fuegofrio17

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Are any of you incorporated? I am thinking of forming an LLC (actually a PLLC in my state) with an S-Corporation election. A couple other members of my group have this structure and recommend it. Another member has structured himself as a PA. Specific to practice as a solo emergency practitioner, what are the benefits and drawbacks to incorporation as you see it? What financial structures do you employ?
 

southerndoc

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First of all, there is no protection from liability from a professional corporation, LLC, or S-corp. People who tell you that there is additional liability protection haven't spoken with a good attorney. Professionals (CPA's, physicians, lawyers, engineers) are responsible for their own actions. As one attorney told me, forming a corporation could potentially expose you to double liability: the person sues your corporation (your "employer") and you individually, which could generate a larger judgement.

There are tax advantages if you pay yourself a fair salary commensurate to what others in your field make. If you make more than that, you can declare it as profit and give yourself dividend income. This is taxed at a lower tax bracket but will soon be subject to Medicare tax if you have enough income.

Some states require corporations to maintain unemployment, disability, and workers compensation insurance for their employees. If your state is such, it may require you to pay a decent fee for it. (Note: Disability insurance is always a great thing to have unless you've accumulated a significant amount of wealth.)

The advice I received from both my CPA and my attorney is don't bother with it. It doesn't add any real benefits, costs a lot of money to do it, and could possibly expose you to more liability. My CPA joked he'd love to do it to pad his pockets, but he said he couldn't sleep well at night if he did that.
 

rxfudd

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See, I've received the complete opposite advice, and I incorporated as an S-corp last year. So far, I couldn't be happier with this decision.

All of my income is 1099 income as an IC. The advise my tax attorney gave me was that if you make $250K+ as an individual, you are at a considerable risk of audit just because you are in the upper 3% of income among US workers. But if you are a corporation, you are "small potatoes" as far as profits go (you are now in a pool of corporations with profits up to $5,000,000), and your risk of audit becomes minimal.

Additionally, there are a bazillion tax write-offs that you can claim as corporate deductions, but that really wouldn't fly as personal ones (i.e. your vacation in Hawaii may become a business trip for your annual corporate board meeting, and you will now be able to make the corresponding deductions). Couple this with the ability to creatively divide both your income and deductions between personal and corporate taxes, and you can do some really interesting things with your returns.

In the end, it only cost me about $1500 to incorporate, and I saved over $13,000 this year alone in taxes.

But everyone's situation is different - get yourself a tax lawyer.

And agreed about asset protection. It just isn't there, not with incorporation at least...
 

willow18

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Additionally, there are a bazillion tax write-offs that you can claim as corporate deductions, but that really wouldn't fly as personal ones (i.e. your vacation in Hawaii may become a business trip for your annual corporate board meeting, and you will now be able to make the corresponding deductions). Couple this with the ability to creatively divide both your income and deductions between personal and corporate taxes, and you can do some really interesting things with your returns.
Would this really pass muster in an audit?
 

rxfudd

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You'd be surprised what a tax lawyer (i.e. one who specializes in corporate taxes) can do and defend...