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The Vision Of A Community For Empowering Micro-Business Physicians

The Vision Of A Community For Empowering Micro-Business Physicians

 

My Dream, My Passion

My dream is to empower every physician with the knowledge and skills to establish their own micro-corporation as the foundational step towards preserving their professional autonomy.

With the power you have earned through your professional license, you don’t have to passively enter the marketplace as an individual and resign yourself to accepting the high burnout rate associated with traditional employment. This co-dependent work relationship is characterized by control, and ultimately, business owners have control over you as an employee. This is not a fulfilling way to live as a professional, and you have so much more potential! Instead, you can actively choose a better path that will enable you to thrive.

Self-employment through a micro-corporation offers you greater control over your life and can greatly benefit your personal and financial well-being. By entering the marketplace as a micro-business instead of an individual, you can effectively preserve your autonomy.

When you add the support and empowerment of like-minded doctors who come together in a community, it adds a greater power and inspiration to the entire process.

My vision for our SimpliMD community is this:

To inspire every US physician to empower themselves as a micro-business within the marketplace.

Imagine the Possibilities

It is time to ignite a movement within our physician tribe that helps each and every one of you see what is possible.

Avoiding burnout is possible, but it requires more than just wishful thinking. You cannot simply rely on luck to avoid becoming a victim of systemic burnout, as the odds are stacked against you (1 in 2), nor can you cannot depend on your employer to provide you with meaningful solutions. Instead, each of us needs to band together to take back control of our healthcare.

The system is rigged against us, and now is the time to rise up and take control of our future.

Imagine a future where you are not dependent on an employer or third parties, but instead, you can practice medicine with the professional autonomy you have earned. This means truly helping patients and enjoying the lifestyle you have always envisioned.

We Need To Band Together and Invite Others to Join

You are one of over 2000 doctors who are currently part of our SimpliMD community. Thank you for joining me on this empowering journey for our profession!

Today, I am reaching out to you for your help because I have a vision to grow our community to 10,000 members over the next year. Why? Because there is power, momentum, and inspiration in numbers when it comes to changing the mindset of doctors.

Yes, I know 10,000 members is a big, hairy, audacious goal. However, I firmly believe it is possible because doctors across the country are exhausted and frustrated with the current insanity of traditional employment. They are actively seeking solutions and answers.

Sadly, young doctors who have recently completed their training often have limited knowledge of what lies ahead for them, as they are often pushed into employment without fully understanding the implications.

Knowledge is power.

Every doctor needs to know that they have options beyond traditional employment.

You might be wondering about our plan to get this message out and grow our community five-fold in one year. Will we buy a bunch of email lists, create clever lead magnets, or pay a media company to assist us?

Nope, simply put, I want to do it with YOUR help.

No matter where you are on your micro-business journey, being connected to our SimpliMD community empowers you with valuable knowledge. Our stream of content consistently keeps you informed and equipped, hopefully empowering you to thrive!

Now is the time for you to share your knowledge and empower your physician friends who may be lacking business literacy and are unaware of what they are missing out on.

I Need Your Help

The reality is that physicians have a deep respect for and listen to their colleagues, particularly those who possess similar knowledge and expertise. This mutual understanding forms the foundation of effective collaboration among doctors. The secret lies in one doctor sharing trusted professional solutions with another doctor.

The most effective way to grow our community is by reaching out to YOUR professional peer network and inviting them to join us in our valuable community. There aren’t many strings attached or any fancy affiliate links involved.

The first step is to invite others to join our movement by signing up to receive our regular emails that will provide information and inspiration about physician own micro-corporations. You can easily do this by sharing the following link: https://www.simplimd.com/doctorvirtualcommunity

As an added bonus, when they sign up, they can also download my best-selling book“Doctor Incorporated: Stop The Insanity of Traditional Employment and Preserve Your Professional Autonomy” for FREE here. (Yes you can download it too)

Please send them the links to our virtual community and the free book. Encourage them to join you in our community!

But wait there is more! If you send out 5 or more invitations to your peers, just email me at tod@simplimd.com and I will send you the link for a FREE annual membership to SimpliMD worth $2500.

By the way, I would like to suggest that you become a SimpliMD member and then sign up to become an affiliate before sending out your invitations because it could be financially advantageous for you.

To ensure the best experience for my affiliates, I prefer you to become members first. As an added incentive, I’m pleased to offer you a 50% off coupon for your membership here. Simply use the code “MEMBERSHIP50” at checkout.

I invite you to take your next step now by committing to become a member of our SimpliMD community now.

The Mission

Now let’s come back to exploring my dream of our community being one that empowers and supports physicians everywhere in their micro-business endeavors.

Imagine a community where physicians who own micro-businesses come together to share their experiences, challenges, and triumphs. This community would serve as a safe haven where doctors can find resources, advice, and inspiration to navigate the often turbulent waters of running micro-corporations that intersect with their lives as healthcare professionals.

It is a mission born out of my personal experience that there is a hidden professional space for doctors that needs exposed.

Our Mission at SimpliMD is to inform, inspire, and support physicians to flourish through micro-business competency, which in turn will empower doctors to thrive in their roles as both healers and entrepreneurs.

In the upcoming weeks, I will delve deeper into this mission for our SimpliMD community and thoroughly review the Roadmap for achieving this mission and vision.

Following that, I will examine what I refer to as the SimpliMD Way—a set of 9 practices that are critical to flourishing as micro-business owners in the marketplace.

I look forward to having you join me and help shape the future of our micro-business community.

Employed Physicians Can Upgrade Their Benefits with their Own Professional Corporation

Employed Physicians Can Upgrade Their Benefits with their Own Professional Corporation

Dr. Incorporated brings you this week's theme about "How Employed Physicians Can Upgrade Their Benefits". Standard physician employment...

A traditional physician employment contract is part of your conditioning during training.

Through medical school and residency, you align yourself with healthcare corporations (yes medical schools are a BIG business) and sign up for the associated corporate benefits packages. You end up trusting in their collective wisdom and the beneficence of the packages given to you and your peers.

This all sets in motion a mindset that continues when you graduate from a residency:

1. Align your Professional Life with a trusted healthcare corporation, and sign up to work for them under a fair market value arrangement.

2. Let that same trusted corporation resource your benefit plan as part of your compensation package and trust that it is built to maximally benefit your personal life.

This is the pattern that you are conditioned to follow in your training and is reinforced by the same employed medical educators that influence you. You are trained to do what they do professionally, and this includes their job choices. What they do is sign employment contracts with big business healthcare and blindly accept their benefits package. In this context, the blind then lead the blind (you).

There was a day and time when big company retirement pension plans and healthcare plans were truly a benefit. They were robust and excellent. I can recall my first hospital employee contract that included free medical care at that facility including labs, x-rays, ER, outpatient visits, etc. This was included in my benefits package and I paid nothing for it out of my paycheck. It was truly a benefit.

Those days are gone. A relic of the past. Now a good portion of costs for many benefit programs are shared by you and your employer, and it seems more and more of it is paid by the individual.

This includes pensions that used to be a bedrock benefit for employees. Now only 4% of private sector employers offer any kind of defined benefit plan, which is down from 60% in the early 1980s. Pensions have now transitioned to newer tax-advantaged retirement funds like 401(k)’s are offered as replacements and are filled more and more by the employee rather than the employer. At this time, only 50% of employers offer any sort of matching program for employees with 401(k) funds. You are paying for more and more of this yourself.

Most of you don’t realize that your benefits package offered by your employer, lacks any ability to be individualized. By definition, as a large corporation, the benefits they offer can’t be individualized due to federal laws like ERISA that sets boundaries in place for all corporate employees regarding retirement and health plans. While ERISA is important for equality purposes, the downstream effects on you as a high-income earner are significant, especially concerning your retirement plan.

Before I started my PC, I was pleased as a punch that I had maxed out my retirement benefits with my employer. I had no idea what I was shooting for, or if it would be “enough”. I was ignorant about what I would need and didn’t know how to calculate my net worth. But it just made sense to max out all of my corporate retirement options assuming this would all add up to be enough. But after I formed my PC and began to pay for all of my retirement plans, I realized how the caps placed on those prior employer accounts, due to ERISA, would have never gotten me to the totals needed to support my desired retirement lifestyle.

When you are a traditional employee you will be limited to the amount you can save in tax-advantaged contributions to your retirement accounts. The 2022 cap with ERISA is currently $61,000 (a combination of employer and individual contributions). 

Using some simple math if you maxed this out with every paycheck, the 30-year total (without growth or interest) is $1,830,000. Although that is a lot of money it will only get about halfway to the estimated needed nest egg for most physicians which is $3-5 million. 

When I was a traditional employee I used to naively believe that maxing out my retirement contributions would be enough. I think many of you assume the same thing as you trust in the wisdom of our federal government and your employer to organize this for you. I think this is especially common early in your career and is easily missed if you don’t monitor your net worth regularly. 

One of the greatest benefits to opening your PC is that both you and your spouse (if they are employed by you) now have the opportunity to set up an individual defined benefit plan (like a cash balance plan) that allows for tax-advantaged contributions well over $200,000 annually (amount is based upon actuarial tables). 

This is over 3x the amount in comparison to a traditional employee and easily provides the estimated $3-5 million that you will likely need for retirement. 

The amount that you can contribute will be proportional to the size of your 1099 income that flows into your Private Corporation.

Retirement shortfall is an emerging problem in the employed physician world where it is estimated that most employer programs will only meet 25% -50% of a physician’s retirement needs as noted above. But through my PC, I will easily hit the needed Net Worth mark needed a full 10 years ahead of schedule. Financial Independence in my 50’s feels good!

When you own your Professional Corporation (PC), you have regained total control over your benefits which can be individualized in a package for your benefit. Now that is novel, a benefits package that helps you reach your personal goals.

Physicians fear having to resource their benefit plans due to time and knowledge constraints. No worries, there are plenty of companies that help small businesses do this. Hire one. For example, SimpliMD is a comprehensive physician agency that helps doctors do this. This is easier than you think.

The fact is that as a traditional employee you pay a growing portion of your employer’s benefit plan and yet have little or no control over how it is organized to meet your needs. The result is that you pay for things you don’t need, you will come up short on your tax-advantaged retirement funds, and miss out on fringe benefits that you could use. Although your employer’s benefit plan is turnkey for traditional employees, and usually comprehensive, it has significant limitations because it cannot be individualized for you and your family. Those limitations may not seem all that significant on the surface but as we will unpack it does have important implications for you. 

When you transition to a PC-employment lite contract you will now gain full control over the sourcing and creation of a benefit plan that is designed to individually benefit you and your household. In contrast to large employers, small businesses can provide their owners a host of unique benefits that include automobile expenses, unrestricted continuing medical education, cell phone-digital services, business expenses, home office expenses, private school reimbursement, employment of spouse and children, health, life, disability insurance, as well as unique retirement plans that allow for larger contributions than traditional employment contracts. Each benefit can be crafted around the needs of you and your family. Therefore your business only pays for the benefits you need.

Ultimately the fringe benefit plan offered to you from your PC should be designed specifically to benefit you and your household, and in turn, they are underwritten by the tax-advantaged framework of your individual-PC business structure.

When you sign a traditional employment contract, you also lose control over your income flow and therefore give away a lot of your hard-earned income to taxes and benefit plans that are organized for the masses, not for you individually.

In this arrangement, you have lost another piece of autonomy in your life. Control over your benefits. By taking over control of your benefits through your PC, you have cut another tie with those who try to control you.

Traditional employment contracts result in giving away millions of dollars during your career, in part due to the restricted benefit programs offered.

The fact is that you are a business, and you subjugate your right to organize yourself as a PC by engaging in a traditional contract with your employer.

Physicians are afforded unique treatment in the US tax code as simultaneously being an individual and a business corporation through what is called a Professional Corporation (PC).

When you form your PC, you now have two entities to flow your hard-earned income through, and this leads to individualized benefits and increased tax strategies.

So how do you regain control over your benefits, and also lower your effective tax rate through your PC?

You organize an employment lite contract (PSA) between your current employer and your PC and in the process take over control of your benefits. In this arrangement:

1. Your PC pays you an IRS-compliant reasonable salary for your professional services that are contracted out to your large corporate employer in a PC-employment lite agreement. Through the power of individual small business ownership, you will be able to lower your effective tax rate on this salary.

2. Your PC will now pay for your fringe benefits and this can be highly individualized to meet your household needs. Most PCs are set up as S-corps and can be organized to provide your desired benefits. I suggest you work with an attorney experienced with setting up PCs for physicians to maximize all of your tax-advantaged benefits.

3. Maximizing your benefits through your PC will reduce your out-of-pocket expenses as the business expense will ultimately reduce your pass-through (if you are an S-corp) taxation on your income. This ultimately reduces your household expenses for benefits (remember traditional employees pay for more and more of their benefits themself) and does it in a tax-efficient manner.

4. You can dramatically increase your tax-advantaged retirement funding through a defined benefit program such as a cash balance plan. This grows your net worth in a much more tax-friendly fashion.

5. Your PC can be used to employ household members such as a spouse and children. This allows you to keep more of your business’s resources within your home and opens up some unique benefit plans like a solo 401(k) for your spouse, Roth IRAs for your children, and private school tuition reimbursement benefits, just to name a few.

6. Your PC can pay for your entire CME expenses that occur anywhere in the world, assuming the CME is legitimate. This is one of my favorite benefits and I particularly like using CME Away out of Canada because they have a “spouse travels for the free program”. My wife and I have gone on several of these trips and thoroughly enjoyed the high-quality CME, as well as the business-covered travel costs.

All of these individualized benefits are possible when your form your PC and wisely leverage your dual tax code status as an individual and a business.

Now that you are aware of what is possible, you can reap the benefits of being both an individual AND a corporation.

Employed physician, you are more than an individual taxpayer, you are a business, and you should have your corporation (PC) to maximize your benefit and tax strategies.

Dr. Inc.

Truth –  4 Benefits That Are Not Beneficial

Truth – 4 Benefits That Are Not Beneficial

Good day, this is Dr. Incorporated bringing you this week’s installment of the Truth About Employed Physicians. I want to thank you for all that you’ve done this week in your job as a physician.

Keep Doing the Right Thing

Regardless of where you’re located in this country, there are so many people who have been benefited from the work that you do taking care of patients every day. I know a lot of those patients don’t often offer their responses of gratitude to you, but I want you to know that as a fellow physician I know the hard work that you do. All those extra hours you put in, the attention to detail, the extra phone calls, the personal efforts that you make to speak to patients one on one to relay information that is very personal and pertinent to them, I want to thank you for that. I’m reminded this week of a patient who called to leave a message for me to express to me their gratitude for the work I’ve been doing with their children. It was a nice message because it wasn’t asking me for anything, it was just simply an expression of their appreciation for the work that I do for them that goes above and beyond the normal call of duty that we have as physicians. I hope maybe you’ve received a note or a verbal response like that from a patient this week. If you haven’t, keep doing the right thing for the right reason and keep working hard to take care of patients the way you’ve been called to. I want to express my gratitude to you for doing that.

Employer Benefits

This week’s truth is going to be talking about some of the benefits that we receive from our employers in terms of our employer packages. This week’s truth is:

Truth: There are 4 Employ Benefits That Are Not Beneficial To Physicians

We’re going to take some time today to unpack this a bit more, but those four benefits that I want to highlight this week are

  1. Your Retirement Program(s)
  2. Your CME Benefits
  3. Your Health Insurance
  4. Your Profession Deductions and Tax Strategies

Employment Versus Employment Lite Benefits

I love being an employed physician and I know many of you who are fellow employed physicians feel the same way; there are so many good things about being an employed physician in today’s healthcare environment. But one of the things that I want you to also recognize is that there are things that you give up in the process of choosing to be an employed physician and choosing to accept the benefit programs and packages that your employer offers to you. There are limitations to those, that’s why today we’re going to talk a little bit about those. I will also express to you that what I’ve discovered is that you can choose to remain employed, but by choosing an employee light contract or program as opposed to the traditional employment program, you can maximize some of these benefits. I’m going to elucidate to you today some of the limitations that you have in your traditional employment packages and then contrast that with some of the benefits that you can obtain by transitioning to an employment light type contractor program. I’m not pushing for one way or the other, but I certainly want to make you aware of those limitations.

Retirement Savings

Let’s talk about retirement savings first. It’s important for you to know and understand an acronym called ERISA: the Employment Retirement Income Security Act. This is an act that heavily influences what your employer can offer to you in terms of retirement plans, and it covers most employer-sponsored retirement plans. That includes 401k plans, pensions, deferred compensation, and profit-sharing plans. It does not cover retirement plans set up and administered by government entities and churches such as many of the 403 b plans. It also does not apply to simplified employee pension plans or set plans and it doesn’t apply to individual retirement accounts. But most of you have some sort of 401k or a Roth 401k program that your employer provides, which allows you to maximize savings for retirement and benefit from the tax breaks associated. The reward to you as an employer is by you participating in these programs you Receive tax-free money that goes into these programs. And due to the rising costs of living that exist in our country, etc. These are great programs for you to participate in. And I certainly encourage you to maximize your 401k or Roth 401k program. Contributing to these 401k programs allows you to use pre-tax dollars. Pre-tax monies mean that it flows directly from your paycheck into the plan before the taxes are deducted. As a result of this less of your income ends up getting taxed. The assessment of the tax is at the point of when the funds are removed from the account, which is usually at a lower rate for physicians in particular high-income earners. Right now your effective tax rate is likely to be much higher than it is when you eventually retire. Now, there is a thing called a Roth 401k program on which you can also contribute after-tax money to a 401k program. And after-tax means that the cash flows from your check into the plan after tax deductions. The trade-off of this qualified withdrawal is that you are down the road, you find that these funds are tax-free A Roth 401k plan is a particularly useful tool if you end up in a lower tax bracket after retirement Many physicians find these Roth type programs are really wise to invest in. But here’s the kicker that you need to know and understand: employees are limited by ERISA to the same rules for tax-advantaged savings as it applies to the lowest level employee in their company There’s a maximum of $19,500 that can be placed in these 401k programs and up to $6,000 can be applied if you’re over 50, in addition to the $19,500. These employee ERISA limits are typically not going to lead to enough savings on a pre-tax basis to allow you to reach the retirement lifestyle that you’re used to in your pre-retirement days. This is a little-known fact that basically the amount that your employer is going to be able to maximize with you and your partnership with them will typically only lead to you reaching about 50% of your retirement needs as a physician. This is a critical thing to understand. The bottom line is that your 401k program as a physician is likely to lead to a retirement shortfall.

ERISA Will Lead To A Retirement Shortfall

A lot of physicians don’t realize this, they basically are maximizing their 401 k and stacking away that money, ultimately trusting in the process of accumulating that money that it will lead to a nest egg that will allow them to retire at a level they want. Today’s ERISA caps make it really difficult to reach that goal. It’s also difficult for physicians to often save enough money with after-tax savings to really reach that goal as well. So what’s the solution? employed physicians can work with their financial planners to become super savers. They can work with their employer-sponsored program, typically in a 401k, to bank away as much pre-tax as possible, and then you’re going to augment those post-tax savings in a program that allows you to reach your projected goal.

How to Fix The Shortfall

My recommendation is for you to consider converting to an employee light contract, for you to form your own PC, and to craft an individualized retirement program that allows you to reach your projected needs. When I made this move I was able to restructure my retirement savings from the ERISA limitations of $56,000 pre-tax to nearly a $200,000 pre-tax retirement savings program through a 401k defined benefit plan for my wife and me that nearly increased our retirement program to four times that what I was receiving through my employer and allowed me to more comfortably reach the desired destination that I had in retirement.

Understand Your Situation

This is a pretty big deal for most physicians and the bottom line I want you to understand as an employed physician is that your current employment program for retirement likely will not allow you to reach your desired destination at retirement. I want you to think about this, maybe work with your tax or financial planner to think through more strategically how you can reach the goals that you will have in retirement. Consider bulking this up through the various programs your planner can help you with, or consider transitioning to an employee lite program that allows you to maximize your retirement savings.

CME

The second area that physicians can get frustrated with is CME restrictions. I know many of you are given an X amount of money for CME per year that can range anywhere from $2,000 to $3,000 to $4,000 per year. I know from my prior experience with my employer that those numbers are relatively small. They go on to add additional restrictions to those about where you can travel both inside and outside the country and begin to nitpick at how those CME reimbursement fees are given to you in terms of where you can go and what you can use that money for. It gets to be a source of frustration for many physicians, they find those CME dollars really don’t stretch very far, especially given some trips that physicians like to take to nice locations and staying in nice places–many times taking their family with them on those CME activities.

Pre-Tax CME Without Limits

What I’ve come to realize is that by forming my own Corporation and engaging in an employment-like contract, I now can travel anywhere I want, where ever there’s an accredited CME afforded to me, and that includes anywhere in the world. So the cost of the trip really becomes a little bit irrelevant to me, and the location of the trip becomes a little bit irrelevant to me in terms of restrictions, and I can really choose along with my wife where we want to go and do our CME. Yes, I do need to take into account the cost of this in terms of the global budget of my corporation, but it really affords me a great deal of freedom to choose to go where I want. There are no financial restrictions to this, my corporation pays all the CME for me with pre-tax dollars, and really turns out to be a great benefit to me.

One of the things I like to do is use a company called Sea Courses out of Canada, to go to some more exotic locations, because they afford a program that includes my spouse and allows her to attend the program for free with me. It’s a nice benefit, in that all the CME expenses are covered through my corporation, but again, my spouse is allowed to attend these with me for free, which is really enjoyable as well. In your current employment structure as a standard, employed physician, as you know, spouses are often not included in those and you have to pay for those out of pocket. There’s still a benefit, and your company is covering a good deal of the overhead associated with that travel and expenses, and adding your spouse in is is a small element, but it’s nice to be able to how’s this all within your own corporation and allow your spouse to come in a covered fashion.

Health Insurance

Let’s talk a little bit about health insurance. The reality is that your employer is asking you to pay more and more the expenses associated with health care From the premiums to the deductibles, more and more of that is being allocated to you. What you’re beginning to realize as physicians is that it really costs a lot to receive health care in this country, even for you as a physician. Man, I can remember 20-25 years ago when I signed up for my first employee contract with our hospital, my little hospital covered virtually all our expenses at the hospital. X-rays, labs, in-patient care, ER care, physician office expenses, everything was covered free. I even had catastrophic coverage on top of that. But those days are gone.

Those are the days of old, no longer do they exist. You have an increasing amount of your paycheck that goes towards health care expenses, and then the deductibles are pretty large as well when it comes to this. One of the things that I’ve found when I reorganized myself into an employee-like contract and form my own PC was that I was able to structure my PC to cover a good portion of my expenses. My own PC covers my private health care insurance for me and my family. That’s a great benefit to me. Yes, this is taxable as a wage in most instances, but it’s a great benefit that I receive through my corporation.

Out of Pocket Healthcare Benefit

My company also pays all my out-of-pocket expenses, including the deductibles. It also provides an HSA program for me that allows me to save pre-tax dollars in an account that can be used as a mini-retirement account in the future. Basically, my out-of-pocket expenses for health care through my own company become very minimal through the combination of these processes, which is much different than you receive in a standard employment benefits package for healthcare, even as a physician.

Professional Deductions and Tax Strategies

The last thing I’ll mention to you is professional deductions and tax strategies. By forming my own PC as an S corporation and employing myself in a PC, I now can unlock many benefits uniquely available to small businesses that are not available to you as an employee of a large healthcare corporation. I will add here that many of the owners and administrators of these large health care corporations are granted the benefits I’m going to mention to you, but as an employee, you are not afforded those benefits.

Lower Marginal Tax Rate

The first I’ll highlight is that you are able to lower your marginal tax rate by lowering your wages. Your household income remains unchanged in a business structure on which your income flows to you through the wages from your own corporation paying you. But now it also flows through the PC or the company’s distributions to you as well. Your total income in your home doesn’t go down, but your own personal wages do go down, which allows you to be taxed at a lower rate, and overall reduces your taxes in your household.

As I mentioned previously, healthcare insurance and health care coverage are greatly improved through a PC or an S Corp.

Employment of Spouse and Children

Number three: You can employ your spouse and children in your corporation. This has many tax advantages as this income is brought into your home. By opening this door, you’re opening the door to enhanced household retirement savings, college savings, and even private school offering coverage for your children.

Home Office Expenses and Dwelling Unit Reimbursement

Number four: there’s a home office expense. Now, this can be a little tricky but done properly. With the advice of your accountant, you can certainly outsource some of the expenses associated with home office expenses. Again, for physicians, this can be a little tricky, I encourage you to work closely with your accountant, but there are some opportunities here. Number 5 is a little-known benefit is that you can also rent your home to your PC. When structured properly, you can rent your own home at fair market value to your PC 14 times per year to be reimbursed to you tax-free. This is called a Dwelling Unit Rental plan that is typically embedded in your corporation through an attorney familiar with the process. The power is that this is reimbursed to you tax-free. This is called a dwelling unit reimbursement program, and it’s a little-known benefit that can amount to a significant tax-free income to you each year when structured properly through your tax attorney or through your tax accountant.

Business Travel Expenses

The sixth benefit is that you can have reimbursement of your business-related travel expenses. You can track your professional related expenses very simply through an app on your phone called MileIQ or others that are similar to it, and then submit those miles for reimbursement through your corporation (note: this can’t be added up in terms of your normal business travel from your home to your office, but for physicians, there’s a lot of traveling that we do, depending on your specialty to provide care at the hospital, your clinic and other locations and this can be tracked through simple apps like MileIQ and then really lead to a significant amount of tax reimbursement to you each year).

Cell Phone and Digital Access

You can also reimburse your own cell phone expenses. And through using these and an accountable plan, you can really outsource an expense out your digital access such as Internet data and cell phones to be reimbursed.

Automobile Expenses

You can also begin a vehicle leasing or depreciation program for your vehicle that is used for company business (medical profession). Depending on how your corporation is organized, you may be able to pass these expenses on through your PC through leasing in a depreciation program that allows you to expense out your vehicles, which is a pretty significant saving.

Larger and More Robust Retirement Programs

And lastly, as I mentioned previously, you can have significant retirement savings through opening your own small business PC and then funneling your retirement accounts in an individual way through those small business plans. In this business model, you can take advantage of maximum IRA, 401K, and qualified plans to help you reach your retirement goals

There are a lot of benefits that you have to be an employed physician. But there are some benefits that don’t favor you in those plans. I encourage you to just take some time to reflect on this and take some time to think about how you might consider individualizing these plans and then maximizing this for yourself and in the future. It’s not as difficult as you might think.

This is a truth that you need to know as an employed physician and I encourage you to think about these things.

I look forward to hearing your thoughts and responses in regard to this and I hope you have a great week. Leave written comments here or leave a voice message at our speak-pipe attached to this blog.

Truth – Predictable Paychecks Make Doctors Happy

Truth – Predictable Paychecks Make Doctors Happy

Hi everyone. Dr. Inc. here bringing you the truth about employed physicians. I want to thank you today for your hard work and dedication. As I’m writing this, it’s a holiday weekend here in this country, and what I know about doctors is there are thousands of you as physicians who are going to work on this holiday weekend and doing your job, just like you always have, in a dedicated way to take care of patients all over the country who are in need of you today. It’s an amazing thing what you do as a doctor. 

I’m thankful that I get to do this myself, and I’m thankful that there are scores of you who are providing care for patients when frankly, you might not even want to  (you’d probably rather be doing something else with your family or going to the beach or to the mountains or whatever it may be). But you’ve chosen this path, you’ve chosen this career, and you’ve signed up to do the work that you’re doing on days like this when many Americans are off. Thank you. Thank you for all that hard work. Thank you for that dedication. 

Today’s truth is that predictable paychecks make doctors happy. 

One of the things that I’ve really enjoyed in my career is collecting that regular paycheck that is really quite substantial and large. I’ve always found that to be a sweet feeling getting that paycheck. Of course, nowadays I don’t receive a paycheck, I just receive a direct deposit to my account. So the feeling of that paper being in my hand or looking at it has really sort of gone away, however, those monthly bank deposits also result in a wonderful feeling. 

Of course, this is not the reason that we do what we do as doctors. I really see it as being downstream of the beautiful thing that we get out of taking care of patients and doing what we do to provide care to people every day. 

But when it comes to getting that predictable and sweet paycheck, there are some assumptions that come along with it. The greatest of these is you’re getting paid at a fair market value. You’re also getting to practice in the community of your choice and preference. There are a few things that come along with that paycheck and the responsibilities that come with being an employee, but isn’t it sweet to have some confidence to know that you’re getting paid fairly and that you’re getting to choose where you want to live, and you’re getting to choose to do what you want to do? 

You know, it is the easy button for us as employed doctors, because quite frankly, we’re getting paid a guaranteed rate that allows us to know (when it comes to our own personal budget) that we’re going to have money in the bank every month. We’re going to know precisely what that amount is and we’re going to know what we want to do with that money. 

Some of you found out in the past six months though, that as much as you thought you had a guaranteed contract and income when COVID came and your health care employers began to bleed a little bit and began to feel the pressures of the financial shortfalls, for many of you they began to short your checks, or they began to change your contract or they wanted to renegotiate how much you’re being paid. Many of you felt that was an injustice. Many of you felt that was wrong. Many of you felt pretty bitter towards your employer. 

I’m not sure where you are in that or how that landed for you, but it certainly is a memorable event for each one of us. At the end of the day, most of us love receiving a guaranteed paycheck with a guaranteed rate as an employed physician. Many of us also enjoy the pre-packaged benefits that come with being employed. From our health insurance to our dental insurance, to our life insurance, to malpractice insurance, and all the way up to retirement programs, these are all pre-packaged in a nice HR product line that really provides some predictability to how we go about living our lives and our family’s lives and provides some of the substance that we have become used to as physicians. 

Although many of you as physicians may not realize this, the majority of physician employer retirement programs will really cause you to fall short of the range that you have come to learn to live out when it comes to your retirement. So I encourage you to take a look, do a little bit of the math, and see where you’re at with that. Maybe talk to your financial planner or financial advisor, or whoever works with you in regards to these things, just to make sure that you’re meeting the goals that you have for your financial future when it comes to retirement because again, most physician employers retirement programs will cause you to fall short. There are a number of good things about those programs, but again, you need to save a little bit more. 

I also love the fact that we get to forego practice management when it comes to being employed in positions. I have an office manager in my practice and she’s the one that manages all of those days today headaches that arise from having 25 employees and all the nuances that come with every Monday through Friday work week, the weekends, the sick days, the kids who are sick, and all the myriad of elements that come with employing people in today’s healthcare economy. I’m really thankful that I don’t have to deal with those issues. I’ve found that in my 25 years of practice I don’t mind being a leader and I don’t mind exerting my clinical influence in my own practice and own office, but I also don’t mind letting somebody else have the responsibility of managing all of the people that are there. I do enjoy the simplicity of simply practicing medicine and taking care of patients, and receiving a good income that comes from that. As long as I provide quality and safe care and meet the productivity requirements that my organization has set for me, I can simply enjoy those patients and enjoy practicing medicine and doing it in a quality way. 

And I think many of you feel the same way. That’s one of the great things that you do enjoy about being an employed doctor. You also probably enjoy the good life that comes from being a high-income earner and all the money that results from it. I find it a rich blessing to be an employed doctor in today’s world really provides massive opportunities for me to just enjoy patients and enjoy practicing medicine and do what I was made to do and do it in a way that provides a very good living for me and my family. 

I hope that many of you have found that the predictability of that paycheck and the predictability of all the benefits that come with being an employed doctor are true for you as well. And I invite you to give me your insight and your feedback on what it is that’s made you choose to be an employed doctor, and what you would like or don’t like about the paycheck, the benefits, the management, the guaranteed rates, how your contracts are arranged–there are so many nuances to it that are worthy conversations that we’ll have as continue to unpack these truths. 

One thing is for certain, the majority of us are happy that we have a predictable paycheck. 

And that’s the truth for today. 

Net Worth: The Simple Number That Every Physician Should Know

Net Worth: The Simple Number That Every Physician Should Know

Dr. Incorporated brings you "The simple number that every physician should know" Your net worth as a physician should show up on your...

Your net worth as a physician should show up on your personal dashboard somewhere.

It should not be the most important indicator of your well-being because the quality of life, meaning in work, and work-home integration is more important. But too many physicians ignore net worth calculations until too late in the game.

To many of us, it just seems uncomfortable to track this, because it’s not the reason we went into medicine.

I was one of those people. Beyond simply enjoying my role as a rural family doctor, my first goal was to get out of debt.

Back in 2005 with all of my debt paid off, I placed a 2nd mortgage on my paid-off home and invested in a series of “angel investments” with the hope to create some passive income out of those leveraged funds. The results were mixed, and I wished I had never taken this step. I should have had my eyes on the Net Worth dashboard.

The Net Worth view would have led me to avoid more debt, and it would have led me to save money by placing it in more secure market-based retirement funds. But since my employer-based retirement funds were maxed out, I thought it would be wise to invest in something that would lead to more future passive income. Angel investments seemed wise because I was not dependent on the income, so slow growth was ok with me.

Passive income-creating projects are good for both income and growth if chosen wisely. But, they should be organized around their impact on net worth, short and long term, My mistake was that I had no idea what my net worth was at that time. The other mistake was that these investments offered no expected return, just speculated growth. Speculation is not an effective way to grow net worth.

15 years later, I have learned a lot from those mistakes. Had I been organized as a PC then (I was not), I would have simply grown my net worth through diversified retirement options afforded through my PC. My financial decisions as an employed physician were hampered by the blind spots that were built into that type of contract.

The good news is that I have arrived at a state of no debt for the 2nd time and this time it’s associated with Financial Independence. Digging out of debt takes behavioral determination. But the secret sauce of Financial Independence for a physician is using your own PC to grow your net worth.

Here is the most common playbook that many of us follow, after becoming an attending physician, and ignoring net worth.

  1. We sign up to be a healthcare employee and start collecting a nice paycheck
  2. We reason that we are earning plenty of money so we don’t need to think about personal finance and money management any longer. We can enjoy the the resources that flow into our bank account regularly, and focus on being a great doctor.
  3. We choose to live the good life, make sure we have maxed out our corporate retirement planning benefits, and use what is left over to pay down our debts while living the American Doctor Dream. We often become consumers rather savers.
  4. From the start, we put our head in the sand, because who wants to be reminded of our negative net worth due to those student loans? We tell our self, tracking net worth will make more sense when the loans are paid off. Of course by then, we have often acquired more debt, so the same logic is applied. The can is kicked down the road again.

I did this, and many of you are in the same boat.

But what you don’t know is what you don’t know.

Net worth is something many of you don’t know and don’t even fully understand. Here is a suggested calculator or formula.

But it’s not a complicated equation, and it should be an important vital sign for assessing your financial health.

There are many variables that affect your net worth:

  1. Your Debt(s)
  2. Your Income
  3. Your Taxes
  4. Your Benefits
  5. Your Savings Rate

What most employed physicians don’t know is that your maxed-out employer retirement programs will only meet about 25% of your projected retirement needs.

You gain control over 5 of the 5 variables by organizing yourself as a PC. You now thoughtfully manage your income, taxes, and benefits through your PC. And with the larger retained income in a PC, you can pay down your debt faster, and save more with retirement planning. A PC is like finding the golden egg.

This brings us to another number you need to place on your dashboard, the desired annual retirement income number.

How much do you need for your desired lifestyle during retirement?

You can simply follow the multiply by 25 and 4% rules for retirement. Until the more recent years, I never even considered any of these numbers, because I had no intention of early retirement. Therefore, they seemed insignificant. I was wrong.

Most physicians have the potential for a net worth of 8-10 million dollars during their careers. Yet sadly, 25% of physicians in their 60s have a net worth less than 1 million dollars, forcing them to work into their 70s in order to catch up, if they ever do. I have seen this in my own rural county.

Standard employment contracts result in giving away millions of dollars during your career.

By tracking your net worth, and seeking to actively manage the variables that influence it, you will find that forming your own PC provides you with all of the needed tools.

The fact is that you are a business, and you waive your right to organize yourself as a PC by engaging in a standard contract with your employer. In this arrangement, you are giving up far more than you realize, including multiplying the time it would take for you to reach your desired net worth destination.

Dr. Inc.

Dr. Incorporated brings you "The simple number that every physician should know" Your net worth as a physician should show up on your...