Not to poo poo practice ownership but again, the numbers don't make sense to me. The first question is why is a practice worth $400k only throwing off essentially $50k in profit annually? That means you're buying your portion of the practice 8X EBITDA which is extremely high, PE type of valuation. Where is all the money going? If there is no more excess money, why not? You can't just write off your car for your practice. There are very specific rules regulating this. Practices are also not necessarily appreciating assets.
I think you're overly simplifying the calculations.
First, if you're an associate making $400k, you're probably pulling in at least $1.2 million. Probably closer to $1.5 realistically.
In the practice valuation, there are usually three major pieces (and there's obviously some variance between practices).
1. Real estate - this will be a huge chunk of your buy in. The price here usually is determined by appraisals, comps, etc - just like buying a home.
2. The medical/ASC/Optical/etc - this is more of a fuzzy number. Some practices choose to do an EBITA multiple (usually between 2 to 4) and maybe the value of the equipment minus depreciation and debts. Typically # active charts don't have a value when it comes to buy in. Everything is negotiable though.
3. Goodwill - this is a "thank you" money to be added on top of the top two. Many practices don't charge this, some may ask for $100,000 premium or may put it in as a percentage. The hope is that you'd recover this from the next person who buys into the practice but it's kind of Ponzi scheme-ish - unless you're buying in the middle of LA I wouldn't go somewhere that requires this.
If your buy in is only the first two, then any money that you "lose" towards it actually are building your wealth. An associate who is pulling a take home pay of $400k is really going to be generating enough money for a $650-750k paycheck as a partner. Yes, a chunk of this will be so you can pay your bills, like a $5,000 per month practice loan note, but when the buyout is complete you now own a piece of commercial medical real estate and a portion of the medical practice - these are assets which you're writing off as worthless.
When it's time to pay yourself as a partner you want as little going through payroll taxes. You have to pay state/federal income tax, social security tax, Medicare tax, etc. So you'll run your car through the company, your cell phone bills, work trips, hotel stays, meals, computers, all sorts of things to pay with pre-tax dollars. You'll be maxing out every tax-advantaged account you can find. Your accountant will help you.
If you can't find the value in the ownership piece then just be employed. Nothing wrong with that, it's just financially such a huge advantage to be a business owner.
