock in the deductible contribution, build a forced savings discipline into the practice’s cash rhythm, and let her tax position be designed rather than discovered.
The dollars here vary by plan type and contribution level.
The principle does not vary at all.
Smart tax strategy is not what you do in April; it is what you decided in May.
The Math, Plainly
Add the three together.
Profit leak: about $18,000 per year in unnecessary payroll tax.
Cash trapped: about $76,000 in working capital and the interest she stops paying to access it.
Tax strategy: a deduction designed instead of guessed.
Round it off; call it $94,000.
In one working session.
From a practice the owner already believed was running well.
Your Practice Is Not Dr. M’s Practice
Yours has three findings of its own.
I do not know yet what they are; neither do you.
That is precisely the point.
The only real question is whether you find them in the next thirty days, while there is still year left to act on them, or in next April’s tax meeting, when the only honest answer is the one nobody wants to give.
We could have looked at it.
Book a free 45-minute call and we will start finding your $94,000.