personal/professional corporations?

[edinOH]

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Now that I'm moonlighting a good bit I'm pulling in several thousand dollars each month as an independent contractor. The IRS is going to own me this year if I don't do something to lower my exposure. Can any of you out in practice share with me the best way to go about this or the kinds of set ups you have?

Thanks.

 

[peksi]

If you are on your own, i would suggest an S Corp. You should discuss this with your accountant given family situations etc. As I am in Delaware the home of incorperation you can set many of these up for a few hundred buck. i am sure you have done an internet search by now. the key is that this cannot be a shell so to speak, so you will or should set up a separate bank account for the S Corp etc. this is a means to improve your tax situation other than just 1099 pass through. feel free to PM me.

Paul

 

[The White Coat Investor]

My understanding of the S Corp is that you still pay all the income at your regular income rates (and if you're an independent contractor you pay both your and your "employers" share of social security and medicare, so add 15% to your marginal tax rate.) The only benefit of an S Corporation for you would be less liability, but you can't get out of malpractice by incorporating. You can itemize and deduct business expenses either with or without the shell. I'm not sure I see the benefit of a "corporate shell" to practicing medicine. Anyone out there that can enlighten me?

P.S. EdinOH, make sure you hold onto at least 50% of your earnings, as you'll likely be paying something close to that in taxes.

 

[peksi]

Two issues actually here, asset protection and tax optimization through increased deductions. So what does one want, the prime means for asset protection available to physicians are

#1-Trusts for your familty
#2-Assest listed in others names, and not your own
#3-Other benefit vehicles that are available if you have and actual defined company such as an S Corp. Such as a defined benefit plan which is often exempt from creditors etc.

Personally I have all of the above including an S Corp, a Company LLC, A Trust and a defined benefit plan.

Paul