My spouse is a salaried physician and I have been out of work for a bit. I am planning on starting locums work and wondering if it is better to start an s corp since he also may start moonlighting. How much and how long does it usually take to form an s corp? What is the process and where do I start?
Incorporate?
- Thread starter cooper12
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You can always just start an llc, and file to be taxed as an s corp. Just go online and search for the forms, about $300 to form llc yourself. Then file for EIN number for your company for free. Why do you prefer scorp? Makes sense if you make 1099 & want to pay yourself salary + dividends to save SE tax. But it depends on how much you make, since you still have to pay yourself a "reasonable" salary. If he is going to moonlight, I would think you should keep the incomes/expenses seperate until tax time, and have him form his own llc. Just my two cents. Make sure you form a business checking/credit to keep things separated as well. What state are you in?
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The first step is to decide which entity is better for him. Numbers matter - without the entire income information it is impossible to tell which one would be best. I'd start with a good accountant who can do the calculation for you. LLC is a good start, and it can be taxed as an S-corp, as previous poster indicated. My hunch is that if he already has a W2 job, S-corp won't save him much on taxes (vs. the costs of filing the taxes), unless he's really making a large SE income (several hundred k or more) and has a large salary.
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Probably worth running the numbers with an accountant and attorney. It may not even be worth incorporating.
So my husband makes around 200k W2 job, and I will be earning around 5-6K/month doing locums 1099. He may or may not be moonlighting so there is a possibility he won't get a 1099. I need to figure out whether to do an llc or scorp or neither. I am in georgia and does anyone know of a good CPA in the atlanta area? Thanks!
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LLC at this point is not for tax purposes but for legal purposes. No S corp, for sure. For tax purposes, I have my clients do a Solo 401k. Your husband can contribute around $30k into a solo 401k with this much income (if it is indeed 1099 - no such luck if he is paid with W2), and that would take care of the taxes. He can also max out the 401k at work, so your overall tax liability is minimized. An LLC is a pass-through, meaning that all income is taxed at your personal level, but your husband will be able to write off his business/travel expenses (this is what an accountant can help you with).
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More likely the opposite. An LLC does not help physicians unless it is protecting assets. Most physicians that "moonlight" will work in a hospital or someone else's practice, thus there is no real assets to protect in the practice. Malpractice insurance protects against personal lawsuits. What is the legal purpose of incorporating in this situation? None that I see. The only benefit of incorporating here is if it provides tax benefits. The problem is that without knowing all of the details, I'm not sure that incorporating is worthwhile.
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Malpractice insurance usually has a cap, so that wouldn't protect you fully (and I would be weary of exclusions and exceptions). But again, I'm not an attorney, so this would be a great question to ask. LLC protects your personal assets from the liabilities of the LLC. So your house, your brokerage account and your liquid assets. Without the LLC, your entire estate (except for the 401k plan assets) can be subject to creditors or litigation. That's the primary purpose of the LLC, because as far as taxes, LLC is the same as solo proprietor (unless you elect to be taxed as an S-corp). Of course, I would consult with an attorney about whether the LLC will protect a doctor (it might not). S-corp might make sense if you own a business (or have a very profitable practice on the side), but the requirements are much more onerous and the cost of filing taxes can be higher than for an LLC.
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In general, a physician is personally liable for malpractice no matter how he legally structures his practice or who he works for (with some exceptions for physicians who are government employees). An LLC or corp (S or C) would protect a physician's personal assets if he was sued for a slip and fall injury at his practice, or something similar, but not for malpractice.
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It doesn't work that way. See above post. An LLC could be used to shelter separate property or other assets if used correctly. States have differing rules on sheltering assets. Each person needs to do their research.
The benefit of an LLC for a moonlighting doc is potentially tax purposes. Some people will waste their money starting and maintaining an LLC for no benefit over a sole proprietorship. This is where a good tax accountant can help.
