Plan would be to sell in 10-15 years to PE so imo that is a benefit of partner and since change from W2 to s corp / LLC tax havens also benefit (can also start employing the kids for Roth benefit)
ASC, granted 2 rooms, cranks 12-16 cases / day with a first assist provided by the asc to close
historically people fight for the good payers and don’t do the less paying procedures. I see an issue if one guy just sits back or takes a ton of vacation but the partner does 45-60 fluoro injections / day and 50+ clinic. Has the support with scribes multiple MAs etc to facilitate this, owns the building so no substantial rent.
My original question is what are some of the tax benefits or write offs you all are doing with s corp paying in distributions to pllc
- If this is an office based practice, as far as I've seen, I don't think PE is going to be very interested or offer very much if anything unless you are staying on after selling to them, in which case they will drastically cut your pay to get their money back. Without YOU, the practice generates exactly $0. You are the product/service, the business doesn't make anything at all without you (and the other doc).
- Again I see the problem of eventually one person is doing more than the other, it's almost impossible to ensure both partners are putting in equal work. So if profits are being divided 50:50, someone is going to eventually feel screwed. As I mentioned earlier, a much more equitable strategy would have been to stay non-partner, and receive the entirety of your incoming accounts receivable minus 50:50 overhead (or any amount of overhead that you two agree to). Now that you own 50:50 shares, both of you are legally entitled to 50% of the profits, but usually one partner is doing a meaningful amount more of the work generating said profits.
- Be careful about "owns the building so no substantial rent." I'm assuming you mean your partner owns the building/property? He is definitely paying rent, probably to another LLC which he owns, which is a holding company for the property. You should find out what the rent is, and if there is a clause in the lease agreement that prevents the owner (him) from substantially jacking up the rent. I have seen this happen in the very situation you are in.
- As to your question regarding tax benefits / write-offs with an S-corp, you did not need to become a partner at all to reap the tax benefits. In fact, I would say at least to some extent your tax benefits just went substantially down. You could've still had an S-corp without being a partner/owner of the practice, and just paid yourself as the lone employee of your own S-corp. The advantage of that would have been substantially juiced up solo-401k contribution (almost 70k per year and goes up every year). Now that you are an owner of a company with employees, you will need to offer the same 401k benefits to the employees and you will not be able to save nearly as much due to non-discrimination IRS rules. You can argue that it's fair and equitable to make sure the employees are taken care of, but had you not become a part-owner, that responsibility would've fallen on your now-partner original owner, and you would've been able to rapidly contribute to your own solo-401k individually.
- As far as other tax savings/strategies, again these are all going to be the same as any sole proprietor, 1099 independent contractor or solo S-corp which you could've had. Write off phone, internet, home-office if justifiable, and any expenses at all related to your work. Vehicle is another popular write-off. Can still do 401k but it just got substantially more complicated (probably need to pay a company to manage this for you, whereas with solo-401k you can do it yourself and open the account within like 1-2 days).