Category Archives:Accounting

Preventing Financial Mistakes Independent Contractor Physicians Make: Reducing Your Tax Bill

When a physician is transitioning from receiving a modest salary as an Intern/ Fellow / Resident to being paid as a board certified physician, there are a myriad of financial mistakes that are often overlooked, but that can be very easily prevented. This critical point is the time to make these decisions, and not after the consequences have reared their head.

Incorporate: Form an Inc. / PA / PC / LLC

Aside from any possible asset protection benefits, the simple act of incorporating will save you money. This will allow you to receive some of your compensation in the form of dividends, rather than earned income. The simple math is that if you receive $100,000 in dividends, rather than as salary or Schedule “C” income, you will save $2,900 in taxes annually.

Establish a Regularly Scheduled Payroll

Setting up a regular payroll will allow you to establish a monthly budget that you will be able to adhere to. This process will also make sure that you are making your regularly scheduled tax payments. Failure to do cause you to deposit your “gross earnings” (Form-1099 earnings) into an account that will then be used to pay for your lifestyle. The saying goes, “If you deposit your gross dollars, you will spend your gross dollars”. There will be a day of reckoning, and that will typically arrive every year on April 15th when the funds are not there to make your tax payments and the related penalties. The cost of a payroll service is far less than the penalty charged by the IRS for not making quarterly payments.

Open a SEP-IRA

Unlike a 401(k) that you would have as an employee, you, as the owner of your physician corporation, are permitted to have a SEP-IRA. The difference is that the contribution to this account is an expense to the business, and not subject to FICA/Medicare taxes. A $50,000 annual contribution would save you at least another $1,450. Pay yourself first, and be able to pay yourself more.

Hire a Physician Business Manager

Hiring a physician business manager who has the experience to guide you through the process is well worth the expense. After all, the savings alone are greater than the annual cost. As a physician, you have spent countless hours honing you knowledge and skills. Why would you want to spend your valuable time doing accounting and filling out forms?

Don’t let yourself get caught in the tax trap of missing filing deadlines, and not making payroll tax payments at the appropriate time. Take the steps necessary early, rather than having to deal with tax liens and legal bills later. Remember, it is easier to start out with a lower salary, and gradually increase it, rather than to start out spending it all, and having to cut back.

My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Small Business Owners and Entrepreneurs.

We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts.

We are not simply a document filing service; we are here to help you with the part of the business that you have to do, so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Email us with any questions or call us at: 1-800-517-0CFO (1-800-517-0236)

For a Limited Time, get FREE Incorporation with our Accounting/Payroll Services! Submit your e-mail for more information, or schedule a quick phone call with me here.

Small Business Mistakes You Can Easily Avoid: Incorporate / Payroll Taxes / Accounting

Working for oneself is one of the “American Dreams,” but if you don’t follow certain steps, this could become your nightmare. Regardless of why you are breaking out on your own, the most important this is that you have done it. Now, the key is to not make the mistake of not properly filing the proper tax returns, and to make the necessary tax payments.

Inc. / PA / PC / LLC

Going to the Secretary of State website and filing your documents is relatively easy, unless you are a licensed professional, in which case, there may be additional steps. What is typically overlooked is that once you file with the state, and establish your entity, you then have to request an EIN number so that you can file your taxes correctly, and there may be other forms/documents required as well. The steps most often overlooked are board meetings and minutes. If you don’t behave like a corporation, you don’t get the protection of a corporation.

Regularly Scheduled Payroll

If you are the only employee in your small business, how and when you pay yourself is really up to you; however, if you have employees, they will expect to be paid on a regularly scheduled basis. What goes along with paying employees is the handling of their appropriate deductions and withholding amounts, as well as the appropriate employer matches to Social Security and Medicare taxes. Failure to appropriately handle these funds has caused long lasting tax problems for small and large business owners.

Payroll Tax Payment and Reporting

Regardless of how often you pay yourself and/or your employees, the state and federal government demand that reports get filed, along with the appropriate tax payments on a strict schedule. Failure to file these reports and make timely payments can result in severe penalties, which unfortunately revert back to the owner of the business. Learn early on what these amounts are, and when these reports are due, and you will be thankful you did.

Small Business Accounting

Odds are that unless you are an accountant, you did not start your business to spend all of your time bookkeeping. While your primary focus is that of either developing your products and/or services, or marketing them, failure to spend the requisite amount of time taking care of the business accounting and bookkeeping can negate the potential tax savings that can come your way, simply because you own a small business.

Costs and Efficiency

It doesn’t matter if you are an Independent Contractor Physician, Attorney, IT Professional or a Salesman who has decided to break away from “Corporate America” and go it alone, every small business owner knows that you get to keep more money if you can figure out how to do more with less expense. Spend your time doing what makes you money, and let someone else focus on doing the things that don’t make you money, i.e., payroll, tax reporting etc.

Don’t let yourself get caught in the tax trap of missing filing deadlines, and not making payroll tax payments at the appropriate time. Take the steps necessary early when you are still building your business, rather than having to deal with tax liens and legal bills when your business is successful.

My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Small Business Owners and Entrepreneurs.

We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts.

We are not simply a document filing service; we are here to help you with the part of the business that you have to do, so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Email us with any questions or call us at: 1-800-517-0CFO (1-800-517-0236)

For a Limited Time, get FREE Incorporation with our Accounting/Payroll Services! Submit your e-mail for more information, or schedule a quick phone call with me here.

5 Tips for Independent Contractors: Biz Start-up, Outsource Accounting, Reducing Self Employed Taxes

As an Independent Contractor, you literally have the best of both words. Not only do you get to determine how much money you want to make, and how hard you want to work, but also you can never be laid off. The downside to this, is that there are things that you have to do that can actually take as much or more of your time to complete than you actually spend generating income, and unfortunately, failure to perform these regular tasks can result in quite the headache, resulting in tax liens and perhaps even the loss of your business. If you are interested in maximizing the time you spend creating income, and reduce the time you spend on the other business related activities, while reducing self-employment taxes, read on.

Start Your Own Business

As the owner of a business, the IRS allows you a variety of tax advantages. The best way to take advantage of these is to step outside your role as an Independent contractor, and formalize the way you conduct business. This will enable you to shield yourself from potential personal liability, and allow you to take a salary and profits, rather than self-employed income. This alone will reduce your annual tax bill, and allow you to keep more of what you work hard to earn. You can even deduct that new laptop or iPad as a business expense. What typically stops people from going the next step is they do not know how to incorporate.

Incorporate

When you start a new business, there are many ways you can go about incorporating. You can simply go to one of the hundreds of websites that offer to help you incorporate online. They will give you the minimum that you ask for, and will leave you to pick up the rest of the pieces along the way. Honestly, the process is not that difficult, but like most things, it can become complicated quickly if you do not follow the proper steps. This is your business we are talking about. Don´t trust your business to the lowest bidder. You may get exactly what you pay for.

Outsource Accounting

As an Independent Contractor, you are an entrepreneur. This means you must be versatile and play a number of roles, from chief salesperson and bookkeeper to head marketer and bill collector. Doing your own small business taxes and accounting does not make you any money. Outsourcing your accounting will cost you less than hiring someone part time, and give you the expertise of having your own in-house accountant.

Hire a Corporation Service Company

As the owner of your small business, you have many important decisions to make. One of the most important ones you can make is to hire a corporation service company. Not only will they assist you in making sure certain things don´t fall through the cracks, but they can also provide you with someone to talk over other important decisions. You are in business to make money. Make the right choices early on, and you won´t regret them later.

Fund Your Retirement

Retirement plans can be extremely confusing to Independent contractors and small business owners. What you need to know is that there are options available to you that will allow you to put away more money for retirement than you may have known, and also that by doing this, you are not only reducing self employment taxes, but also your income taxes. The key is to start your own pension plan, and work with someone who has your best interests in mind.
You have either just set your inner entrepreneur free, or you are about to do so.

While this can be a scary time for some, you have the ability and the drive to make it a success. Be thoughtful and deliberate about each and every decision you make, and about every dollar you spend. Make sure that before you commit to something, it should either make you money, or free up your time to allow you to spend time making more money. Also, don´t be someone else´s guinea pig when it comes to your future. Work with professionals who are working with you, not just for your money. Remember, as the owner of the business, you are the one in control, so take the wheel, and enjoy the ride.

My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Small Business Owners and Entrepreneurs.

We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts.

We are not simply a document filing service; we are here to help you with the part of the business that you have to do, so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Email us with any questions or call us at: 1-800-517-0CFO (1-800-517-0236)

For a Limited Time, get FREE Incorporation with our Accounting/Payroll Services! Click here to submit your e-mail for more information.

5 Tips: Accounting and Business Start Up for New Physicians; Minimizing Your Self Employed Income

A recurring theme when speaking with new Independent Contractor Physicians is minimizing the amount of taxes they have to pay. More often than not, the first thing they all do is to calculate how much they think they will make the first year, typically around $300,000, and then they do the math and figure that in the 35% tax bracket, they will pay $105,000 for income taxes, which unto itself is a large number. What they often forget is that they must also pay taxes on self-employed income, which will add another $21,943, bringing your total tax due to $126,943, and that is if you live in a state with NO income tax. There are ways to reduce this number, legally, so hire the right physician business manager, and keep more of what you earn.

Form a Physician Corporation

Establishing your physician corporation will allow you to opportunity to significantly reduce your earned income, resulting in a significant tax reduction. Simply file your PA or PC, apply for your EIN Number, file your appropriate IRS forms and establish a bank account. You can do this yourself, or you can work with a business manager. This does take some work, but it will pay for itself many times over with the reduction in annual taxes.

Physician Business Expenses

As a physician, there are regular expenses that you incur to maintain either state licensing requirements and/or Board Certification. Your Physician Corporation, along with certain other monthly expenses, can pay for these expenses. Considering that these are expenses that you would be paying anyway, the fact that you are having the Corporation pay for them with pre-tax dollars means that the expenses are 42% less than if you paid them with after tax dollars. In fact, even the expense for your Physician Business Manager is paid with pre-tax dollars.

Physician Salary

As an employee of your Physician Corporation, you are obligated to pay yourself a salary. What you are not obligated to do is pay yourself an inflated salary. Remember, what you pay yourself in salary; you must also pay self-employment taxes on as well. We recommend you pay yourself a reasonable salary, deduct for your 401(k), and withhold an appropriate amount of taxes to cover the bill that will arrive on April 15th.

Physician Pension Plan

Most physicians are unaware that they are eligible to have their corporation contribute to a Physician Pension Plan, as a direct business expense. This alone can assist in adding significant funds to your retirement account, while at the same time reducing the profits of your corporation that would be subject to both income and self-employment taxes.

Physician Corporation Dividends

As the owner of your Physician Corporation, you receive all of the profits at the end of each year, and these profits are paid to you in the form of dividends that are not subject to self-employment taxes. That saves you 12.4% on social security taxes and 2.9% Medicare taxes. Utilizing the above strategies, and assuming an annual income of $300,000, your tax bill (excluding state income tax) could very easily, (and more important, legally) be reduced from $126,943 to $81,090. You would experience an annual tax savings of $45,853, and you would add $100,000 to your retirement savings. The amount you would pay to a Physician Business Manager to put this entire plan to work would be a fraction of your annual cost savings, so do yourself a favor, and start yourself off on the right track with the right Physician Business Manager. You will thank yourself every April 15th.

My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Small Business Owners and Entrepreneurs.

We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts.

We are not simply a document filing service; we are here to help you with the part of the business that you have to do, so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Email us with any questions or call us at: 1-800-517-0CFO (1-800-517-0236)

For a Limited Time, get FREE Incorporation with our Accounting/Payroll Services! Click here to submit your e-mail for more information.

Independent Contractor Physician Corp. Case Study: Avoid Tax Lien, Invest, Judgment Proof Assets

You have graduated medical school, and have completed your internship and residency. You are now ready to reap the financial rewards of all your hard work. What no one has told you along the way is that the decisions you make right now will dictate where you are financially in the next 25 years. Make the right decisions by hiring a business manager and setting up a physician pension, and you can find yourself reducing your number of monthly shifts, and increasing your leisure activities. Make the wrong decisions, and you could find yourself living paycheck to paycheck, servicing a mounting debt load and paying off a tax lien. Not to scare you, but this is a true story of a close family member who made the wrong decisions when he finished his residency.

Avoid Tax Liens

Tax liens are something you never want to deal with, and they are the result of a physician either not properly paying quarterly estimated tax payments, or, simply spending everything as the checks come in. Underpaying your taxes will ALWAYS wind up costing you in penalties. As a physician, the IRS knows you make a significant amount of money, and they do not want to wait. Establish a Physician Corporation and start yourself out by paying the business expenses allowed, and make file your payroll tax payments and returns on time. The physician business expenses will reduce some of your income and the regular salary will keep you from overspending.

Do not attempt to put money in a savings account in hopes that it will be sufficient come tax time. It is seldom enough, and as was the case with my family member, the account became a convenient source of extra funds for his soon to be ex-wife. A business manager could have taken the financial strain off of this relationship.

Physician Investments

Payroll deductions are allowed to include funding your retirement accounts. After all, you don ́t want to work shifts forever. You as an officer of your corporation are allowed to have a pre-tax salary deferral to your 401(k) plan and an after tax contribution to your Roth 401(k) plan. What most don ́t know exists is the Physician Pension Plan. Yes, you can establish a pension for yourself that is an expense to the business, essentially reducing your taxable income, and maximizing your annual savings. Your business manager can help you establish the correct type of plan, and the appropriate funding level to meet your needs.

Judgment Proof Your Assets

Aside from taxes, most of our physician clients ask questions about strategies to protect their assets from judgment. There are countless companies who will gladly take your money and set up a captive insurance company, or create an elaborate offshore trust system to shield your assets from judgment. I have even known physicians to place all of their assets in the name of their spouse. All things considered, the least expensive and most effective method for a physician to protect their assets is to extensively fund their retirement. Physician retirement plans are not subject to civil judgment or garnishment in virtually all states. Physician retirement plans are also exempt from bankruptcy. Ask your business manger for more details. As a new physician, reading the above sections has hopefully given you a list of things to do now to prevent what could be years of paying off debts and living paycheck to paycheck. By the way, the close family member who this case study is based on just paid off his tax lien, and is now on his way to saving for his retirement. He has been an ER Physician for 8 years. Hiring a physician business manager today will save you more in annual taxes than you pay for their services. Don ́t try to go at it alone in order to save some money today. It just may cost you in the long run.

My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Small Business Owners and Entrepreneurs.

We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts.

We are not simply a document filing service; we are here to help you with the part of the business that you have to do, so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Email us with any questions or call us at: 1-800-517-0CFO (1-800-517-0236)

For a Limited Time, get FREE Incorporation with our Accounting/Payroll Services! Click here to submit your e-mail for more information.

Avoid Mistakes Small Businesses Make: Corporation, LLC Accounting and Payroll

Congratulations! You have either just recently started your small business, or you are in the final stages of convincing yourself that it is time to take the plunge. Whether you have done this to take control of your future, or you were an independent contractor who decided that there were additional tax savings to be had, the most important this is that you have done it.

Now, the key is to not make the key mistake of not properly filing the proper tax returns, and to make the necessary tax payments. After all, this is the reason you hear advertisements on the TV and radio asking if you owe more than $100,000 to either the IRS or the state. Do NOT let this happen to you. Read on to learn more about managing your small business accounting and why you may want to hire a Business Manager.

Regularly Scheduled Payroll

If you are the only employee in your small business, how and when you pay yourself is really up to you; however, if you have employees, they will expect to be paid on a regularly scheduled basis. What goes along with paying employees is the handling of their appropriate deductions and withholding amounts, as well as the appropriate employer matches to Social Security and Medicare taxes. Failure to appropriately handle these funds has caused long lasting tax problems for small and large business owners.

Payroll Tax Payment and Reporting

Regardless of how often you pay yourself and/or your employees, the state and federal government demand that reports get filed, along with the appropriate tax payments on a strict schedule. Failure to file these reports and make timely payments can result in severe penalties, which unfortunately revert back to the owner of the business. Learn early on what these amounts are, and when these reports are due, and you will be thankful you did.

Small Business Accounting

Odds are that unless you are an accountant, you did not start your business to spend all of your time bookkeeping. While your primary focus is that of either developing your products and/or services, or marketing them, failure to spend the requisite amount of time taking care of the business accounting and bookkeeping can negate the potential tax savings that can come your way, simply because you own a small business.

Small Business Software

Today, small business software is everywhere. I have even seen companies giving it away on the internet. There are a number of “off the shelf” Accounting programs on the market today, but quite frankly, many small business owners are finding them too complex to fully utilize without a significant amount of accounting knowledge to start with. If you have the accounting knowledge, or are willing to put in the necessary amount of time to acquire it, the packages are fully capable of doing everything you need them to do. The question to ask yourself is “How much time do I really want to spend on this?” and “What is this amount of time costing me in lost sales?”

Costs and Efficiency

It doesn ́t matter if you are an Independent Contractor Physician, or a Salesman who has decided to break away from “Corporate America” and go it alone, every small business owner knows that you get to keep more money if you can figure out how to do more with less expense. Maximizing your efficiency is something a Business Manager would be able to help you with. You get to spend your time doing what makes you and your business manager is solely focused on doing the things that you don ́t make you money, i.e., payroll, tax reporting and accounts payable, among other things.

Don’t let yourself get caught in the tax trap of missing filing deadlines, and not making payroll tax payments at the appropriate time. Take the steps necessary early when you are still building your business, rather than having to deal with tax liens and legal bills when your business is successful.

My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Small Business Owners and Entrepreneurs.

We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts.

We are not simply a document filing service; we are here to help you with the part of the business that you have to do, so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Email us with any questions or call us at: 1-800-517-0CFO (1-800-517-0236)

For a Limited Time, get FREE Incorporation with our Accounting/Payroll Services! Submit your e-mail for more information, or schedule a quick phone call with me here.

Why All Small Businesses Need A Business Manager: Time Management, Reduce Costs & Protect Assets

As a small business owner, regardless of the product or service you offer, your time is the most precious commodity you have. Since you only have a limited number of hours in each day, managing the amount of time you spend on various projects is critical. You want to make certain that these hours are as productive as possible, meaning they generate the greatest level of income possible. What you do not want to do is to spend hundreds of hours during the year on bookkeeping, taxes and keeping up with your corporate filings when you can have an expert take care of this for you.

If you are interested in learning how to leverage a business manager for improved small business time management, to reduce small business costs, and to protect your personal assets, read on.

Time Management

According to the Internal Revenue Service, you can anticipate spending over one hundred hours doing the recordkeeping for your company each year. In addition, you can expect to spend an additional 30 hours learning what forms you need to file, another 65 hours actually preparing the forms, and another 5 hours reviewing and actually filing your returns.

What is your time worth?

Since you are not able to increase the number of hours in each day, this is most likely not the best use of your time. A business manager is already knowledgeable about small business accounting, and will be able to do this amount of work in a fraction of the time, for a fraction of the cost. Don ́t make a costly management mistake. You are not a bookkeeper or accountant, so why should you try to become one. Let someone else do what you have to do, so you can spend your time on what you love to do.

Reduced Costs

Just like any other small business owner, you are looking to reduce costs anywhere you can. Before you start looking at hiring an internal bookkeeper and tax accountant, take a look at a business management company.

They can assist you in streamlining various portions of your business and will cost you much less than you would have ever thought. In addition, you will receive the expertise of a professional, for what it would cost you to have a part time bookkeeper. Remember, in the end, it really is about what you get to keep.

Your business manager is able to keep you informed about various filing deadlines, as well as giving you suggestions for managing and even reducing your various office expenses. Don ́t go it alone, have a partner who is looking to you as a client for the long term, not just a part time job until something better comes along.

Asset Protection

Do you remember the day you started your company? Not the day you opened for business, but the day you filed your corporation or LLC. You may have formed your corporation online, and went to the IRS website to get your EIN Number, but did you do everything you needed to do to actually BE a corporation? If you incorporate online, you use a document filing service that will fill out the forms you tell them, but they will not let you know what else you need to do.

For example, does your LLC have an operating agreement? If not, your LLC is not valid. Document filing services will not remind you that you have ongoing filing requirements. Not fulfilling these requirements means that you are can lose your status as a corporation, which can open you up to personal liability, and subject your personal assets to civil judgment along with filing penalties and interest. Your business manager or corporation service company can make sure all of your filings are complete and on time. They can also make suggestions that can reduce your tax liability.

You cannot be in control of a business if you don’t know what is going on. With bad numbers, or no numbers, a company is flying blind, and it happens all of the time. Why? For one thing, it is a common — and disastrous misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. In reality, that is the job of the chief financial officer, one of the many hats an entrepreneur has to wear until a real one is hired. In the mean time there are professionals who specialize in working with businesses just like yours. They know what the requirements are, and can help you satisfy them all, while not costing you an arm and a leg. Small businesses are the engine that makes this country great, so spend your time and money wisely. Ask a professional for assistance with the aspects of your business that do not make you money, so you can focus on what does.


My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Small Business Owners and Entrepreneurs. We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant.

We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts. We are not simply a document filing service we are here to help you with the part of the business that you have to do so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Contact Us Today!

How to Reduce Self Employment Taxes & Increase Retirement Savings as an Independent Contractor Physician

As an independent contractor physician, you have spent countless hours in the classroom and clinical training, and have finally reached the point at which you are finally reaping the financial rewards for all of your hard work, only to find out that you have to give more than half of everything you make to the government via income and self employment taxes. Read on to learn how to reduce your tax bill, and pay yourself first.

Physician Corporation – Make sure you Incorporate properly, and file the correct forms in a timely manner. Mostdocument filing services will file and charge you for the forms you request. What you really want is someone who willtell you the correct forms for your circumstances, assist you in completing them, and file them in a timely, cost effective manner. This is definitely a case of getting what you pay for, but you also do not get what you do not pay for.Unfortunately, not filing a correct form in a timely manner could cost you tens of thousands of dollars annually.

• Physician Self Employment Taxes – Set up your payroll and pay business expenses on a regular schedule. By having your business expenses and monthly payroll done on a regular schedule, you will reduce the chance that something gets overlooked, which could result in late charges and unnecessary penalties. In addition, paying yourself a fixed monthly salary will put you in the habit of saving more, and make the actual running of your business more streamlined.

• Physician Retirement Accounts – Use all possible retirement plan vehicles to their maximum benefit. While the most common retirement accounts include IRA’s and Roth IRA’s, as a corporation, the options are expanded significantly, allowing you to not only save a significant amount toward your retirement, you can also shelter these funds from taxes and judgments as well.

• Physician Investment Advisor – Hire a professional to manage your assets based upon your personal goals and objectives. You are a professional, which has taken many years of education and training. Hire a professional to manage your assets, as this will decrease the likelihood of the pitfalls met by many a part time investor, but when hiring a professional, hire someone who gets paid over time, not paid by what you invest in. Only use a Registered Investment Advisor, and never pay a sales commission.

• Physician Corporation Compliance – Keep your corporation filings current to maintain these and many other advantages that are open to you. In order to have the advantages of being a corporate entity, you must behave like a corporate entity, which includes the filing of monthly reports and holding board meetings. Failure to complete these will open you up to personal judgment and potentially hefty IRS penalties. You have worked hard to get where you are. Take the necessary steps to protect yourself from paying tens of thousands of dollars in additional taxes. While technically, you can do it all yourself, it is highly recommended that you hire a professional and do it right the first time.


For a limited time, receive FREE Incorporation when you use our Accounting and Payroll services!


My Professional CFO, LLC, is a professional services firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians and Entrepreneurs. We specialize in Corporation filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts.

We are not simply a document filing service, we are here to help you the with the part of the business that you have to do, so you can focus on what you love to do.

Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients.

Email us with any questions, or call us at: 1 (800) 517-0CFO, 1 (800) 517-0236

The Most Efficient Approach For Businesses To Build Liquid Reserves

One of the greatest challenges that small and mid-market businesses face is building up sufficient liquid reserves. It has often been said that, “Cash Is King,” and liquid assets are key to the long term health and survival of an enterprise. Being in a strong cash position is particularly important if an unforeseen calamity strikes. Also, liquidity enables businesses to quickly adapt or pivot to address changes in the marketplace.

I recently talked with an insurance agent in the Mid-West who explained why many farmers were land and equipment rich but cash poor. During good years, many farms are quite profitable, creating strong cash flow. However, to avoid high taxes many farmers purchase brand new equipment, even if their current equipment is fairly new and in good working order.

Our experience in business has revealed two time-proven destroyers of liquid reserves:

Destroyer #1 – Uninsured Losses

Destroyer #2 – Taxes and/or Tax Incentives

As an example, consider taxes on “excess” retained earnings, known as the Accumulated Earnings Tax. This tax is deliberately designed to discourage business wealth and liquidity.The Accumulated Earnings Tax (AET) is a penalty tax, imposed on C corporations perceived as trying to avoid or defer shareholder income tax through an “unnecessary” accumulation of earnings. The AET threat is intended to encourage corporations to make timely payments of dividends, thus triggering the double taxation of C corporation earnings. Once an IRS agent asserts that there is an excess accumulation of earnings, the burden of proof shifts to the taxpayer to substantiate that the accumulations were for anticipated needs and were reasonable in nature.

Can Liquidity Destroyers 1 & 2 Be Meaningfully Addressed?

The great news for business owners is that Destroyers 1 and 2 outlined above can be addressed by one game-changing, risk management and financial strategy – Enterprise Risk Management (ERM) with a Captive Insurance Company (CIC). The chart below that visually depicts the powerful benefits of implementing an ERM approach with one or more CICs. Indeed, we know of no other risk management and financial vehicle that affords its owners the array and magnitude of benefits that captive insurance companies do. By choosing to own their own insurance company, a business owner or CFO is able to simultaneously have more insurance protection and more money.

The chart below compares the status quo on the left with ERM implementation and captive ownership on the right. This illustration covers a 10 year period and assumes a 4% rate of investment return for both scenarios. Both businesses have third party insurance coverage in place to insure core risks.

The business on the right which implemented ERM with a captive insurance company has more insurance coverage and more money. In fact, over a ten year period, the business on the right has almost 80% more wealth (or liquid reserves) than the business on the left.

Screen Shot 2015-10-28 at 10.42.19 AM

Understanding Liquidity Destroyer 1

Today, small and mid-size business owners face far greater challenges than their predecessors faced. In fact, they are far more likely to face existential threats that can drain their limited cash reserves or completely wipe out their operations. For instance, cyber risk is a growing and wildly unpredictable threat. Terrorism and impact from international conflicts are very real threats to businesses and their operations (Even if a business isn’t directly targeted, how long can cash reserves last without power…without infrastructure…without key suppliers…without key customers?).

Spending a little time on Ready.Gov, the U.S. Department of Homeland Security’s business preparedness web-site, puts the threats listed above into perspective. The threats are real and their impact can be catastrophic.

Ready.Gov notes that “40% of businesses affected by a natural or human-caused disaster never reopen.”

The government site recognizes that low-frequency and high-impact risks are the ones that pose the greatest threats to small and mid-size businesses, largely because they can wipe out liquidity. Addressing small business disaster preparedness, Ready.Gov notes that:

* “Businesses can do much to prepare for the impact of the many hazards they face…including natural hazards like floods, hurricanes, tornadoes, earthquakes, and widespread serious illness such as the H1N1 flu virus pandemic.
* Human-caused hazards include accidents, acts of violence by people and acts of terrorism.
* Examples of technology-related hazards are the failure or malfunction of systems, equipment or software.”

Screen Shot 2015-10-28 at 10.42.25 AM
Illustration From Ready.Gov On Threats Facing Small Businesses

Consider “Human-caused hazards [like] terrorism.” Ready.Gov makes it clear that any business, large or small, in the U.S. could be impacted by terrorism. Businesses should have business interruption insurance for lost revenue caused by terrorism including chemical, biological or nuclear attack.

Businesses should also be insured for business interruption caused by failure of the power grid (due to natural disaster, terror attack or a solar storm). Also, businesses should have robust business interruption insurance to cover lost revenue in the event of a pandemic disease in the U.S. It is not inconceivable that the government would confine all non-essential workers to their homes for 30, 60 or 90 days to stem a national emergency.

In addition to the existential threats covered above which can quickly empty business coffers, small and mid-size business owners face risks posed by their own governments – local, state and federal. Government regulators wield more power than in bygone days. Overzealous government regulators often “shoot first and ask questions later.” They often have the power to shut down a business until a dispute can be resolved by the courts.

Finally, litigation is an ever-increasing threat to business owners and liquidity, and the dangers come from inside and outside of their businesses. Business owners and their staffs must navigate a complex maze of employment laws, healthcare laws, worker’s compensation laws, environmental laws, tax laws and many other laws that can result in costly lawsuits. Also, many commercial insurance liability policies will cover damages, but do not cover punitive damages awarded in a lawsuit. In many cases, punitive damages awarded to plaintiffs are 3 to 10 times higher than compensatory damages.

ERM with a CIC can address the liquidity threats outlined above by supplementing commercial insurance coverage with insurance coverage provided by the CIC.

Addressing Destroyer 1 – Enterprise Risk Management – Blending Third Party Insurance With Formal Self-Insurance

For many, a far more powerful approach to risk management is Enterprise Risk Management that results in a layered or blended approach. By combining third party insurance with a captive insurance company, a business owner can establish a far more comprehensive and thorough risk management approach. ERM is also a better forward looking approach, because the captive insurance company will accumulate additional reserves in years with low claims. These ERM reserves can provide more robust insurance coverage in the future and, when necessary, can be accessed by the owner (or CFO) as a war chest to address contingencies or unanticipated risks.

What Is A Captive Insurance Company?

Simply put, a captive insurance company is a closely-held insurance company that insures primarily thought not exclusively your business. It is a C corporation and is licensed and domiciled like any large insurance company. Captives also have their own reserves, policies, policyholders, and claims. Insurance policies are issued by the captive to its parent or related companies and are actuarially priced. Owning a captive insurance company is a sophisticated way to self-insure, and captives are generally formed to insure the risks of a business, group of businesses and related or affiliated third parties. A captive (or captives) form the chassis of a small / mid-size business ERM strategy.

Why Is ERM With A CIC A Powerful Approach To Address Destroyer 1

A CIC is one of the most powerful risk management and wealth accumulation tools that a business can access. When properly employed, there is nothing else that can do what a captive insurance company does. By operating their own insurance company as part of ERM, business owners and CFOs can:

Fill Third Party Gaps
A captive insurance company can issue insurance policies that address gaps not covered by third party insurers. Captives can also insure third party insurance deductibles, enabling the parent company to raise its deductible and lower its third party insurance costs. Also, a business can enjoy more broad business interruption coverage with ERM and a CIC when an adverse event occurs, particularly events where third party insurance doesn’t cover all damages or peripheral damages.

Utilize Customizable Coverage
Captive insurance companies can write customizable coverage for the businesses they insure. Many businesses face unique risks that may not be addressed by commercial insurers. Unique coverages can also be very expensive when covered by commercial insurers. This feature enables business owners and CFOs to say, “this has gone wrong in the past, let’s insure against it in the future,” or “other companies have experienced this adverse event, we can insure this via our captive.” The flexibility afforded by a ERM with a captive is extremely beneficial in a complex world.

Benefit From Few Or No Policy Exclusions
Captives can provide broad coverage without the exclusions that riddle typical commercial insurance policies. Insurance coverage is worthless if an exclusion prevents the insured from receiving a claims payment when it needs it most.

Avoid Sunk Cost Of Third Party Insurance
Premiums paid to a captive insurance company remain the property of the captive owners (usually the business or business owners). One of the reasons that most businesses are underinsured is that purchasing insurance is a bit like purchasing a lottery ticket. If you don’t win (or in the case of insurance, experience an adverse event resulting in a claim), your money is gone with nothing to show for it. With a captive, this simply isn’t the case. Profits in the captive, defined as premiums collected less claims paid, belong to the captive owners.

Addressing Liquidity Destroyer 2 – Taxes

Over time, businesses, owners and CFOs can build up a substantial war chest with ERM and a captive insurance company. This war chest is available to pay insurance claims the business may have. And, it can also be accessed should the owner or the business require liquid funds. Assets accumulated in a captive almost always outpace retained earnings or a business’ “rainy day fund.” Because the captive is a formal form of self-insurance, it benefits from insurance law and favorable tax treatment. Hence, it is able to accelerate asset accumulation for two main reasons.

First, premiums paid to the captive receive favorable tax treatment. Premiums paid to the captive are an expense to the parent company. This lowers the parent company’s taxable income. As, the captive takes in premiums, it is taxed as an insurance company on its underwriting profits (typically defined as premiums less reserves to pay future claims). For large insurance companies, underwriting profit is actuarially determined. However, small insurance companies can make an 831 (b) tax election, resulting in a tax rate of 0% (that’s zero percent) on their underwriting profit. A small insurance company is defined as receiving premiums of $1.2 million or less per year.

Second, the captive is able to invest and grow larger pool of assets. Large commercial insurers have entire staffs whose sole purpose is to invest reserves (that have not been taxed).
For these reasons, ERM with a well-run captive insurance company will typically double liquid capital. And, the same claims that would be paid by the captive would have to be covered out of retained earnings anyway if the captive weren’t in place.

The Long Term Benefit Of Defeating Destroyers 1 & 2

When business owners are ready to sell their business or retire, they keep the war chest. A successful captive amasses wealth for its owners that can be accessed and enjoyed in the future. This unique ability to improve risk management and simultaneously stockpile wealth makes ERM with a CIC The Most Efficient Approach For Businesses To Build Liquid Reserves.


My Professional CFO, LLC, is a Business Management firm providing the highest level of service in three key areas of importance to Independent Contractor Physicians, Attorneys and Information Technology Professionals. We specialize in Corporation and LLC filings and ongoing Compliance, Accounting and Payroll, and Investment Management. Our professionals will assist you in forming the appropriate type of company for your situation and work with you to make sure your company remains compliant. We provide ongoing Accounting and Payroll services to make certain all bills are paid and necessary tax forms and withholding payments are made in a timely manner, as well as the set up and management of your retirement accounts. We are not simply a document filing service, we are here to help you with the part of the business that you have to do, so you can focus on what you love to do. For more information visit our website www.myprofessionalcfo.com Alan Conner, MBA – President of My Professional CFO, LLC has nearly 2 decades of experience working with professionals and small business during both the start-up and ongoing management. He has written countless business plans and has managed assets for both institutions and high net worth clients. Email us with any questions. Call us at: 1 (800) 517-0CFO 1 or (800) 517-0236 Captive services powered by: image