Selling a veterinary practice is one of the most significant financial events an owner will experience—and taxes play a major role in how much value you ultimately keep.

In this interview, tax expert Aunim Hossain, founder of Agent, shares practical tax planning insights for veterinary practices and small business owners. The conversation covers commonly overlooked deductions, retirement strategies, depreciation decisions, real estate ownership, and how tax planning can dramatically impact outcomes before, during, and after a business sale.

Watch the full interview below, then explore the key takeaways summarized here.

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Overlooked Tax Deductions in Veterinary Practices

One of the most common issues Aunim sees is that veterinary practices leave deductions on the table—often unintentionally.

Beyond obvious operating expenses like supplies, meals, conferences, and equipment, many owners fail to fully leverage depreciation. With current tax rules allowing bonus depreciation, qualifying assets—from major equipment to laptops—can often be fully depreciated in the year they are purchased.

This can generate substantial paper losses that offset taxable income without reducing cash flow, improving short-term tax efficiency.
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Retirement Plans as a Tax Strategy

Retirement accounts are one of the most powerful—yet underutilized—tax tools for practice owners.

Aunim recommends starting with a Solo 401(k), which allows:

• Employee contributions (up to current annual limits)
  
  
• Employer contributions of up to 20% of net income
  

For higher-income practices, defined benefit plans may allow even larger contributions, though eligibility depends on factors such as staffing structure and income levels.

Maximizing retirement contributions not only supports long-term financial security but can materially reduce taxable income in the years leading up to a sale.
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Balancing Salary and Distributions

For practices structured as S-Corporations, how income is split between W-2 salary and owner distributions has a direct tax impact.

Salary is subject to self-employment taxes, while distributions are not. The key is maintaining a reasonable salary—generally aligned with what the practice would pay someone else in the same role—while distributing remaining profits efficiently.

Striking this balance can significantly reduce overall tax liability while staying within IRS guidelines.
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Depreciation Decisions Before a Sale

A common concern among sellers is whether to defer depreciation to avoid future recapture taxes.

Aunim’s guidance is clear:
Operate the business as if no sale is guaranteed.

Because transactions are uncertain, taking legitimate deductions when available—especially considering the time value of money—often outweighs potential recapture concerns later. Cash saved today can be reinvested, grown, or used strategically, frequently offsetting future tax costs.
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Asset Sale vs. Equity Sale: Why It Matters

One of the most important tax distinctions in a business sale is the difference between an asset sale and an equity (stock) sale.

• Asset sales are largely taxed as ordinary income (up to 37% federally).
  
  
• Equity sales are primarily taxed as long-term capital gains (typically 20%).
  

That difference can translate into hundreds of thousands of dollars. Clean books, strong financial reporting, and informed negotiation are essential to maximizing the portion of the sale allocated to equity rather than assets.
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Real Estate Ownership Considerations

When it comes to real estate, Aunim generally prefers keeping the property outside the operating entity.

This structure:

• Preserves flexibility at sale
  
  
• Allows the owner to retain or separately sell the real estate
  
  
• Creates rental deductions for the practice
  
  
• Unlocks additional real estate–specific tax strategies at the personal level

Separating real estate ownership can materially improve long-term tax efficiency and optionality.
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Tax Planning One to Three Years Before a Sale

Owners preparing for a sale should focus on two priorities:

1. Maximize Tax Efficiency

This includes:

• Fully leveraging depreciation
  
  
• Maximizing retirement contributions
  
  
• Deducting all reasonable expenses
  
  

2. Keep Impeccably Clean Books

Clean financials create leverage. Buyers—especially private equity groups—move faster and negotiate less aggressively when data is organized, transparent, and defensible.

Poor bookkeeping often forces asset-heavy deal structures, reducing after-tax proceeds.
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Reducing Taxes After the Sale

Post-sale planning is just as important as pre-sale preparation. Strategies discussed include:

• Charitable giving (including donor-advised funds)
  
  
• Installment sales (when appropriate)
  
  
• Real estate and alternative investments
  
  
• Trust structures for estate planning and asset protection
  

The key principle: don’t let the tax tail wag the dog. Tax strategies should support life goals—not drive them.
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Key Takeaway for Veterinary Practice Owners

Tax planning isn’t something to think about once a deal is on the table. Owners who plan early—optimize deductions, structure income intelligently, maintain clean books, and understand sale mechanics—retain far more value when it matters most.

As Aunim emphasized, the cost of strong tax and advisory support is often minimal compared to the six- or seven-figure consequences of getting it wrong.

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