Tired of reading that pharmacists "don't make much money"

[Doctor M]

...when was the last time you worry about being able paying the light bill or putting food on the table for your family??...if you can't remember than STFU you more blessed than others..

yes Medicaid people make me angry some times but brush it off..after work your hopinh into your bmw and going home

This argument of medicaid babies and i make this and get taxed that is sooooooooo old. Just live with the fact that the Govt is gonna tax the crap out of us and live with it. All my patients are on some Govt aid. Oh well. I can bitch all day or fill their prescriptions, get paid and love it. The govt pays me, i give back to the Govt.

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[owlegrad]

This argument of medicaid babies and i make this and get taxed that is sooooooooo old. Just live with the fact that the Govt is gonna tax the crap out of us and live with it. All my patients are on some Govt aid. Oh well. I can bitch all day or fill their prescriptions, get paid and love it. The govt pays me, i give back to the Govt.

Oroborus!

 

[Doctor M]

Oroborus!

Perhaps, but it is true! I pay the Govt Taxes, and in turn, Mr. smiths Oxycodone is paid by the Govt to my pharmacy at a rate of $0.45 cents per pill. I pay my income taxes and my business tax back to the govt. Day in and day out

 

[Momus]

Perhaps, but it is true! I pay the Govt Taxes, and in turn, Mr. smiths Oxycodone is paid by the Govt to my pharmacy at a rate of $0.45 cents per pill. I pay my income taxes and my business tax back to the govt. Day in and day out

You are lucky. You don't have to pay taxes like the rest of us. So many deduction you can take being a business owner bringing in at least ~$150k:

1. Write off up to $10,000 in start-up expenses in 2010 (-$5k/year average).
2. Legitimate business expenses are flexible: ~ $10k
   • Even if you buy a computer, a cellphone and a car primarily for business use, you can use them for personal purposes as well. If you happen to take a business trip to Florida in, say, January, no one is going to stop you from enjoying the sunshine or taking a dip in the pool.
3. Pay yourself Medicare and Social Security taxes 19,000 – ½ can be deducted $9.5k
4. Solo 401k - $50k ($16,5k employee contribution and 20% of net profit of employers the rest – pretax profit at least $205k to max solo 401k)
5. Spouse 401k -$17k
   
6. State and Local taxes -$10k
7. Tax loss harvesting - $3k
8. Mortgage interest 3.5% rate @300,000 loan - $10.5k
9. Property taxes 1% - $3k
   
10. Premium for yourself health insurance is deductible - $10k
11. Health saving account contribution -$5k
12. Personal exemption -$3.7k
13. Home equity loan to make improvement in the house -$1500 max

This all will give you around $143k total deductions... Your income for tax liability after all this... $7000... You pay 0 tax... Of course, I will be happy if I were you

 

[Doctor M]

You are lucky. You don't have to pay taxes like the rest of us. So many deduction you can take being a business owner bringing in at least ~$150k:

1. Write off up to $10,000 in start-up expenses in 2010 (-$5k/year average).
2. Legitimate business expenses are flexible: ~ $10k
   • Even if you buy a computer, a cellphone and a car primarily for business use, you can use them for personal purposes as well. If you happen to take a business trip to Florida in, say, January, no one is going to stop you from enjoying the sunshine or taking a dip in the pool.
3. Pay yourself Medicare and Social Security taxes 19,000 – ½ can be deducted $9.5k
4. Solo 401k - $50k ($16,5k employee contribution and 20% of net profit of employers the rest – pretax profit at least $205k to max solo 401k)
5. Spouse 401k -$17k
   
6. State and Local taxes -$10k
7. Tax loss harvesting - $3k
8. Mortgage interest 3.5% rate @300,000 loan - $10.5k
9. Property taxes 1% - $3k
   
10. Premium for yourself health insurance is deductible - $10k
11. Health saving account contribution -$5k
12. Personal exemption -$3.7k
13. Home equity loan to make improvement in the house -$1500 max

This all will give you around $143k total deductions... Your income for tax liability after all this... $7000... You pay 0 tax... Of course, I will be happy if I were you

Um, we pay taxes. If i could tell you what we have paid. This year we are gonna get crapped on with taxes...We get taxed based on what is in our business account at the end of the year. We are an LLC so my partner and i pay the taxes in our individual taxes.

 

[pezdispenser]

You are lucky. You don't have to pay taxes like the rest of us. So many deduction you can take being a business owner bringing in at least ~$150k:

1. Write off up to $10,000 in start-up expenses in 2010 (-$5k/year average).
2. Legitimate business expenses are flexible: ~ $10k
   • Even if you buy a computer, a cellphone and a car primarily for business use, you can use them for personal purposes as well. If you happen to take a business trip to Florida in, say, January, no one is going to stop you from enjoying the sunshine or taking a dip in the pool.
3. Pay yourself Medicare and Social Security taxes 19,000 – ½ can be deducted $9.5k
4. Solo 401k - $50k ($16,5k employee contribution and 20% of net profit of employers the rest – pretax profit at least $205k to max solo 401k)
5. Spouse 401k -$17k
   
6. State and Local taxes -$10k
7. Tax loss harvesting - $3k
8. Mortgage interest 3.5% rate @300,000 loan - $10.5k
9. Property taxes 1% - $3k
   
10. Premium for yourself health insurance is deductible - $10k
11. Health saving account contribution -$5k
12. Personal exemption -$3.7k
13. Home equity loan to make improvement in the house -$1500 max

This all will give you around $143k total deductions... Your income for tax liability after all this... $7000... You pay 0 tax... Of course, I will be happy if I were you

er... so have you figured out a way to make groceries tax deductible, like out of a FSA or something???

 

[Ackj]

We are an LLC so my partner and i pay the taxes in our individual taxes.

What's the advantage to that, rather than being a regular corporation?

 

[xiphoid2010]

What's the advantage to that, rather than being a regular corporation?

That's exactly the advantage of an LLC. The profit is pass through, so you do not get the double taxation of a traditional corporation (corporate tax + Your income tax), yet still enjoy the liability protection of a corporation.

Off topic, but I'm disappointed by the lack of financial education of the PharmD degree. Here is an opportunity to advance our profession through financial success and hence power in real politik. Unfortunately most students are either disinterested or ignorant about its importance.

 

[Doctor M]

What's the advantage to that, rather than being a regular corporation?

If we get sued, or we file for bankruptcy, or anything of that nature, our individual assets are protected. In florida, we are protected form anyone pursuing us for monies owed by our business. The business gets sued, not the members.

 

[Ackj]

That's exactly the advantage of an LLC. The profit is pass through, so you do not get the double taxation of a traditional corporation (corporate tax + Your income tax), yet still enjoy the liability protection of a corporation.

Off topic, but I'm disappointed by the lack of financial education of the PharmD degree. Here is an opportunity to advance our profession through financial success and hence power in real politik. Unfortunately most students are either disinterested or ignorant about its importance.

If we get sued, or we file for bankruptcy, or anything of that nature, our individual assets are protected. In florida, we are protected form anyone pursuing us for monies owed by our business. The business gets sued, not the members.

I know the point of incorporating means the business gets sued rather than you personally, but what's the advantage to being an LLC rather than an S corp? I thought they both had single taxation.

 

[Doctor M]

I know the point of incorporating means the business gets sued rather than you personally, but what's the advantage to being an LLC rather than an S corp? I thought they both had single taxation.

We are a partnership.

 

[Dr Wario]

If we get sued, or we file for bankruptcy, or anything of that nature, our individual assets are protected. In florida, we are protected form anyone pursuing us for monies owed by our business. The business gets sued, not the members.

There are a couple of points I would like to make about this statement that many people do not understand. First of all, speaking of liability protection in the event of a lawsuit, personal assets are only protected as long as the individual is not the one making a mistake. Clarifying with example, a standard partnership is sued, the assets of the business and the personal assets of each partner can be used in judgement, even if only one partner is at fault. In the case of Dr. M, if his partner made a mistake, only the assets of his partner and the LLC will be forfeit. What this means to a pharmacist is that if you make a mistake, no matter what business structure you have in place, your personal assets can be included in a judgement.

Secondly, financial obligations to creditors of a LLC are, by default, only collateralized by the assets of the business. However, in many cases lenders require clauses passing financial liability for defaults to owners of the LLC if the assets/income of the LLC can not standalone qualify for the loan.

I make these points to warn people to not think of corporate business structures as some type of impenetrable force-field of liability protection.

 

[xiphoid2010]

If we get sued, or we file for bankruptcy, or anything of that nature, our individual assets are protected. In florida, we are protected form anyone pursuing us for monies owed by our business. The business gets sued, not the members.

I think the students in this forum needs a primer on incorporation.

People, in layman's term, incorporation is the formation of a business entity as if it's a person. So me and Dr.M might form an "ABC corp", and the liability (debt, wrong doing) is as if it's doing and responsibilities of that person, not it's owners/share holders.

It's not bullet proof as someone posted, that's for a more law savvy person to delve into. But it does go a long way to grant large amount of protection.

 

[All4MyDaughter]

I think the students in this forum needs a primer on incorporation.

People, in layman's term, incorporation is the formation of a business entity as if it's a person. So me and Dr.M might form an "ABC corp", and the liability (debt, wrong doing) is as if it's doing and responsibilities of that person, not it's share holders.

It's not bullet proof as someone posted, that's for a more law savvy person to delve into. But it does grant very large amount of protection.

Since you know a lot about it, you'll want to clarify that an LLC like Doctor M's (or mine) is not a corporation.

 

[All4MyDaughter]

I know the point of incorporating means the business gets sued rather than you personally, but what's the advantage to being an LLC rather than an S corp? I thought they both had single taxation.

We are a partnership.

Granted, I'm in a different state than Doctor M, but my accountant has advised me to switch my business structure to from an LLC to an S-corp. They are both taxed on a "pass through" basis, but there are some advantages pertaining to the way dividends are taxed that my accountant thinks will benefit me. I'm looking toward doing that at the end of the year, before we file our taxes.

 

[xiphoid2010]

Since you know a lot about it, you'll want to clarify that an LLC like Doctor M's (or mine) is not a corporation.

LLC is often synonymous with S corp (with few differences). I hold no law degree, just trying to convey what the general info I learned in layman's term. Feel free to correct me if I'm wrong.

 

[All4MyDaughter]

LLC is often synonymous with S corp (with few differences). I hold no law degree, just trying to convey what the general info remember what I learned in layman's term. Feel free to correct me if I'm wrong.

Synonymous? Hardly. LLC is a Limited Liability Company and is not a corporation. The taxation structure is similar (though not identical) to an S corp, but the process of formation and laws pertaining to operations and governance are different. It's an important distinction.

 

[xiphoid2010]

Synonymous? Hardly. LLC is a Limited Liability Company and is not a corporation. The taxation structure is similar (though not identical) to an S corp, but the process of formation and laws pertaining to operations and governance are different. It's an important distinction.

yet it still enjoys the liability protection of a corporation, which I think is the major point of incorporation.

 

[All4MyDaughter]

yet it still enjoys the liability protection of a corporation, which I think is the major point of incorporation.

Well. Dr Wario summarized issues pertaining to the liability matter quite nicely. And there aren't a lot of differences on the front. But it is absolutely, positively, 100% incorrect to say that LLC and S-Corp are synonymous. Someone looking to start a business shouldn't say, "Oh, they are the same, I'll just pick one because I need liability protection!" There are a host of other factors to consider when choosing your business structure. To make it all about liability protection is gross oversimplification.

 

[xiphoid2010]

Well. Dr Wario summarized issues pertaining to the liability matter quite nicely. And there aren't a lot of differences on the front. But it is absolutely, positively, 100% incorrect to say that LLC and S-Corp are synonymous. Someone looking to start a business shouldn't say, "Oh, they are the same, I'll just pick one because I need liability protection!" There are a host of other factors to consider when choosing your business structure. To make it all about liability protection is gross oversimplification.

agreed there, it's a gross simplification. But if we are to teach people the primer on incorporation, then let's not dive into the details as it would only serve to confuse.

What I want to pass onto students in this forum is that incorporation is like creating a straw man, so liabilities will go to it rather than who owns the straw man. If they are really interested in incorporating their own company, then they need professional help in choosing LLC vs. S-corp vs. C-corp, advice far more than you and I could possibly provide in some forum. It's unfortunately that most students here don't even know this much.

 

[All4MyDaughter]

agreed there, it's a gross simplification. But if we are to teach people the primer on incorporation, then let's not dive into the details as it would only serve to confuse.

What I want to pass onto students in this forum is that incorporation is like creating a straw man, so liabilities will go to it rather than who owns the straw man. If they are really interested in incorporating their own company, then they need professional help in choosing LLC vs. S-corp vs. C-corp, advice far more than you and I could possibly provide in some forum. It's unfortunately that most students here don't even know this much.

While there's no doubt professional guidance is important when starting a business, I think the students and pharmacists on this forum can comprehend at a higher level than you are giving them credit for. It certainly doesn't require a law degree.

Since someone already posed the question about the differences between the two types of entity, it's clear that there is some interest. I'm too tired after working all day to get into the specifics beyond what I already posted, but the major tax advantage for an S-corp (vs LLC) is avoidance of some (but not all) self-employment taxes.

 

[Doctor M]

There are a couple of points I would like to make about this statement that many people do not understand. First of all, speaking of liability protection in the event of a lawsuit, personal assets are only protected as long as the individual is not the one making a mistake. Clarifying with example, a standard partnership is sued, the assets of the business and the personal assets of each partner can be used in judgement, even if only one partner is at fault. In the case of Dr. M, if his partner made a mistake, only the assets of his partner and the LLC will be forfeit. What this means to a pharmacist is that if you make a mistake, no matter what business structure you have in place, your personal assets can be included in a judgement.

Secondly, financial obligations to creditors of a LLC are, by default, only collateralized by the assets of the business. However, in many cases lenders require clauses passing financial liability for defaults to owners of the LLC if the assets/income of the LLC can not standalone qualify for the loan.

I make these points to warn people to not think of corporate business structures as some type of impenetrable force-field of liability protection.

Yes, this is correct. I speak only in terms of the following:

http://law.onecle.com/florida/business-organizations/608.4228.html

We dont plan on getting sued for a negligent act, misconduct etc etc. but you never know. We hopefully can protect ourselves from the money hungry PBMs.

 

[Doctor M]

Please consult a lawyer and CPA before picking one...

 

[Doctor M]

http://law.onecle.com/florida/business-organizations/608.4421.html

 

[Sparda29]

Even though my pay has gone substantially higher, the one thing I'm not happy about is having to spend money on "professional clothing". I probably only have like 3 pairs of dress pants, and 7 dress shirts (each a different color), and 10 ties.

God damn, why can't I just wear scrubs? $100 could probably get me 10 scrub suits. So annoying watching all the physicians getting to wear them while us pharmacists don't. If I ever become a DOP, that's gonna be my first rule change.

 

[Temperature101]

Unforunately, pharmacists get stuck in this mode where they work as many hours as possible to get a little more on their checks, but after they work their OT, they're just too tired to bother trying to make REAL money somewhere else.

I find a lot of pharmacists (and healthcare workers in general...compare them to my MBA friends who were the "dumb business school" kids in college) are just really terrible with money and have no idea what they are doing.

I would encourage everyone to use the cashflows from their pharmacy job to find other sources of income. The answer is not in a book; everyone finds their own path. It's simply not enough to work and live month to month. I'm 30 years old, 7 years out of pharmacy school (with no help from parents), owe $270k on a $1M build custom home, fully paid off pharmacy school $200k (ya, I could have done better by putting money somewhere else, but the irrational side of me doesn't like owing ANYONE), have about $150k set aside in retirement accounts, bought my dream car, etc. I'm not anywhere near "rich," but I am comfortable and now only work 30hours a week. My job as a pharmacist pays the bills, but it's not enough to "make it." I can't say I've "made it" yet, but I'm getting closer.

You are only 30...You have achieved all that and do not consider yourself as someone who has made it...Who are you kidding? Sell that house and buy a 2000sqft house cash in FL and put the rest 500k in some investement with 4-5% yearly interest and you will living like a king/Queen...

 

[rxblitzrx]

To OP: I didn't even get past the first page and it seems like you've gotten advice from both sides of the fence. I hope you learned something.

 

[clachan3]

[YOUTUBE]http://www.youtube.com/watch?v=5hfYJsQAhl0[/YOUTUBE]

love the clip, thanks for sharing