Category Archives:Physicians

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.

6 Ways Independent Contractors, Physicians and Employees Lower Taxes, Protect Assets, & Fund Retirement

As an Independent Contractor Physician, when you are at work, you are complete control. In order to have that complete control on the rest of your life, you need to first look at the way you are earning your money, how it is being paid to you, and what you are doing with that money. There are several ways to change the amount of money you keep, which can result in you actually working less to earn the same amount of money, and it doesn’t matter how long or short the period of time you have been practicing. If you would like to learn how you, as a Physician can lower taxes and protect assets, keep reading.

Nice Assets

With some young doctors, purchasing expensive homes, cars, boats, and other toys seems to takeprecedence over saving for a rainy day. For a young physician starting out in a specialty with an early burnout rate, this is especially dangerous. What if you could have an extra 15% of your income? Not only would it make paying for these assets easier, it could be the easiest way to fund your retirement. and it doesn’t matter if you are the owner/partner in a practice, or if you are an employee.

Become Your Own Employer

Whether your are the owner/partner of a practice, an Independent Contractor Physician or employee, lower taxes comes from changing your compensation structure. This is the first step in taking control of your taxes. Becoming your own employer can be as easy a forming a physician corporation or an LLC. This allows you to pay some expenses direct from the business, and collect dividends on the profits.

Pay Yourself First

As the owner of your Physician Corporation, you get to determine how you compensate yourself. By paying yourself first, we are referring to the funds that will go into your retirement accounts. These funds are not taxed until you actually withdraw the money to spend it, so by putting as much as possible in to tax advantaged retirement accounts, you are effectively reducing the amount of income taxes you will pay annually, in addition to reducing your payroll tax expenses as well.

Social Insecurity

Everyone has to pay Social Security and Medicare taxes. What everyone does not have to do is overpay them. By reducing your Physician Salary to one that that is reasonable, you can reduce the Medicare taxes you pay, and eliminate the additional matching portion that your Physician Corporation would pay as well. For years citizens have been asking for the ability to invest their own social security funds, because few think it will be there when it comes time to collect. We can show you how to make it happen today.

Physician Pension

We have now arrived at the most important piece of information. The Physician Pension is not only the vehicle that will single handedly reduce your income taxes by nearly $50,000 per year, but it is the vehicle that will dictate how many years you work, how many hours you work each week, and even give you the flexibility to retire after just 15 or 20 years of work, rather than the typical 30 years. Your Physician Pension allows you to pay, as a business expense, a contribution that, given the right investment strategy, can allow you to take a salary of up to $195,000 each year in retirement. As an added incentive to take advantage of a Pension Plan, retirement plans are exempt from civil judgment in most states. This means that not only would you be adding to your net worth, but your Physician Pension protects assets. This is much more cost effective than most any other asset protection strategy.

Hire an Expert

You have gone to school for several years, completed Internships, Residency, and perhaps even a number of fellowships to attain the level of expertise you possess. When it comes to establishing your Physician Corporation and setting up your Physician Pension, make certain that you are working a Physician Business Manager who has the expertise you require. What you want is someone thorough and detailed, not a document filing service and a broker who is looking to sell you something, rather than actually managing your assets for your well being. Keep in mind that the ideas discussed above are just a sample of the various tax savings that are available to Physicians. You work hard for your money, and should look for every viable avenue to minimize your tax burden, but make sure you work with a professional. We take care of the areas of business you hate to do, so you can do what you love to do.

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 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 Things Every New Physician Should Do to Lower Taxes and Protect Assets

When speaking with physicians, whether it is one on one, or in a group setting, two topics of conversation are a virtual constant, taxes and asset protection. Notwithstanding the litigious environment we live in, I can clearly see why physicians want to do whatever possible to protect their assets. Reducing taxes is something everyone wants to do.

Even if someone pays very little in taxes, they still want to pay less, so it only make sense that physicians want to keep more of what they make, especially after paying insurance and education costs. So if you would like protect your assets and pay less in taxes, read on.

Form a Physician Corporation

Establishing a Physician Corporation will allow you to pay various expenses from the corporation. Since these expenses are paid before you take your salary, they are deductible from your overall income, and are not taxed at all. Owning a Physician Corporation will also enable you to take advantage of other options which are only available to corporations. Pay Yourself a Salary – Of course you want to make as much money as possible, but in the end, it is really about how much you get to keep. By paying yourself the lowest possible salary, your overall tax burden will be lower, because you will not have to pay FICA taxes on the dividends you take from your Physician Corporation.

Contribute to Retirement Accounts

Your retirement accounts aid you in both reducing your taxes and protecting your assets. From a tax perspective, retirement plan contributions are not subject to income or FICA taxes, so the more you can contribute, the lower your tax bill. As it pertains to protecting your assets, in most states, retirement accounts are not subject to levy as payment in the event of a civil judgment. Therefore, the more you contribute to these plans, the more assets you have protected. Create a Physician

Pension

As the owner of your Physician Corporation, you are able to establish a Physician Pension for yourself. This does two things. First, it allows you to fund a retirement vehicle for yourself as an expense to the business. These funds are not taxed, and do not require you to take a significant salary in order to make the contributions. Second, as a retirement account, these funds are also protected from civil judgment in most states.

Hire a Physician Business Manager

At first glance, you may be saying to yourself that this is an unnecessary expense. With some additional time, you will come to realize that it takes some expertise and experience, and hiring a professional is well worth it. Protecting your assets and reducing your taxes is a full time job that takes expertise and experience. It also requires a disciplined approach that experience tells us is best implemented by someone other than yourself. After all, our experience has told us that more often than not, assets need to be protected from one ́s own spending habits, and perhaps those of a spouse or possible ex-spouse. Your Physician Business Manager will give you the facts; they will not tell you simply what you want to hear. While you may not always like the answer, you will appreciate the candor, and will always know that your best interests are always the first priority.

Trying to manage a significant income and sizeable assets on your own can be a daunting task and if not done properly can wind up unnecessarily costing you tens of thousands of dollars. After all, earning a significant income comes with a great deal of personal responsibility. If you feel like it may take more time and effort than you personally want to invest, don ́t be afraid to outsource it to a professional who will always look out for your best interests. You are a professional, and people look to you as an expert. You should not be hesitant in doing the same.

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.

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.

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 Form a Physician Corporation: A Step by Step Guide

As a physician, you have either just signed with a contract group, or you have decided to do some shifts as a Locum Tenens. There is a chance that your contract group will require you to be an employee, but that is not often the case. Now you need to form a corporation. We are often asked why. The simple answer is that it draws a clear line between you the individual and you the professional. Another response is that as a corporation, you are afforded additional tax benefits that are not available to you via Schedule “C”. Your SEP IRA contribution for one. As a physician, your options are limited to either a PC (Professional Corporation), PA (Professional Association) or PLLC (Professional Limited Liability Company). There are subtle differences in each type of entity, but there are some specifics that you will need to keep in mind. First and foremost, your state will most likely dictate what type of entity you can form, also, some states do not allow PLLC’s. Don’t just blindly form an entity without knowing the correct type of entity for you. Also, as a physician, forming a corporation will not insulate you from civil liability. For advice related to asset protection, call us. From this point forward, we will discuss the formation of a PC/PA.

The creation of your entity:

The formation process begins with a stop at the Secretary of State office, or the division of corporations. This is where you will find the forms for your specific state, along with the filing requirements and related fees. Filing requirements for professionals differ from state to state. For example, NY requires Physicians to verify their license status with the Education department before and after filing Articles of Incorporation. This is a two-step process, and involves paying two separate fees. Find out if your state has this requirement or a similar process before you file any documents. Some online Incorporation sites do not take this step. Not only will you not get your incorporation filed, you may not get your money back. Just as a precaution, before you fill out any documents, make sure there isn’t another physician in your state with your name. This can most often be avoided by using a middle initial or middle name, but you will want to be certain. Once you have confirmed this, reserve your own name. Send two copies of these documents to the state, and request a stamped copy be returned to you in a self-addressed stamped envelope.

Tax Status and Employer ID Number (EIN):

Once you have completed the Incorporation process, you will need to become legal in the eyes of the IRS. First, you will need to request a Tax ID# or Employer Identification Number. This is essentially the social security number for your business. This can be obtained online, or via fax. Simply fill out the form and submit. Now you need to address the tax status of your entity. All new corporations are seen as “C” corporations until you request to be taxed as an “S” or “Subchapter S” corporation. The difference is simple and straightforward. Do you wish to be taxed on your income twice, or only once? Most of our clients are “S” corporations. The “S” election form can be found on the IRS website, and must be filed with the IRS as soon as possible. You will receive a letter of acceptance once the IRS has approved your status. This must be completed prior to filing your first tax return. Our suggestion is to file this the same day you receive your EIN number. Send this certified mail to make sure you have proof.

Acting Like a Corporation:

Now that you are a corporation, you will have to begin acting like one. What this means is that when you do something business related, you will need to document it. First you will need to establish Bylaws. This will be the blueprint for the way you run your corporation. Sample Bylaws can usually be found on the website for the state where you incorporated. It will define what title you will have, how many times a year your board will meet, and any means to alter the nature of your entity. You will also need to have regular meetings of your Board of Directors, yes, even if you are the only one. When you hold these meetings, you will also need to keep details of what you decided to do. Whether that is opening a bank account, or entering into a contract for employment. In these minutes, you will also document how you will be compensated by your entity, and any employee benefits you will receive. You will now have to keep all of these in one place. That is why you have a Corporate Book. A corporate book can be purchased online from a variety of vendors. Within this book, you will keep the certified copy of your Articles of Incorporation, the acceptance letter of your Subchapter “S” filing, the notification letter for your EIN number, a copy of your bylaws, and each and every set of minutes from all of your Board meetings. This is the first thing that will be requested if your corporation is ever sued.

Reducing Your Taxes:

This is the primary reason you are putting yourself through this. The first reason is that as a Corporation, rather than a Sole Proprietor, you are able to make a SEP IRA contribution up to 25% of your salary versus only 20%. If you pay yourself enough to make the maximum contribution, that would be a salary of $212,000 in order to make a SEP contribution of $53,000. As a Sole Proprietor, you would only be able to contribute $42,400 at the same salary. Not contributing the additional $10,600 just cost you an additional $3,710 if you are in the 35% tax bracket. If your state has an income tax as well, you saved even more. Also, as a corporation, you can establish a Defined Benefit Plan for yourself. This can allow you to put away $100k or more annually, thus accelerating the tax savings.

Tax returns and Annual Reports:

This is where your corporation will save you money, and make all of this worth it. Your corporation will have to file a tax return each year (Form 1120S), and you will receive a form K-1, which is the shareholder profit and loss, (think of it as your 1099 as an owner of your entity.) Regardless of whether or not your state has an income tax, you will still need to file tax returns for your corporation. No taxes will be due, as those will be paid on your personal return, but pay special attention to whether or not your state levy’s a “filing fee”.

The state will also require an annual report from you, although some are every other year, but you pay twice as much. This is simply informing the state that you are still in business along with your current address.

Summary:

You can do this. Just like most things that look complicated, it is more about following the process step by step. There are no shortcuts. If you decide you need some assistance, or simply feel that you would rather work with someone who does this all the time, we would be honored to add you to our list of satisfied clients.

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 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!

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

Independent Contractor Physicians: 5 Taxes You Can Stop Paying Today!

A recurring theme when speaking with new Independent Contractor Physicians is Taxes, and how to pay less of them.  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, also known as FICA/Medicare.  If you live in a state with an income tax, this amount gets even higher. There are ways to reduce this number, legally. Keep reading to see how.