Mobile Medical Exams Business Outgrew Schedule C

His Mobile Medical Testing Company Outgrew Schedule C. Here’s How We Restructured It.

“Daniel” built his business around a simple gap in healthcare.

Hospitals, clinics and physician groups need specialized diagnostic testing, but many don’t need it often enough to hire a full-time technician with benefits. So Daniel bought the equipment, won contracts with those facilities, and sends trained contract technicians to run the tests on his machines. Facilities get testing on demand. Technicians get steady work. Daniel gets paid per service.

The model took off. Last year the business brought in low six figures and was reported on a simple Schedule C. This year it’s on pace for several times that.

That’s when Daniel called us. He had never worked with a CPA. He ran his own bookkeeping and his own payroll, and he knew a business this size needed a real structure.

A business model built on contracts, equipment and people

Mobile medical testing companies have a structure most accountants don’t see every day:

• Contracts with facilities: Revenue comes from hospitals, clinics and physician practices, billed per service and often paid weeks later.
• Equipment the business owns: The machines are the core asset. Some are paid off and some are financed.
• Technicians who use that equipment: Contract technicians perform the work under contracts the owner secures, on the owner’s machines.
• A small admin team: Staff who handle invoicing and scheduling, paid through payroll.

Each piece has its own accounting and tax treatment. Getting them right is what turns a fast-growing practice into a well-run company.

Too much income for a Schedule C

As a single-member LLC taxed as a sole proprietorship, every dollar of Daniel’s profit was subject to self-employment tax. At low six figures, that’s manageable. At several times that, it’s money he doesn’t need to give up.

So we ran the numbers and are putting an S-corp election in place. As an S corp, Daniel pays himself a reasonable salary through payroll, and the rest of the profit can come out as distributions that aren’t subject to self-employment tax. It adds payroll and a separate business return, but at his income level the savings are meaningful.

We’re also planning his estimated taxes. Payments based on last year’s smaller income won’t come close to covering this year.

Equipment that pays for itself, on paper too

Daniel’s diagnostic machines are business assets, and they’re recorded that way now, machine by machine. Depending on the cost of each one and the rules that apply, equipment can be depreciated over several years or, in many cases, deducted much sooner. For the financed machine, only the interest is an expense; the principal pays down the loan.

Tracking equipment this way also helps Daniel price his contracts. When he knows what each machine costs to own and run, he knows what each test really earns.

Contract technicians: getting the structure right

Technicians who use his equipment on contracts he secures need a careful look at whether they’re contractors or employees. The answer depends on how the work is actually done, not just what the agreement says. We’re reviewing the setup, making sure every technician has a W-9 on file and the right 1099 reporting, and that his admin payroll and its quarterly filings match what was actually paid.

Billing hospitals now, getting paid later

Daniel invoices facilities and collects later, so his books use the accrual method. That shows what he earned each month and exactly how much each facility still owes him. We track receivables facility by facility and plan for taxes on income that hasn’t been collected yet, so growth never turns into a cash crunch.

“Do I need to charge sales tax?”

It was one of Daniel’s first questions. Florida taxes the sale of most goods, but far fewer services, and medical diagnostic services are generally not subject to Florida sales tax. The answer can change if a business also sells products, so we confirm what’s being billed.

What we put in place

• Business structure: An entity review and an S-corp election, moving him off Schedule C.
• Owner payroll: A reasonable salary for Daniel, alongside his admin team.
• Clean books: Monthly bookkeeping on the accrual method, with receivables tracked by facility.
• Equipment tracking: Every machine recorded as an asset, with financing set up correctly.
• Contractor review: The right classification and reporting for his technicians.
• Tax planning: Estimated payments and year-round planning as he adds contracts.

Is this you?

Daniel’s model is common across healthcare. If you run a mobile diagnostic or imaging company, a sleep study or testing service, mobile phlebotomy, or any medical service that contracts with hospitals and clinics and sends staff or equipment on site, you likely face the same questions: when to leave Schedule C, how to treat your equipment, and how to structure the people doing the work.

Running a medical services business that’s outgrown its setup? Book a call with our team. Let’s get your structure working as hard as you do.

Names and details in this story have been changed to protect client privacy. Results depend on each client’s specific facts.

Book a call: get your medical business on the right structure.