Category Archives:Corporate Compliance

The Importance of Incorporation for Independent Contractors, Physicians, & Doctors

As an independent contractor physician, the most painful consequence of failing to properly establish yourself as a corporation is the annual overpayment of income and self employment taxes. Making the decision to incorporate not only reduces your annual tax burden, but significantly increases the amount of retirement savings you can set aside each and every year.

As a 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. Most document filing services will file and charge you for the forms you request. What you really want is someone who will tell 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.

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 Physician Recruiting Mistakes: Best Answers to Independent Contractor vs. Employee Questions

There are literally hundreds of physician practice groups nationwide, looking to sign up Emergency Physicians, Radiologists and Anesthesiologists who have either recently completed Residency, or those who have been practicing for years. What many of you may not be aware of is that you should really weigh the offers you receive based on being an employee, or whether or not you should contract as an Independent Contractor Physician. Failure to do this could wind up costing you thousands in additional taxes, and also a reduction in the amount of retirement money you can put away. While being an Independent Contractor may not sound like the best option, read on to see why you should give it strong consideration.

Business Expenses

As a physician, you have expenses related to the way you practice. These expenses could include your telephone, auto related travel, and perhaps even some overnight travel depending on where you practice. These are in addition to your regular continuing education costs. As an Independent Contractor, you would be able to pay these expenses pre-tax, rather than after tax. Based on the typical physician ́s salary, that would save you in excess of 35% for all of these expenses. The tax savings will really add up over time.

Health Insurance Options

As a health care provider, you understand health insurance costs better than most, so why should you only have the choice of the carrier offered by the physician practice group? The other side of that question is that if you want to purchase coverage from another provider, you have to pay for it with after tax income. Why not purchase the type of coverage you want, and pay for it with pre-tax dollars, rather than take someone else ́s choice?

Physician Retirement Plans

As an employee, the IRS limits the amount you are allowed to contribute to a 401(k) plan to $49,000, and in most cases, if the practice group has an option at all, it typically contains mutual funds you don ́t want to own. As an Independent Contractor, you can establish a physician pension for yourself, and contribute over $100,000 per year, and you also get to decide where to invest those funds. Increased

Hourly Rate

As an Independent Contractor, the practice group will not be responsible for matching your Social Security and Medicare taxes every pay period, resulting in a greater hourly rate for you, which can then be used to fund “business” expenses and your Physician Retirement Plans.

Simplified Income Verification

While income verification may not sound like something important, try applying for a home mortgage when you are being paid by multiple physician practice groups or hospitals. Other than your tax return, there is no way to verify your income, and technically, you would have no real employment history. This happened to a client who has been a Radiologist for 20 years, and works for 5 different hospitals. We were able to consolidate his income via a Physician Corporation, and set him up on a payroll system. He will never have to worry about employment verification again.

Taking the easy way out and becoming an employee may sound like the best route to take when joining a physician practice group, going the extra mile and weighing all of your options may not only create tax savings, but it may result in you making and keeping more in the long run. After all, it is not about how much money you make- it is about how much you actually get to keep. We can help you keep more. Call Us.

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.

Why Your LLC, Corp, PA, PC May Not Be Valid

You probably formed your company, whether it is a LLC / Corp / PA or PC, for a variety of reasons. Some of these reasons may include protecting your personal assets, defining ownership if you have partners, or simply so you had a separate set of accounting records in the event you have employees or various retirement plans. How would you feel if someone were to tell you that this did not do the job you wanted, only because your entity was either not set up correctly in the first place, or that you have failed to properly maintain your entity? As an LLC / Corp / PA or PC, you have ongoing obligations that must be met in order to maintain your “corporate veil” of protection. Failure to do so will allow an attorney to “pierce the corporate veil” which can open you up to personal liability, and make your personal assets fair game to civil judgment. Read on to protect yourself from making this mistake.

Bylaws

The bylaws contain the most fundamental principles and rules regarding the nature of the corporation, and are generally the governing document. In simplistic terms, corporate bylaws define the Name, Objective, Members, Officers, Meetings, Executive board, Committees, and ability to make Amendments. Your corporation does not formally exist until bylaws have been adopted, unless otherwise provided by law.

Operating Agreements

LLC ́s are very flexible in nature and the operating agreement defines each member or manager’s rights, powers and entitlements. This includes capital accounts, membership interest, distributions of profit and allocated tax responsibility, just to name a few. This is an agreement agree to by the company members that contains provisions for critical items and rules that run the company. Operating agreements can be amended at anytime by the company members or managers; however, one is necessary to prove that any given member is indeed separate from the entity itself. Similar to corporate bylaws, the LLC does not formally exist until an operating agreement has been adopted by the members.

Fictitious Name Filing

This filing states that an entity other than a person will be doing business in a given county. While this may seem mundane, this is a requirement, and must be filed in a specific newspaper in the county in which you will be doing business. In addition, a similar filing must be made when you choose to close your business. Failure to file for a fictitious name can result in local fines and restrictions from obtaining necessary permits and licenses.

Board Meetings

If you want the protection provided by being a corporation, you actually have to act like a corporation. This means that you must vote on a board of directors, and actually document that you had meetings, what was discussed, and what you decided to act on. This is one of the first items an attorney will ask for when trying to piece the “corporate veil”. Make certain you do this on a regular basis, or get some assistance to make sure your board meeting minutes are produced, and kept in your corporate compliance book.

Annual Reports

Your corporate annual report is due the beginning of each year, and the due date varies from state to state. This form requires you to provide information on corporate officers and your registered agent. Failure to complete this form, and pay your annual renewal fee on a timely basis will result in your company being “administratively dissolved”. If you have any corporate debts, and you are administratively dissolved, you just became personally liable for those obligations, as your company no longer exists.

You spent a lot of time and effort to get your business started and making money. We all understand that you can get caught up in the day to day operations of your business, and lose track of some of the things that are required, but, do not generate sales for your business. So before you let too much time pass, and your company no longer exists, give us a call. We will work with you to bring your filings up to date, and make certain they are current on a going forward basis.

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

Plug and Play for Doctors: Forming a Corporation, PA, PC, Or LLC

Now that you have completed your Internship and Residency, you are now an independent contractor physician, and about to make more money than you have ever made before. The next question in your mind is; “How do I keep what I make, and not pay out everything I make in taxes?”

To avoid the painful consequence and get all of the benefits, here are 5 things that must be done when forming your Corporation.

• Why Incorporate – Incorporating shields you from some liability by providing you with a corporate veil. It also provides you with the ability to pay certain expenses on a pre-tax basis, while also allowing you the opportunity to fund a variety of retirement plan vehicles, thus reducing your taxable income

• Form a Corporation – Forming your corporation is done in your state, and requires the filing of Articles of Incorporation with the Secretary of State. This can be done yourself, or you can hire a physician business manager to work with you.

• Apply for an EIN Number – Your EIN Number is the social security number for your business and is obtained from the Internal Revenue Service. It is necessary for establishing any bank accounts and retirement accounts, and will also be needed for your payroll taxes and annual corporate tax return.

• Become a Subchapter “S” Corporation –The amount of money you pay in income and payroll taxes is dependent on how you declare your income. By filing your “S” election form with the IRS, you are saying that your corporation will not pay income taxes, but that the profits of your corporation will be reflected as income on your personal tax return. Failure to file this form in a timely manner means that your corporation will pay taxes on its income, and you will then pay personal income taxes on this same income. The dreaded “double taxation”.

• Properly maintain your corporate records – Most people go take the steps listed in the last 3 items, and stop there. After your corporation has been filed, you then must hold an Initial Meeting of the Board of Directors, and perhaps file a fictitious name announcement if it applies in your situation.

After you have done all of this to make your corporation effective, please do not forget to do the following on a regular basis: File your Annual report, file quarterly payroll tax returns, hold regular board of director meetings and file your annual corporate tax return.

Selecting the right type of structure for your business is only the first step. Making sure you take the necessary steps to follow through and get everything done correctly the first time is paramount. So take your time, don ́t make any hasty decisions, and by all means, if you are going to hire someone to assist you along the way, use these 5 steps to help you find the partner that you can trust to be there to assist you after you pay the filing fees.


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 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!

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

5 Mistakes Most New Physicians Make Regarding Finances

Now that your Internship and Residency are coming to a close, you are now looking forward to being out on your own, doing what you love to do. You are about to reap the rewards, both emotional and financial for the years of hard work you have put in. Right now, before you make any type of financial decisions, realize that the decisions you make right now can have a dramatic impact on a physician’s financial situation for many years to come. If you do not take the proper steps, and file the appropriate paperwork at the scheduled times, you can find yourself paying significantly more in income taxes and also subject to IRS fines and penalties, and heaven forbid tax liens. Take the proper steps now, and start by hiring a physician business manager.

Forming a Corporation

While you can form a corporation online, and obtain you EIN number, most document filing services fall short of completing everything that must be done. You still must have a board meeting, issue shares, and determine your tax treatment. If you are going to form a physician corporation, do it correctly, and do it completely. If you are not sure about what to file, don´t be afraid to use a professional. You will be thankful when it comes to filing your first tax return.

Annual Corporation Filings

The day you form your corporation is only the beginning. You have annual filings that must be made, and you also have a requirement to act like a corporation. Acting like a corporation means you have documented board meetings, and these meetings are held on a regularly scheduled basis. If for some reason you are ever involved in litigation, these are the documents that are requested first, and are regularly used to “pierce the corporate veil.”

Accounting

You cannot be in control of your business if you don’t know what is going on. With bad numbers, or no numbers, you are 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, so if you don´t want to go back to school to get another degree in Finance or Accounting, don´t be shy in outsourcing these duties.

Tax Planning

You must remember that you are not only a physician, but you are also an employee of your Physician Corporation. This is important in that you are able to utilize your Physician Corporation to pay certain business related expenses, and fund your retirement accounts, prior to actually taking your salary. The net effect of this is a significant reduction in your annual tax bill. You are however, required to pay quarterly withholding taxes, in addition to matching Social Security and Medicare taxes. You may think that you can simply set money aside to cover this at the end of the year, but past experience has shown, this is not something you want to do.

Retirement Funding

As a physician, your retirement planning is more than just saving for the future. It is also the primary means for reducing your tax burden, in addition to a method of sheltering your personal assets from civil judgment. Be certain to take this seriously. You do NOT want to work with someone who is simply selling you products, and has no firsthand experience working with physician pensions. You have many more options than the average broker knows about, so be sure and work with a professional who has done this before, and really specializes in situations such as yours.

Now that we have gone through the various areas to pay close attention to, don´t let them keep you up at night. Each of the items covered above has a very specific procedure to make certain they are done completely and correctly. The main point is that while there are dreadful consequences for failing to take the proper steps, the rewards for actually taking those steps can be extremely rewarding financially. The moral of this is that while you don´t want to overpay for document filing, you do want to work with someone professional – someone who has experience. You also want to seek out someone you can trust to know that they are looking out for your best interests over the long term.

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.