PLLC

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futuredo32

futuredo32

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Not a resident question but I didn't know where to ask. Does anyone have a PLLC? I have a little private practice and work as an independent contractor and moonlight. My CPA bugged me to death until I changed it to a PLLC because it's like 8k a year to be a solo corporation. He didn't explain it well. It's MY money, but I can't just spend it? I really don't understand. He said to use it for business expenses, but I also need to pay other bills. He told me to have EVERY CHECK even from my independent contractor and locums job made out to my PLLC. That part doesn't seem right to me. My independent contractor position and locums are separate from my private practice. So 2 questions so I don't end up in prison for tax fraud-
1. Is it appropriate to have my independent contractor checks made out to my PLLC account and
2.Can I take money out of my account and pay myself a salary? I paid my office rent a year ahead. Other than my upcoming licenses that are due I really don't have business expenses. I really need to be able to spend my money on living expenses etc. How do you decide on a salary?
Thanks.
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futuredo32 said:
Not a resident question but I didn't know where to ask. Does anyone have a PLLC? I have a little private practice and work as an independent contractor and moonlight. My CPA bugged me to death until I changed it to a PLLC because it's like 8k a year to be a solo corporation. He didn't explain it well. It's MY money, but I can't just spend it? I really don't understand. He said to use it for business expenses, but I also need to pay other bills. He told me to have EVERY CHECK even from my independent contractor and locums job made out to my PLLC. That part doesn't seem right to me. My independent contractor position and locums are separate from my private practice. So 2 questions so I don't end up in prison for tax fraud-
1. Is it appropriate to have my independent contractor checks made out to my PLLC account and
2.Can I take money out of my account and pay myself a salary? I paid my office rent a year ahead. Other than my upcoming licenses that are due I really don't have business expenses. I really need to be able to spend my money on living expenses etc. How do you decide on a salary?
Thanks.
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If you don't trust your accountant, get a new one.
 
I trust him I just don't understand. He doesn't explain things well.
 
If your doctor didn't explain things well, would you trust them?

futuredo32 said:
Not a resident question but I didn't know where to ask. Does anyone have a PLLC? I have a little private practice and work as an independent contractor and moonlight. My CPA bugged me to death until I changed it to a PLLC because it's like 8k a year to be a solo corporation. He didn't explain it well. It's MY money, but I can't just spend it? I really don't understand. He said to use it for business expenses, but I also need to pay other bills. He told me to have EVERY CHECK even from my independent contractor and locums job made out to my PLLC. That part doesn't seem right to me. My independent contractor position and locums are separate from my private practice. So 2 questions so I don't end up in prison for tax fraud-
1. Is it appropriate to have my independent contractor checks made out to my PLLC account and
2.Can I take money out of my account and pay myself a salary? I paid my office rent a year ahead. Other than my upcoming licenses that are due I really don't have business expenses. I really need to be able to spend my money on living expenses etc. How do you decide on a salary?
Thanks.
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1. That's fine. You can separate them, but functionally given it's all income earned as a physician IRS considers it the same and there's no reason to separate it (if you had a second business where you made money driving uber or something, then it makes a difference of what can be deducted against what).

2. Yes. From a corporation (as opposed to a sole proprietorship, which is less complicated), you can take money out, with some portion being salary and some portion being dividends. The dividends are taxed (slightly) less because while you need to pay income tax on them you don't need to pay medicare tax. You do need to pay yourself a salary that meets IRS muster, so something resembling the average for your specialty. You can deduct any business expenses against it.

I am NOT a CPA though, so better to confirm the answers with your own.
 
atomi said:
It doesn’t cost 8k a year to have an s Corp.

New accountant x4
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Maybe its a state tax. I had 2 different accountants do my taxes in 16 and 17 and both times I paid 8k to be a sole business owner. It wasn't the accountant unless two accountants made the same mistake.
 
I don't think we have any reason to say get another accountant.

The answer here is really, talk to an accountant, a financial advisor, someone with a background in business. Anyone but us, basically.

I wouldn't talk to any physician about this, even if they had their own practice, unless I knew they had a separate education and background where they were actually qualified to give me this kind of specific advice.

When it really matters, I go to a licensed car mechanic, a boarded physician, a certified public accountant, a licenced and bonded contractor, a hair stylist that graduated beauty school, a lawyer. Because I've learned that when it really matters and you don't, there's reasons credentials exist. It's not just to weed out bad seeds or any such. It's the only way to objectively check that someone actually knows what they are talking about, and for some things the internet and school of the hard knocks is enough, and for others formal education is essential.

Taxes and small business ownership, I put in the category that must be put past professionals.

Decide if the 8k is worth sorting out.
 
And you need a new NPI if you become a PLLC. It's a huge pain. I think my CPA is fine I just need to call him and it's the holiday season. I think once I get everything set up it will be fine its just getting to that point. I thought it wouldn't be all this BS stuff to do.
 
I have a sole proprietorship for my private practice but get checks for my locums and independent contractors positions made out to me personally..... but it's all treated the same by the irs. I am not sure what you mean by "solo corporation ". Sounds like you're dealing with some state specific laws. Do you have an S Corp or C?
 
michaelrack said:
I have a sole proprietorship for my private practice but get checks for my locums and independent contractors positions made out to me personally..... but it's all treated the same by the irs. I am not sure what you mean by "solo corporation ". Sounds like you're dealing with some state specific laws. Do you have an S Corp or C?
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I agree, it is difficult to assess the situation when the terminology used is off
 
michaelrack said:
I have a sole proprietorship for my private practice but get checks for my locums and independent contractors positions made out to me personally..... but it's all treated the same by the irs. I am not sure what you mean by "solo corporation ". Sounds like you're dealing with some state specific laws. Do you have an S Corp or C?
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An S Corp, but I received paperwork that I am now a PLLC but I cant find the forms online to finish so I am somewhere in the middle of the two at the moment. I need to renew my license this year and me being me, waiting until the last minute to get my CMEs and I looked and you can renew with no changes or renew some other way, I am thinking I should renew with no changes? I haven't filled out some online form I cant find that my bank told me to. But the state sent me the paperwork for the PLLC. I am going to be super tight with the renewal deadline. I feel like there should be a mandatory course in med school or residency. I am so beyond clueless. I have all these codes I am supposed to enter online but I can't even find the form to enter them on and I don't know what form I am looking for. I keep emailing the government helpline for this and they respond but they don't know what to tell me because I am so totally clueless. I SO regret the PLLC thing. 8k is a ton for me but I am just not good with this kind of stuff. I wish I could unPLLC and fast. I have like 18k in checks sitting here that I can't deposit and cant cash. I don't think this is a question for my CPA. How is he going to know where I should file. I am just beyond confused.
 
A lot of this depends on the state you work in. I can not imagine not establishing a PLLC for a private practice physician. The benefits are literally boundless for every practice I can imagine.

But, admittedly, I don't handle the paperwork, have a lawyer wife for that 😉, so the headache is likely lost on me.
 
mimelim said:
A lot of this depends on the state you work in. I can not imagine not establishing a PLLC for a private practice physician. The benefits are literally boundless for every practice I can imagine.

But, admittedly, I don't handle the paperwork, have a lawyer wife for that 😉, so the headache is likely lost on me.
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Since our biggest liability risk is malpractice which isn't something your LLC or PLLC protects your personal assets from I don't think there is a huge benefit.
 
There are other ways to protect your assets, like an irrevocable living trust. Of course, you have to be OK with your stuff not really being "your stuff" any more, as you will have to manage it on behalf of someone else, an oh yeah, you have to be OK with essentially giving it away while you're still alive. If you have kids and you're OK with this scenario then it can be great.

My understanding is that this is one way to ensure major assets like home and car and such, are not in your name, and cannot be legally attached to by creditors or other claims.
 
Crayola227 said:
There are other ways to protect your assets, like an irrevocable living trust. Of course, you have to be OK with your stuff not really being "your stuff" any more, as you will have to manage it on behalf of someone else, an oh yeah, you have to be OK with essentially giving it away while you're still alive. If you have kids and you're OK with this scenario then it can be great.

My understanding is that this is one way to ensure major assets like home and car and such, are not in your name, and cannot be legally attached to by creditors or other claims.
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Yeah, that seems extreme. I just live within my means (so no worries about creditors), have appropriate insurance, and try to have good relationships with my patients. Helps that my state has a cap on non-economic damages.
 
dpmd said:
Yeah, that seems extreme. I just live within my means (so no worries about creditors), have appropriate insurance, and try to have good relationships with my patients. Helps that my state has a cap on non-economic damages.
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Malpractice awards that survive an appeal above the limits to ones malpractice are very very rare
 
VA Hopeful Dr said:
Malpractice awards that survive an appeal above the limits to ones malpractice are very very rare
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I could think of some injuries I could create where it could be more than a million in lost work and medical expenses even before the pain and suffering cap. But thus far even my patients with terrible complications have appreciated my honesty and caring attitude and haven't sued me. Fingers crossed that trend continues.
 
dpmd said:
I could think of some injuries I could create where it could be more than a million in lost work and medical expenses even before the pain and suffering cap. But thus far even my patients with terrible complications have appreciated my honesty and caring attitude and haven't sued me. Fingers crossed that trend continues.
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No I get that, but practically speaking it doesn't happen often because the awards get decreased to malpractice limits on appeal the vast majority of the time.
 
VA Hopeful Dr said:
No I get that, but practically speaking it doesn't happen often because the awards get decreased to malpractice limits on appeal the vast majority of the time.
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Is that like how car accident claims often settle for policy limits because the lawyers know it will be cheaper and faster to do that than trying to go after more?
 
dpmd said:
Is that like how car accident claims often settle for policy limits because the lawyers know it will be cheaper and faster to do that than trying to go after more?
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Either that or judges unwilling to financially ruin someone, not really sure the cause - just the result.
 
Doing such a trust isn't all that extreme. There are all kinds of terms where you are trustor and trustee, and it leaves you able to manage things just as you ever would for your own family. It's selective what you put into these trusts.

Another reason to do them for example, is if you ever end up disabled or have to go into some sort of long term care.

Physicians shouldn't assume that just because they have a big income, little debt, or "good" medical insurance, that you will be able to leave all that you have worked for to your family (should this matter to you).

For example, you could put your house into a trust for your mom/brother/child whoever, and the terms could be that you are able to live in it as trustee managing it on behalf of beneficiaries. You can sell it and buy another house provided it is a good financial investment or has some other justification for the beneficiaries (better school, closer to care for them, etc).

Mostly it's just about how you manage the assets with a fiduciary duty to your named beneficiaries. Many of us ultimately are working for more than just ourselves, and would like to see our efforts, our money and things go to loved ones. While also protecting those things from lawsuits.

If you want to know how the Hiltons or Trump or the Kennedys or really anyone with money in this country has family money, it is with well-crafted trusts.

Please, please believe me. See an estate planning attorney and a financial advisor ASAP. And life and disability insurance.

All the times I ever took this advice, I was so glad. All the ways I screwed up the above, completely and utterly screwed me over. I'm not that different a physician from anyone else.

You don't have to have kids for this stuff to be a good idea and to apply.
 
We sorta expect patients to get check ups for their own health.

Over and over and over I hear from sooooo many different types of attorneys and business types, that physicians, especially for having the sort of money and liability that they do, are STUPID when it comes to managing legal and monetary issues (which, besides health, the other two HUGE categories for well being), and it's frankly staggering for a group of people who have money, are so educated, and make a living out of managing risk both present and future.

Many people have need of these professionals but find them out of financial reach. Since most physicians CAN afford to see an attorney and business professionals like accountants, and actually do have assets to protect, it's even more ridiculous that they don't take proper advantage of it.

Being a nice person, competent, and with malpractice insurance, will not protect you from potentially serious adverse financial consequences, any more than it does heart disease.

I've heard it said, that all of this may either represent a certain lack of aptitude for business or legal matters, or possibly hubris.
 
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What's more, and is totally ridiculous, is we see so many people get unexpectedly boned by medical issues and financially ruined every day.

That might seem a tangent from discussing seeing an accountant and having a business plan, and malpractice, and a trust, but it isn't. It's all in the umbrella of being covered in the case of being boned by life.

I don't recall the numbers of malpractice, but a HUGE number of us get sued, to the point it's basically an accepted risk of practice, hence the big malpractice premiums. You don't think you'll make a mistake that leads a huge lawsuit where you lose everything. I don't think anyone does think that. Yet it happens.

Physicians, like anyone else, also succumb to illness before retirement. Disability strikes docs just like it does patients, but I'm telling you, the range of where that can leave a physician financially, is BROAD and I have seen it first hand.

Illness, disability, need for long term care, and unexpected deaths, are actually not that uncommon ways that life bones all of us. Shouldn't we know that? We expect patients to plan for these things in certain ways, but then we don't ourselves in other ways.
 
Just take it from me. Don't be a physician that gets boned by not having enough financial and legal advice to cover you. Please. The risk is real.
 
Crayola227 said:
Doing such a trust isn't all that extreme. There are all kinds of terms where you are trustor and trustee, and it leaves you able to manage things just as you ever would for your own family. It's selective what you put into these trusts.

Another reason to do them for example, is if you ever end up disabled or have to go into some sort of long term care.

Physicians shouldn't assume that just because they have a big income, little debt, or "good" medical insurance, that you will be able to leave all that you have worked for to your family (should this matter to you).

For example, you could put your house into a trust for your mom/brother/child whoever, and the terms could be that you are able to live in it as trustee managing it on behalf of beneficiaries. You can sell it and buy another house provided it is a good financial investment or has some other justification for the beneficiaries (better school, closer to care for them, etc).

Mostly it's just about how you manage the assets with a fiduciary duty to your named beneficiaries. Many of us ultimately are working for more than just ourselves, and would like to see our efforts, our money and things go to loved ones. While also protecting those things from lawsuits.

If you want to know how the Hiltons or Trump or the Kennedys or really anyone with money in this country has family money, it is with well-crafted trusts.

Please, please believe me. See an estate planning attorney and a financial advisor ASAP. And life and disability insurance.

All the times I ever took this advice, I was so glad. All the ways I screwed up the above, completely and utterly screwed me over. I'm not that different a physician from anyone else.

You don't have to have kids for this stuff to be a good idea and to apply.
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Trusts where you are a beneficiary or retain defacto control are subject to being set aside and therefore not actually protecting them. I am not prepared to give away any assets in that fashion and I doubt most people are.
 
dpmd said:
Trusts where you are a beneficiary or retain defacto control are subject to being set aside and therefore not actually protecting them. I am not prepared to give away any assets in that fashion and I doubt most people are.
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I'm not talking about that and didn't say that.

You absolutely can retain certain controls as a trustor and trustee, which is NOT being the beneficiary of your own trust, that make them very attractive.

One trust for example, could be set up for a minor child, and set up that the assets are held in trust for them, and there have to be what are considered reasonable payout terms. For example, it could be that the net interest income from a trust, would be distributed quarterly when a beneficiary has attained the age of 35. So, that's going to depend on what assets are in the trust and what income it has. If it's real estate, which can be considered an investment asset of the trust, like your house, then nothing. Most trusts of this type have a clause for eventual and total payout to be valid, which you sorta hint at. 65 is a commonly used age as it is close to the age of retirement, so it essentially suggests that the trust is partly meant to help provide a retirement for the child, but it does kick it down the road quite a bit.

You can set standards on distributions, for example that the child has completed some level of higher education to qualify for payout at an earlier age, otherwise that can get kicked down the road.

I mean, if you live to see your child hit 65, there's worse things in the world than having all your stuff go to them without probate and all that. Like not losing it before they hit age 65 to a lawsuit or disability.

Also, you absolutely can have a clause that is NOT an issue, that you are allowed as trustor to live in the house or use other assets as long as you are alive. In the case of the house, you just have to show that you are maintaining the house's value.

I literally sat down with an estate planning attorney a couple weeks ago, and the points I make above, were made to my face over such a document.

Lastly, a lot of these sorts of trusts are written to pass the muster of Social Security and Medicare. I've seen it and I've seen it work. So no, they are NOT usually subject to being set aside unless they are improperly prepared. I won't get into the ramifications of legal malpractice on that. It's about as major as medical malpractice for attorneys.

If Social Security and Medicare cannot touch your stuff because of such a trust, believe me that creditors or a malpractice judgement against you won't be able to either. Still, of course, I would suggest sitting down with an attorney that specializes in shielding your assets from that specifically.

Anyway, a lot of people are OK putting a lot of what they have into these, because it doesn't actually change much about how you go about your business, and in most worst case scenarios, your kids just get your stuff when you're dead or too old that you should care, and it was worth it because of the benefits you had while the trust was in place.
 
mimelim said:
A lot of this depends on the state you work in. I can not imagine not establishing a PLLC for a private practice physician. The benefits are literally boundless for every practice I can imagine.

But, admittedly, I don't handle the paperwork, have a lawyer wife for that 😉, so the headache is likely lost on me.
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Yeah, I probably buy into this given it sounds like you have an attorney handling it.
 
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