The keys to the successful application of Google Adwords for veterinarians is its ability to target potential clients in a specific geographical area and only having to pay for clicks from the Google ad to their website.

With traditional media, such as the Yellow Pages and the newspaper, you pay whether anyone looks at your ad or not and you pay for exposure to viewers who are too far away to consider your clinic for services.

Obviously, if you are driving potential clients to your website it needs to show off your staff in photos and clearly explain your benefits, along with an “actionable” statement to get the potential client to pick up the phone and call, email or text your clinic for an appointment.

The geotargeting feature of Adwords, allows you to zoom in on your town, select the neighborhoods you want to target when you set up your campaign. Only people living in those areas you selected will see the ads and be able to click to your website.

So, I’m often asked, do Adwords really work? We have one of our own campaigns targeting veterinarians nationwide. Just last week we received a call from a clinic on the East Coast needing our services. Yes, Adwords work, and at this point few veterinarians are using the service, which makes the ones who do really stand out.

To get more information on this subject go to adwords.google.com  or see the article on pay-per-click advertising in the February 2012 issue of The Costco Connection.

We sorted the clients recently contacted by postcard and started making calls to the clients on that list who had been compliant in the past, but seemed to drop off the radar.

We made four appointments in just six calls! Success, but more important than the appointments we made we gained strategic marketing information while talking with the clients. It seemed that the clients we talked with had all set aside the postcard and forgot about it. Three of the clients told us if we sent them an email instead of a postcard, they would be more responsive in the future.

What they were saying was “talk to us on the channel of communications we prefer.” When I asked the front desk staff if they asked new clients how they preferred to be contacted for reminders they said everyone gets a postcard and a follow-up phone call if there’s time to do them. They had never thought of sending an email instead of a postcard.

Younger clients, in particular, have grown up with text messaging and email. To many of them, it’s how they expect to stay in touch and ask friends for referrals. If your clinic is not using email and text messaging to reach clients who prefer this form of communications you may find clients drifting away to clinics where they get the information they need online.

If you are interested in learning more about veterinary marketing, please contact me at randy@bizgal.com.

In the United States during 2010, there were an estimated 1 billion searches of the phone directory, while there were 8 billion searches for businesses through Google.

If you are looking for new, younger clients, a big, expensive phone directory ad is becoming the buggy whip of veterinary marketing.

I asked my college-aged son the other day when was the last time he had used a phone directory to find a local business and his response was “never.” While this is a single data point, I’m confident that the majority of consumers 30 or younger expect your business be easily located on the internet or they won’t use your services.

My suggestion is to shift some of your marketing budget away from directory advertising (a smaller ad) and invest in pay-per-click online advertising (Google AdWords), search engine optimization (SEO) and on improvements to your website. By doing this you will be providing multiple ways that potential clients to find your veterinary business.

You’re probably selling food, treats, pet supplies and meds through your practice. Your state, county and city want their share of transaction privilege tax (sales tax) on applicable items. Here are some general guidelines for what is and isn’t taxable:

Inconsequential items, such as surgical supplies, meds administered by your techs and other routine materials consumed in treatment are considered not taxable if items are less than 15% of the total bill and are not itemized on the bill. If the items used during the treatment represent more than 15% of the total, you must itemize the products and charge sales tax on them. Your fee would still not be subject to taxation.

Likewise, if the item you use is not typically in a form offered for retail sale, such a tick dipping a dog (the answer to our quiz), this is considered an inconsequential item not subject to tax.

Prescription drugs are not taxable, however, any drug that is OTC is taxable, even if you write a prescription for that drug.

One of the trickiest areas concerns dietary pet food. In Arizona, for example, the tax code says food is not a drug and therefore should be subject to tax, even if written on prescription. However, if the food contains a legend drug, then it is exempt if written as a prescription.

In the case of items consumed in running your practice, such as food for animals boarded, shampoo and other small items, these should be purchased at retail so you pay the sales tax up front since you are not reselling them.  Or if previously purchased for resale and you use them, you can add them to your report and pay use tax.

If your practice does not sell retail then you are not required to obtain tax licenses, otherwise, obtain the licenses from the state, county and city, depending on what the rules are in your state. Once you are licensed you should provide your vendors an exemption certificate to avoid paying tax on items that you will be reselling. It’s essential that you carefully track, report and pay the tax on those applicable items you sell. It also is critical that your accounting professional advising you about sales tax be thoroughly familiar with current issues and decisions that can affect your tax responsibilities.

If you have questions about what is taxable and what isn’t, please email or call me. 

Camala C. Bailey, CPA, PC
Specializing in consulting and accounting for the veterinary profession 

 I want to tell you about some actual legitimate exceptions to these rules, some which your practice most likely incurs, but may not be taking proper advantage. The IRS tags these exceptions as “De Minimis Fringe Benefits,” and they are 100% deductible!

 According to Internal Revenue Service Publication 15-B, a de minis fringe benefits is any property or service you provide to an employee which is excluded from wages, that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable.  

 What does this really mean? It means that as long as you are reasonable, you can deduct such things as:

1.  Holiday gifts, other than cash, with a low fair market value
2. Occasional parties or picnics for employees and their guests (your holiday party)
3. Occasional tickets for theater or sporting events (employee outings or incentives)
4. Office snacks (donuts, soda, coffee, candy)
5. Meals provided to enable employees to work overtime (not based on hours worked)
6. Meals furnished to your employees for your convenience (office meetings)

 Be sure to account for these expenses carefully, even though the IRS may consider them de minimis, over the year, they could add up to thousands of dollars in deductions, which could be hundreds or even more in tax savings! Your pocket book will benefit and so will your employees!

I ask my veterinary clinic owners, “How can you manage your business without goals?” To me, a budget is a goal, and it’s a bonus that it is written down! Written goals are accomplished more often than those that are abstract or memorized. With all that is going on in the world, the likelihood of forgetting those abstract and memorized goals is much higher than those written and tracked. I’m sure there’s research to back that up too!

Don’t let the prospect of preparing a budget overwhelm you. If you have accurate financial statements, as mentioned previously, you are on your way! What I suggest to clients is to set up a spreadsheet that includes categories for the revenue and expenses as shown on your income statement. Once the spreadsheet is set up, you can review the past twelve months to help schedule out your budget for next twelve months. Take note of such things as the relationship of cost of services to revenue or facility expenses as they relate to seasons. Be sure to look for trends, for example in Arizona, revenues will often decrease in the summer due to the fact a lot of us either leave the state or don’t go anywhere (literally) because it’s so dang HOT!

A budget is truly a living thing; it is created then tweaked as things change! The thing to remember is that you just need to “JUST DO IT!”

Next time I am going to talk about how to utilize your budget to measure and monitor your income and expenses, the next step in our profit improvement plan!

As the veterinary animal hospital owner, one of the quickest and easiest ways to increase profits is to manage your expenses. Over the next few weeks I will be blogging about what information you need to gather and how to use it to implement a profit improvement process. I will include what to measure as well as how to understand and utilize the outcomes. In addition, I will share some useful suggestions for reducing your hospital’s overhead.

The first thing you will need is a good set of books, or as we in the business call it, an accurate set of financial statements. Financial statements provide you with the income and expense information you need to measure how profitable (or not) your business is. With accurate, detailed financial statements, you can measure your performance against budget (yes, I said budget!) as well as from month to month and year to year. Even better you can measure your performance against industry benchmarks produced by The Well Managed Practice Studies, AAHA (American Animal Hospital Association) and NCVEI (National Commission on Veterinary Economic Issues).

Your financials should include your detailed production and detailed cost of services, personnel expenses, fixed expenses, facility costs and other expenses and income. We prepare our veterinary clients financial statements utilizing the AAHA chart of accounts. We find they are simple to understand and translate easily when reading industry articles or utilizing industry benchmarks.

In my next blog, I will discuss the next step to managing your overhead; how to utilize your financial statements to prepare a budget.

Arizona’s overall state and local tax burden ranked 41st in the nation in 2008, with 8.5 percent of per capita income going to taxes, according to the nonpartisan, Washington, D.C.-based Tax Foundation. The national average is 9.7 percent.

If the 1-cent-per-dollar tax increase is approved this month, it will take the sales tax to 6.6 percent and raise nearly $1 billion a year for three years before expiring. Spread across the state’s population, the tax is unlikely to push Arizona much higher on the tax-burden ladder. Many of Arizona’s other taxes remain relatively low, and most other states have increased at least some of their taxes since 2008.

Homeowners in Arizona have state and local property-tax bills that are lower than the national average. The state’s income-tax rate is one of the lowest among the 43 states that collect such taxes, according to the Tax Foundation.

Twenty-six states have a higher state sales-tax rate than Arizona’s, although if the sales-tax hike passed, only eight states would have a higher rate.

Although the increase would expire after three years, such promises have been broken before. Within four months of a 13-month, temporary hike in 1983, lawmakers talked about making the increase permanent, which they later did.

Opponents of the measure say there is room to trim government spending rather than raise taxes.

“A lot of people are saying, ‘I’ve had to cut back in my life.’ People are looking at state government and saying, ‘Why can’t they do that?’ ” said Tom Jenney, director of the Arizona chapter of Americans for Prosperity, which promotes limited government and free markets. With help from the federal stimulus, he said, state government hasn’t shrunk nearly as much as people think.

Martin Shultz, vice president of Pinnacle West Capital Corp. and a supporter of Proposition 100, suggests people consider the budget cuts that will happen if the tax hike fails.

“We’ll have fewer teachers and larger class sizes,” he said. “(The tax) is $10 for every $1,000 you actually spend. It’s modest, it’s temporary and it’s necessary.”

by Ronald J. Hansen from The Arizona Republic

As you gather your tax information together this year, whether you prepare your own return or take it to a tax preparer, make sure to gather everything, especially those deductions we’re still allowed to take while we can!

Here is a handy list of items you need to gather:

• W-2s wage forms
• Retirement earning statements
• Social security earning statements
• Forms 1099 for interest and dividends
• Schedule K-1 (income/loss from partnerships, S Corporations, etc.)
• Form 1098 mortgage interest, plus your property tax information
• Real estate purchase or refinance paperwork
• Brokerage statements from stock, bond or other investment transactions (and don’t forget the cost basis for those sales of stock)
• All documents for deductions such as mileage, medical receipts and unreimbursed employee expenses
• One often missed deduction – car registrations if they are considered personal property tax (which in Arizona they are)
• Charitable giving receipts for both cash and non-cash donations, if your donation is over $250, you must have a receipt
• Tuition forms (1099-T)

Also, if you don’t want to bother adding up your medical expenses, consider that in some states, including Arizona, medical expenses are 100% deductible, so take the time, it’s probably worth it!

As we all go through this taxing exercise (ha ha), remember you can always get an extension, but it’s important to realize that an extension is only an extension of time to FILE your taxes, not an extension of time to PAY your taxes.  If you owe, you need to include payment with your extension by April 15^th.  You will incur penalties and interest on any underpaid tax after that date.

Running a business without a budget is like navigating a ship without a compass.  Especially in this day and age it is important to set aside time (and it’s not too late!) to develop your budget. With this critical information you will have more options when making important decisions about where your company should be going and growing.

Assess Your Finances

The first step in developing an accurate and reliable budget is to take a look at your finances. Review income and expenses.  Previous records, financial statements and tax returns can be used for this purpose. If you are just getting started, consider using a budget from a similar business as a model.  We can provide you with some samples if you’d like!

List Expenses

Once you have compiled your documents and information, list your expenses.  Consider whether you want to develop a budget for 3, 6, or 12 months.  Create appropriate categories for all your expenses: rent, wages, inventory.  Always remember to set aside money for emergencies and slow business periods. If your business is just getting started, you may decide to create a budget for a short time so that you can start to analyze your spending patterns, cash flow and inventory.

Examine Spending Habits

Analyzing your spending trends and considering your finances will help you project amounts for each category of your budget.  Always remember to re-examine your budget periodically. You may want to create benchmarks for shorter periods. Budgets with benchmarks for month-long or 2-week periods can make the whole process easier to manage.

Review the numbers periodically and adjust them if your business conditions change, it’s okay!

Stick to Your Budget

Once you have a working budget, it’s important to stay on course and stick to it, just like the big boys!  Sharing it with your team, financial advisors and accountant can help you cruise successfully into the business you’ve envisioned for yourself.