Expected income in PP

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Don't forget self-employment taxes. The comparison was to gross profits not net revenue.
True. Although there are of course ways to mitigate self-employment taxes. But I think 150% seems reasonable, bumped up a bit if a person is also receiving EDRP or actually succeeds in applying for PSLF (which theoretically should be easier for VA employees than many other folks).

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You know that maxim, "never trust a salesman"? I would never trust a potential employer's analysis of why working for them is a great deal.

Let's turn those numbers around. ~9k is SSA and Medicare contributions, which EVERY employer does. Then there is the flexible savings account, which is only applicable if you save. The rest is healthcare insurance, EAP, and retirement. Retirement is ~110k or so, and stops when you die.

Let's say you're in PP, and pull in $200k gross. You buy a building, put it in an LLC or FLP, and rent office space to your clinical LLC at $30k/year. This creates a substantial tax benefit, if you file the correct paperwork. Then you contribute the maximum allowed to your SEP IRA, leaving you 128k gross. Then you get health insurance at $1k/month, so it qualifies for a deduction. Throw in some disability insurance, which you choose to deduct at $1k/yr (that's a bad idea). And you get life insurance because you're a sucker (which you can borrow against, but I think that is a bad idea). That's $111k in net income, for which you'll pay a total 16k in SSA taxes. Maybe you're not a halfwit, and you create a website which feature stock photos of faux patients. Those pictures feature "childhood models", who happen to be your children, and happen to have their payments placed in a Roth IRA starting at birth, and continuing on until they graduate college. Maybe you have your spouse create an LLC to do your admin work, which opens up his/her access to retirement vehicles and lowers your taxable revenue even more. After 25 years, you'll have between $3MM-$15MM in your SEP, a paid off office building, $1-3MM from your rent (if you invested it), plus whatever your tenants bring in annually, less overhead. Assuming you never want the capital to decrease, you could safely withdraw over $110k, in perpetuity. Then you get to add whatever the office will bring in, which low ball figure is another $60k/yr (your rent + one additional office). Or you could sell the building and play with that money. Those same assets can be transferred to your heirs upon your death, which automatically makes them more valuable. And you've set up an LLC structure, which used properly can help them avoid estate taxes. Which won't matter because your children will be literal billionaires by 59.

Now tell me which is a better deal?
 
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You know that maxim, "never trust a salesman"? I would never trust a potential employer's analysis of why working for them is a great deal.

Let's turn those numbers around. ~9k is SSA and Medicare contributions, which EVERY employer does. Then there is the flexible savings account, which is only applicable if you save. The rest is healthcare insurance, EAP, and retirement. Retirement is ~110k or so, and stops when you die.

Let's say you're in PP, and pull in $200k gross. You buy a building, put it in an LLC or FLP, and rent office space to your clinical LLC at $30k/year. This creates a substantial tax benefit, if you file the correct paperwork. Then you contribute the maximum allowed to your SEP IRA, leaving you 128k gross. Then you get health insurance at $1k/month, so it qualifies for a deduction. Throw in some disability insurance, which you choose to deduct at $1k/yr (that's a bad idea). And you get life insurance because you're a sucker (which you can borrow against, but I think that is a bad idea). That's $111k in net income, for which you'll pay a total 16k in SSA taxes. Maybe you're not a halfwit, and you create a website which feature stock photos of faux patients. Those pictures feature "childhood models", who happen to be your children, and happen to have their payments placed in a Roth IRA starting at birth, and continuing on until they graduate college. Maybe you have your spouse create an LLC to do your admin work, which opens up his/her access to retirement vehicles and lowers your taxable revenue even more. After 25 years, you'll have between $3MM-$15MM in your SEP, a paid off office building, $1-3MM from your rent (if you invested it), plus whatever your tenants bring in annually, less overhead. Assuming you never want the capital to decrease, you could safely withdraw over $110k, in perpetuity. Then you get to add whatever the office will bring in, which low ball figure is another $60k/yr (your rent + one additional office). Or you could sell the building and play with that money. Those same assets can be transferred to your heirs upon your death, which automatically makes them more valuable. And you've set up an LLC structure, which used properly can help them avoid estate taxes. Which won't matter because your children will be literal billionaires by 59.

Now tell me which is a better deal?

The one thing I would challenge here is the $1k/month health insurance depending on if you have a pre-existing condition and whether it is for self or family. The other question I am curious about is if you have a VA gig and run real estate on the side, how would those numbers look?
 
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The one thing I would challenge here is the $1k/month health insurance depending on if you have a pre-existing condition and whether it is for self or family. The other question I am curious about is if you have a VA gig and run real estate on the side, how would those numbers look?

Having done both real estate on the side, as well as PP, I will say that the return on investment for time spent is much better on the PP side for me. Also, if you have a spouse with decent health benefits, you can pay much less than 1k/month for good health/dental.
 
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The one thing I would challenge here is the $1k/month health insurance depending on if you have a pre-existing condition and whether it is for self or family. The other question I am curious about is if you have a VA gig and run real estate on the side, how would those numbers look?

1) I pay a LOT less than $1k/month and have incredible insurance.

2) The numbers would be a lot worse because you are then using post tax dollars to invest into real estate. So that’s a minimum of a 10% difference each year. And your pension income cannot be transferred to your kids, which can be done with an IRA.
 
Just popping in to say that I’m very happy there was no post on this thread saying that everyone on it must be a terrible therapist bc all we care about it money, how can we be therapists if that’s all we think about, etc. That idea / attitude is super prevalent among folks, bizarrely so.
 
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Just popping in to say that I’m very happy there was no post on this thread saying that everyone on it must be a terrible therapist bc all we care about it money, how can we be therapists if that’s all we think about, etc. That idea / attitude is super prevalent among folks, bizarrely so.

I can't help but think that attitude only contributes to the unavailability of treatment long term. By creating downward pressure on market value of psychological services we decrease quality of life for those in our field and increase burnout, which ultimately leads to fewer practitioners. As many on this forum have pointed out before, insurance companies will reimburse the lowest amount they think they can get away with. The more service providers acquiesce to low reimbursement levels the more unsustainable it becomes to be a professional in our field. It's a disservice to our communities and our patients, in the long run.
 
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The one thing I would challenge here is the $1k/month health insurance depending on if you have a pre-existing condition and whether it is for self or family. The other question I am curious about is if you have a VA gig and run real estate on the side, how would those numbers look?

As of passage of ACA exchange-eligible policies can only set premiums on three pieces of information:

1) Age
2) Zip code
3) Smoking status

Any modification to premiums based on pre-existing conditions, for example, is totally illegal. You also cannot be denied a policy based on pre-existing conditions. You are right for sure that how many people you are covering on one policy is a significant factor, however.
 
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Just popping in to say that I’m very happy there was no post on this thread saying that everyone on it must be a terrible therapist bc all we care about it money, how can we be therapists if that’s all we think about, etc. That idea / attitude is super prevalent among folks, bizarrely so.

You know it's funny you say that. When I was in part-time PP, I remember my supervisor/practice owner commenting on how I had the least (no) complaints of being pushy/inappropriate with patients as a young clinician. This was largely because I had a day job and was not desperate for cash. Being poor clouds motivations more than being comfortable/rich, imo.
 
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As of passage of ACA exchange-eligible policies can only set premiums on three pieces of information:

1) Age
2) Zip code
3) Smoking status

Any modification to premiums based on pre-existing conditions, for example, is totally illegal. You also cannot be denied a policy based on pre-existing conditions. You are right for sure that how many people you are covering on one policy is a significant factor, however.

While this is true, I have seen policies for above $1k/month or with significant deductibles in some states. My old company used to shop in the exchange and our coverage got worse every year. For people that require life-saving meds (insulin, etc) this can be very stressful. Not to mention the ever-present threat of Republicans attempting to gut/repeal the law.
 
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You know it's funny you say that. When I was in part-time PP, I remember my supervisor/practice owner commenting on how I had the least (no) complaints of being pushy/inappropriate with patients as a young clinician. This was largely because I had a day job and was not desperate for cash. Being poor clouds motivations more than being comfortable/rich, imo.
On the referral group I am on for my city, it is funny how many people are "perfect fits" for basically every self-pay client posted for referral. Self-pay gay borderline PD 50 yr old refugee? Perfect fit for me. Self-pay recovering alcoholic physically disabled late adolescent? Oh yeah perfect fit for that too.
 
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On the referral group I am on for my city, it is funny how many people are "perfect fits" for basically every self-pay client posted for referral. Self-pay gay borderline PD 50 yr old refugee? Perfect fit for me. Self-pay recovering alcoholic physically disabled late adolescent? Oh yeah perfect fit for that too.

Ha, this made me laugh thinking about our listserv and very similar issues.
 
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Adding to the above, if one is doing 100% clinical work (particularly therapy) with the majority being insurance-based, I don't know how feasible it is to match in PP the total compensation offered by hospital systems and other large employers (e.g., VA). Others who work directly in this area can of course correct me. In neuropsych, broadly speaking, individuals in PP earn more and have higher job satisfaction than those in institution settings. They also are more likely to participate in some amount of forensic work, which likely isn't a coincidence
If you are willing to work it’s totally feasible to roughly triple typical hospital total compensation in PP and even possible for some to quadruple it.

Edit: upon seeing the VA sample total compensation I’d add the qualifier that for the VA system only it’s more like a doubling is totally feasible in PP, better if like me, you don’t fully/highly value 13 sick days and/or many of the federal holidays that I honestly don’t often even realize are happening until I don’t get mail or the bank statements don’t update.
 
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You people are bad at it. PP is MUCH better at wealth generation.

1) At the MOST basic, PP allows one to use a SEP IRA. This instrument allows you to convert ~ 25% of gross into a retirement account. Using this 180k number, because I’m tired and lazy, that’s 45k/yr of personal wealth. That blows away any federal retirement. And it can be inherited.

2) PP allows you to buy appreciating assets. Using the SEP account as leverage, you could borrow a few million, buy an office building, put that building into an llc, and then have your PP rent space from your office llc. A decade later you own a building, which is worth a million plus. Do the same with wall art, office furniture. Buy the desk from a historical figure. It depreciates as an office durable. After you max out depreciation, you sell it to yourself. Why do you think the rich buy private jets? Rent that out for revenue, depreciate the jet until it’s hit maximum , sell it for more than what you’ve depreciated, and you’ve just gotten a free jet and revenue for 5 years.

That’s just the simple stuff.
💯
 
In my business of PP talk for our grad students, I suggest not going by the raw % but to do the math on the income from the split, what’s saved by not paying overhead, etc. a “good” split can still be a terrible financial deal. But even my extreme example of a “bad” split percent is better than this offer and requires semi obscene pay (I give the example of the local posh derm place wanting to have some mental health treatment at like $250/hr for an example of a “bad” split still working out good in terms of the math).

This sounds like an awful deal.
 
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Curious: am I the only person who ruled out PP on the basis of having absolutely no desire to run a small business?

Nah, plenty of people don't want to deal with the business side of things. The thing is, though, once you have the initial steps complete, it's really not that different than if you were the clinic director, or overseeing your own clinic within a hospital system on the admin side of things. And, for us neuro people with lower patient volume, the admin side of things is pretty easy. Throw in IME work, and your hourly comp goes up dramatically. It's just a lot of front end work.
 
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If you are willing to work it’s totally feasible to roughly triple typical hospital total compensation in PP and even possible for some to quadruple it.

Edit: upon seeing the VA sample total compensation I’d add the qualifier that for the VA system only it’s more like a doubling is totally feasible in PP, better if like me, you don’t fully/highly value 13 sick days and/or many of the federal holidays that I honestly don’t often even realize are happening until I don’t get mail or the bank statements don’t update.

Definitely, and that's an advantage to PP work compared to at least some hospital/clinic settings--the more you work, the more you get paid. I should've clarified that I was trying to make a direct apples-to-apples comparison (i.e., same number of hours worked, same number of patients seen). But even then, if you're able to capitalize on at least some of the things PsyDr mentioned here and in the past, PP may still outperform what I'd thought.
 
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Curious: am I the only person who ruled out PP on the basis of having absolutely no desire to run a small business?
Better to do that than open a PP while still having no desire/knowledge to run a small business! Which seems to be the modal operating procedure for most graduates.....
 
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Better to do that than open a PP while still having no desire/knowledge to run a small business! Which seems to be the modal operating procedure for most graduates.....
I’ve seen this a lot, too—people seem to think that they’ll just do therapy somewhere and all the financial pieces and logistics will somehow sort themselves out completely on their own.
 
Better to do that than open a PP while still having no desire/knowledge to run a small business! Which seems to be the modal operating procedure for most graduates.....

Yeah, I think I would have been very unprepared if I had gone right into PP from training. Also, it was good to have a few years outside of the VA to get better at billing and coding. Also helps to have some good friends/colleagues who have been in PP for a while to talk to.
 
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Yeah, I think I would have been very unprepared if I had gone right into PP from training. Also, it was good to have a few years outside of the VA to get better at billing and coding. Also helps to have some good friends/colleagues who have been in PP for a while to talk to.
I can't imagine having gone into solo PP immediately out of fellowship. Kudos to those who are able to pull that off.
 
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I can't imagine having gone into solo PP immediately out of fellowship. Kudos to those who are able to pull that off.

I wonder if it's different for those at AMCs or other postdocs. We don't get a lot of exposure to meaningful admin work or good billing stuff in the VA. I learned quite a bit after taking my first non-VA job and having to rebuild a clinic.
 
I’d go even further tho an my other post actually, and say that for a substantial portion of people who jump right into pp, they don’t even view it as “starting a business.”
 
Curious: am I the only person who ruled out PP on the basis of having absolutely no desire to run a small business?

Depending on the day, I def get frustrated by how much time I spend doing non-billable work. That said, I doubt I'll ever work for someone else for my full-time hrs ever again. Maybe pick up some per diem work if I want a change of pace, but not likely.
 
There can be a lot of "lost hours" in private practice, so it is helpful to track actual hours spent and revenue generated, so you can figure out your actual hourly rate. There are a lot of hours up-front, spread out over a number of months.
 
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I certainly get frustrated and tempted to open a PP open, but then I spend a few minutes going over billing and remember how unequipped I am to start a business.
 
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Curious: am I the only person who ruled out PP on the basis of having absolutely no desire to run a small business?

Got grant expectations? Those expectations more than your salary? Your salary dependent on bringing that in? You're already running a small business
 
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I can't imagine having gone into solo PP immediately out of fellowship. Kudos to those who are able to pull that off.
Honestly, a lot of what psychology offers is solo PP with less front end outlay. I started off as an independent contractor and then ended up as an employed clinical director when my boss quit. Had I been out on my own, I would have made more for the same effort. I think one thing COVID has shown is that being an employee only provides the illusion of financial security. You are still going to be at the whim of market forces.
 
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I have an entire talk I give on the business of PP for our grad students. Being a semester away from being done my MBA has helped me a lot on this front. I should probably monetize that and offer it more widely
Uh, yes, actually, you most definitely should. Put that MBA to immediate use :) With only a little marketing my guess would be you could make a pretty penny pretty quickly.
 
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It’s in development now. Going to try to be done it before end of summer. :)

Any update on this?
I've been slogging through getting all the pieces in place to start my private practice and would love to have a more comprehensive resource than cobbling things together from numerous informal sources.

Also, how do other folks collect payment from clients? I'll be seeing people remotely, so need a remote payment option. SimplePractice contracts with "Stripe," and they charge a 3% service fee. Curious if there are other options that would be HIPAA compliant.
 
Any update on this?
I've been slogging through getting all the pieces in place to start my private practice and would love to have a more comprehensive resource than cobbling things together from numerous informal sources.

Also, how do other folks collect payment from clients? I'll be seeing people remotely, so need a remote payment option. SimplePractice contracts with "Stripe," and they charge a 3% service fee. Curious if there are other options that would be HIPAA compliant.
Aiming to be done soonish (like end of this month). I will for sure provide an update. We are looking for it to be decent quality so it’s taking a minute. Happy to know there’s interest, that is lighting a fire for me on it :)
 
Any update on this?
I've been slogging through getting all the pieces in place to start my private practice and would love to have a more comprehensive resource than cobbling things together from numerous informal sources.

Also, how do other folks collect payment from clients? I'll be seeing people remotely, so need a remote payment option. SimplePractice contracts with "Stripe," and they charge a 3% service fee. Curious if there are other options that would be HIPAA compliant.
I ask my clients if they are able to mail a check; if that is not convenient then I collect via Simple Practice (stripe). The convenience and administrative efficiency of integrated billing within SP at 2.95% + 30c outweighs the savings of using an alternative HIPAA compliant payment processor that has slightly lower fees (ie Ivy Pay at 2.75%). One option that I considered but decided against (and advise doing your due diligence if considering since the business of credit card processing is not known for transparency): If you have the volume, have a website, want to find the lowest fee credit card processor, and don’t mind the additional admin work (a lot of ifs), Elavon for healthcare (Costco partner) offers flat 2% with a $150 set up fee for using their online platform. There is a $5 monthly fee waived for Costco executive members and they provide you with link that you can embed in your website for clients to make secure payments. And if you want to send invoices that’s $30 a month. Not worth the headache to save an extra ~$780 on every $100K (over SP) in my opinion, but that is the lowest fee processor that I found.
 
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I’ve used Elavon through Costco for years. They have the best rates and I’ve checked all other choices multiple times over the years and have yet to find a better option. I’ve found them to be user-friendly and haven’t had any problems I can mention. As for processing, I have the patient sign a credit card agreement form at intake and run their card the day of their appointment. Or, if they prefer not to keep their card on file, I get their number and run it at the time of their appointment.

This has not been a problem or a time inconvenience. I cannot justify paying even a small percentage of a higher rate for credit card processing. Credit cards fees are ridiculous and add up quickly. Most people expect to have the option to pay with a card and you do get your money deposited in your account in 1-2 days and you don’t have to deal with overdraft/insufficient fund issues with checks. I do accept checks or cash but less than 5% of my patients choose this option. I always look to save money in my practice where I can even if it means foregoing a more streamlined/integrated process and paying more as a result. There has to be a clearly demonstrated benefit in terms of time or efficiency (or both) before I shell out more money for a service.
 
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I have seen psychologists charge anywhere between $200/hr to $700/hr.
 
You know that maxim, "never trust a salesman"? I would never trust a potential employer's analysis of why working for them is a great deal.

Let's turn those numbers around. ~9k is SSA and Medicare contributions, which EVERY employer does. Then there is the flexible savings account, which is only applicable if you save. The rest is healthcare insurance, EAP, and retirement. Retirement is ~110k or so, and stops when you die.

Let's say you're in PP, and pull in $200k gross. You buy a building, put it in an LLC or FLP, and rent office space to your clinical LLC at $30k/year. This creates a substantial tax benefit, if you file the correct paperwork. Then you contribute the maximum allowed to your SEP IRA, leaving you 128k gross. Then you get health insurance at $1k/month, so it qualifies for a deduction. Throw in some disability insurance, which you choose to deduct at $1k/yr (that's a bad idea). And you get life insurance because you're a sucker (which you can borrow against, but I think that is a bad idea). That's $111k in net income, for which you'll pay a total 16k in SSA taxes. Maybe you're not a halfwit, and you create a website which feature stock photos of faux patients. Those pictures feature "childhood models", who happen to be your children, and happen to have their payments placed in a Roth IRA starting at birth, and continuing on until they graduate college. Maybe you have your spouse create an LLC to do your admin work, which opens up his/her access to retirement vehicles and lowers your taxable revenue even more. After 25 years, you'll have between $3MM-$15MM in your SEP, a paid off office building, $1-3MM from your rent (if you invested it), plus whatever your tenants bring in annually, less overhead. Assuming you never want the capital to decrease, you could safely withdraw over $110k, in perpetuity. Then you get to add whatever the office will bring in, which low ball figure is another $60k/yr (your rent + one additional office). Or you could sell the building and play with that money. Those same assets can be transferred to your heirs upon your death, which automatically makes them more valuable. And you've set up an LLC structure, which used properly can help them avoid estate taxes. Which won't matter because your children will be literal billionaires by 59.

Now tell me which is a better deal?
Would you like to be my financial advisor? :)
 
Aiming to be done soonish (like end of this month). I will for sure provide an update. We are looking for it to be decent quality so it’s taking a minute. Happy to know there’s interest, that is lighting a fire for me on it :)
Any update on this course/talk? I'd love to learn from you!
 
I think they work with some MH venture enterprise of some sort.
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I’m sure he choose a good one, so this is not directed at him, but I think people overestimate the likelihood of making $$$$ in venture. For every Google/Facebook/Uber/etc, there’s tons of startups just getting by and probably even more that are going broke. I know of one tenured psychology professor who quit to work for Facebook/Meta, got laid off about a year later, and still can’t find a full-time job (he’s location-bound to the state where he was faculty). There are lots of people for whom tech/venture is a great move, but it’s not guaranteed mountains of money or even guaranteed employment. If/when I leave academia, it’d be for government work (very nearly did so this past year but decided to try out tenure—not 100% sure if I made the right choice).
 
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