From solo therapy practices to home care agencies with a full roster of caregivers, we handle the entity structure, payroll, and worker classification that come with running a care-based business — so you can focus on your clients.
Therapists, home care agencies, rehab clinics, and medical staffing businesses share a problem most generalist CPAs don't see clearly: a workforce that's often a mix of W-2 employees and 1099 contractors, hourly clinical staff that requires careful overtime handling, and — for solo practitioners — the same entity and self-employment tax questions that affect any licensed professional running their own practice.
At Mercer Flanagan, we've worked with therapists, home care agencies, and allied healthcare businesses in Frederick and surrounding counties for over 50 years. We know the worker classification rules. We know the payroll complexity. And we're here year-round — not just in April.
"The home care agencies that come to us mid-year usually have the same issue: caregivers were brought on as 1099 contractors to keep things simple, and nobody checked whether that classification would actually hold up. By the time it's questioned, the back payroll tax exposure can be significant."
We work with:
These are the situations we hear about most often from new clients in therapy and allied healthcare.
Caregivers and clinical staff are frequently misclassified as independent contractors when, under the actual working relationship, they're legally employees. This is one of the highest-risk issues in this industry and one of the first things we review.
Solo therapists and practice owners are often still operating as a sole proprietor well past the point where an S-Corp election would meaningfully reduce self-employment tax. We evaluate this for every new client.
Caregivers and clinical staff paid hourly are generally entitled to overtime beyond 40 hours a week. Agencies that don't track and calculate this correctly carry real wage-and-hour exposure.
Home care and staffing businesses often pay different rates for different visit types or shifts. Payroll systems need to be set up to handle this correctly from day one, not patched together after the fact.
Professional licensing, liability insurance, continuing education, and mileage between client visits are routinely missed by generalist preparers who don't know what's normal for this industry.
Without clean separation between payroll, supplies, and overhead, it's hard to know what your practice or agency is actually netting. We provide bookkeeping support and QuickBooks setup for businesses that need it.
If you run your own therapy practice or allied healthcare business, how you're structured has a bigger impact on your tax bill than almost any other single decision. Here's how the common options compare.
| Structure | Self-Employment Tax | Admin Complexity | Best For |
|---|---|---|---|
| Sole Proprietor / Single-Member LLC | 15.3% on all net income | Lowest | New or part-time practitioners just starting out |
| S-Corporation | Only on reasonable salary | Moderate | Established solo practices earning $80K+ net |
| Multi-Member LLC / Agency Entity | Varies by structure | Moderate–High | Home care agencies and group practices with staff |
The right answer depends on your income level, your state licensing requirements, and whether you employ staff. We analyze this for every new client. Read our S-Corp vs. LLC guide →
We review your current 1099 and W-2 arrangements against the actual working relationship, flag misclassification risk, and help you structure new hires correctly from the start.
We evaluate your current structure, run the numbers on what an S-Corp election would save you, and handle the paperwork to make the switch if it makes sense. For many solo practitioners earning over $80,000 in net income, this is the highest-return tax move available.
S-Corp vs. LLC: Which Is Right for You? →We prepare your business return — Schedule C, Form 1120-S for S-Corps, or Form 1065 for partnerships — along with your personal Form 1040, including all schedule attachments. Everything is handled under one roof with full context across both returns.
Small Business Tax Services → Individual Tax Preparation →We help set up payroll correctly from day one for hourly caregivers and clinical staff, including proper overtime calculation, multiple pay rates, and visit-based or shift-based pay structures.
We calculate your quarterly estimated payments based on your actual projected income and adjust throughout the year as things change. No surprise April bills.
Tax Planning Services →Clean, current books so you actually know what your practice or agency is netting after payroll, supplies, and overhead — not just at tax time. We offer ongoing monthly bookkeeping and can clean up the books if they've fallen behind.
QuickBooks Support & Training →If your practice or agency needs compiled financial statements for a bank loan, lease application, or partner buy-in agreement, we handle that. Clean, professionally prepared statements that lenders and partners accept.
Financial Statement Compilations →These are the deductions specific to therapy and allied healthcare businesses — the ones generalist preparers most often underutilize or miss entirely. Every situation is different, and eligibility depends on your specific circumstances, but these are worth discussing with us.
Deductibility always depends on your specific facts and circumstances. The IRS has specific rules about what qualifies, how to document it, and how to calculate it. We make sure you're capturing what you're entitled to — and that it's documented properly so it holds up if questioned.
Big firms want big corporate clients. We built our practice around the therapists, home care agencies, and allied healthcare professionals who are the backbone of Frederick County's care economy. You won't be handed off to a junior associate. You won't wait three weeks for a call back. You get a CPA who knows your name and your situation.
Year Mercer Flanagan was founded in Frederick, MD
Years serving local professionals, businesses & nonprofits
Rated by clients across Frederick County
Access to your CPA — not just during tax season
Year-round access to your CPA. Questions get answered when you have them, not weeks later.
We understand the 1099 vs. W-2 line and help you stay on the right side of it.
We're based in Frederick, MD. We know this community and we're not going anywhere.
We don't just file your returns. We contact you when something changes that affects your tax situation.
Book a free 20-minute consultation. We'll tell you honestly whether we can help — and what it would cost. No pressure, no obligation.
Book a Free Consultation