Beginning with last week I am providing as much information as possible regarding the political landscape’s effect on taxation, and the net resulting effects that I feel you should care about the most.
This is the second in a series. This week, let’s talk about the corporate tax landscape, and whether or not this may be a window of opportunity for you.
While you were memorizing the intricacies of human anatomy, you probably weren’t daydreaming about corporate entity structures.
Depending on when you completed residency and entered private practice as a entrepreneur physician, there is a very real possibility you could never have predicted the kind of metamorphosis the tax code would go through in the past 7 years.
But here’s the thing: the reduction of the corporate tax rate to 21% may just be sitting there like an unopened gift, and you may want to consider unwrapping it before the political winds shift.
Breaking Down the Numbers (Without Breaking Your Brain)
You’ve built your practice from the ground up, carefully nurturing it like a particularly demanding houseplant.
Now it’s flourishing, and your current LLC/S-Corporation structure might be starting to feel like a pair of scrubs that’s one size too small.
The potential tax savings of a C-Corporation structure could be more substantial than that end-of-year bonus you keep promising yourself.
The Shield of Corporate Protection
Remember that group project in medical school where one person nearly tanked the whole thing? Well, bringing additional clinicians into your practice should never be so risky.
A corporate structure under a limited liability partnership acts like a professional-grade isolation ward – keeping everyone’s legal exposures quarantined from each other.
Isn’t it nice when business structures work as effectively as proper sanitization protocols?
The State of Affairs (All 44 of Them)
You know how patients never read the full prescription information?
Well, this is one time you’ll want expert advice to review all the fine print. The 44 states that tax corporate income each has their own special flavor of regulations – think of them as different strains of the same bacteria, each requiring its own specific treatment plan.
This underlines again the importance of seeking expert business advisor assistance with the minutiae of microforecasting.
The Numbers Game: Your Practice’s Financial Physical
Before you make the leap, consider this your practice’s financial wellness check. You’ll need:
✓ A thorough analysis of your current tax burden
✓ Projected growth patterns for the next 3-5 years
✓ Detailed scenarios for different income levels
✓ Risk assessment for various liability exposures
A very general hallelujah number, since I know you’re curious, would be when your reportable net income from your current LLC added to the reasonable wage you’re taking begins to crack the half a million mark.
If you have amazing margins in the upper 30 percent range, say 38%, you’re looking at about a $1.3M practice.
Please! Be advised this is a generalization – you may reap benefits in a range below this estimate, depending on your unique situation.
And Now… Because There’s Always a Bottom Line…
Making the switch from an LLC/S-Corp to a C-Corp isn’t like choosing between generic and name-brand medications – it’s a decision that requires careful consideration and professional guidance.
Your business advisor should be as specialized in medical practice wealth creation as you are in your field of medicine.
Remember, this isn’t a one-size-fits-all prescription.
Your practice’s unique symptoms (call them circumstances) will determine whether this treatment plan is right for you.
The potential tax savings at 21% corporate rate might look attractive, but like any good diagnostic process, you’ll need to run all the tests before making a final determination.
The good news? Unlike some of your more challenging patient cases, this one comes with a clear set of parameters and measurable outcomes.
Just make sure you’re working with a business advisory specialist who knows their way around a medical practice as well as you know your way around an examination room.
Now that I have you thinking about your future prosperity…
Would you like to discuss an even more proactive approach to the business element of your practice, right now?
Can you imagine how having a non-equity financial partner guiding your practice can increase your wealth, reduce your taxes, and provide peace of mind that will allow you to put 110% of yourself into your patient care goals?
We would like to talk to you about it.
We are accepting two new business advisory clients in the month of December.
Use the link I’m providing below now to choose the time to talk that is most convenient for you.
Imagine having a financial coach and compliance expert by your side, so that you can focus your professional clinical time where it belongs: on patient care.
Does that sound good?
Then reach out to me, and let’s talk: Free Profit & Cash Flow Analysis