January 24, 2018
Planning taxes for physicians and medical practices can often be a little more complex than for other professions, and there are some areas which will require special attention:
There is ample evidence to show that at least one in four practicing physicians will find themselves being sued in any given year, and research has shown that the majority have been sued at least once during their career. Suing physicians is sadly seen as being highly profitable by patients, and while some may have just cause to take legal action against their physicians, others simply assume that physicians are highly paid and therefore have bottomless pockets and endless supplies of ready money.
Asset protection is often referred to as ‘litigation liability limitation planning’, and as with all types of asset protection, physicians will need to ensure that their family home, savings, investments and future inheritances – to name but a few – are protected. Unlike regular business owners though, physicians need to plan to protect their accounts receivables for their medical practice.
An effective and comprehensive asset protection plan for physicians, should involve making them and their practice unappealing to litigation, and this is achieved by their being no assets at risk that would satisfy a litigation pay out.
It’s vital that physicians have an active asset protection plan in place well in advance of any potential litigation claims.
Combining S-corporations, C-corporations, LLC’s and other entities, is perhaps the most effective structure for ensuring the full utilization of tax planning and minimization, payroll tax planning, compensation options, fringe benefit planning, retirement planning and tax and income deferral opportunities.
Such a structure will naturally vary depending on the size of the practice and the business involved, personal and business assets, existing practice agreements, external contractual relationships and other relative facts and circumstances.
There are individual costs related to the practice for physicians, and consideration needs to be given to these. Such as asking the question of how asset protection planning, or the use of a captive insurance company, might impact upon rising insurance and malpractice insurance costs.
Some advanced retirement plans, along with the legal structure of a practice and its GP’s, can bring great opportunities for qualified and non-qualified retirement planning and funding. If physicians and medical practices take opportunity of such plans, it can have a great impact on the wealth building capacity of individual doctors, and can replace some of the taxes that are paid in Congress’s attempts to redistribute wealth.
With the continually changing medical industry, including constant variations on how to practice medicine, it’s hugely important that physicians pay close attention to all aspects of their medical practices that relate to business.
Such challenges are best faced with the help of a professional company who specialize in giving advice and guidance to physicians and their medical practices, and not only will they ensure that you remain legally compliant and free from the risk of litigation, but they will help your practice to thrive and be financially successful.
Most US individuals and businesses who benefit from having completed their tax returns in a timely and accurate manner, will admit to having used the services of a tax professional, and there is absolutely no shame in that.
While costs may be the concern of some, and not shame, experience shows that for most who used their...
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Be sure to check your withholding:
Thanks to the TCJA, or...