The Benefits of PC OWnership For All Doctors

  The most important and positive feature of owning and operating your professional corporation is that it will provide you with autonomy or control over your professional and personal life. This is why so many professionals like attorneys, engineers, dentists, and architects choose to incorporate due to the way it allows them to keep control over their professional lives.

The Power to Do Good

I love owning my professional corporation due to the power I have over it. I attended a community event this weekend in which I was able to give a 6 figure donation to help restore a historical landmark in our downtown that will serve as a cornerstone community asset for the arts. As an employed doctor, this type of donation would have been much harder to do because it would have had to come out of my after-tax household income. Don’t get me wrong, after-tax personal contributions are a type of charitable giving that is important for several reasons and this is why we give 20% of our gross income away. It’s also why 50% of all profits from Dr. Inc. will be given to charity. However, on top of personal donations, when I can add in my PC’s tax-advantaged contributions the total amount that I get to give away is much larger compared to when I was a W-2 employee. As a W-2 earner, your contributions are all after tax and must be done within the same calendar year.
On top of this, I take my personal and corporate contributions and place them in my donor-advised fund operated by Fidelity and allow them to grow until I want to distribute them. Each year my wife and go on and financial retreat, and work through our personal and corporate budgets. Here we decide on the distributions from our DAF, which is another special gift of autonomy. The DAF allows us to gain the annual tax advantages of charitable giving but more easily allows funds to accumulate so that we can make larger distributions as opportunities arise. The DAF allows one to not feel forced to choose a charity to contribute to by the end of the year. Additively all of this helps bring meaning and purpose to my life and places a value on my work that extends beyond my doctor identity.

Contractor Rather Than Employee

The built-in individuality of a PC structure is highly congruent with the psyche of most doctors who want to control their destiny and not be told what to do in a pre-defined manner like most employees. This distinction about control is one of the fundamental differences the IRS uses as a litmus test to determine if you are an employee or a contractor. Employees are told what to do and how to do it. Contractors use their knowledge and expertise to decide on a case-by-case basis the best course of action, i.e., the art of medicine.  When you own and operate your medical corporation, you get to use your expertise on a case-by-case basis. Even if you are working as a contractor within a large corporation through a PC-employment lite contract, or as a locum, you preserve your professional power to use your highly-trained brain to individually deliver care to patients. Depending on the contractual terms of your professional relationship, there may still be some 3rd party oversite and corporate compliance involved in your work. Traditionally employed doctors typically have a compensation formula that is tied to their corporate citizenship quality and performance metrics that are in turn driven by corporate KPIs. In contrast to this, as a contractor through employment lite, my compensation is $65 per wRVU and it’s that simple. I still have some accountability for helping my employer meet their KPI, but my compensation is not tied to it. By eliminating the “performance pay” layer that many traditionally employed doctors must endure, I have removed a significant stress point of having to prove that I deliver quality care to my patients. I simply know that I do and I don’t need a monthly performance report card to prove this. That is the heart of being a professional!

More Household Income

Whether you contract your professional services via salary via a wRVU productivity model, or even some blend of the two, your earned dollars will arrive in your company’s bank account as 1099 income, which is in contrast to traditional employees who receive it as W-2 income.
This brings forth the next significant benefit of owning your micro-PC and that is you will gain full control of the flow of your earned dollars. This in turn unlocks a host of financial benefits for you through your small business structuring that includes tax minimization, tax-efficient financial strategies, and enhanced retirement funding. Together this adds up to significant retained income for your household that is in the range of 10-15% more than if the same dollars were earned as a W-2 employee. In turn, this leads to your arrival at financial independence faster, which provides you with even more personal and professional autonomy.

Improve Your Well-BEing and Prevent Burnout

What an exhilarating feeling it is within PC-employment lite to hold onto 10-15% of your high income while doing virtually the same work with the same employer as your traditional employment! But even more profound is the impact that small business owners will have on your well-being. Enhancing your financial health is one thing, but helping you thrive holistically has even greater power to you, your family, and even your career. It helps prevent the greatest scourge in existence for modern doctors, and that is burnout.

Control And The Benefits of Small Business

I can’t understate the importance and value that you will derive through the ownership of your micro-professional corporation and the way it will preserve your professional autonomy. When you incorporate yourself, you will discover why scores of small business people all over our country have chosen this same path. Those professional-related benefits will include:

1. You can do what you love. Because you maintain control over your professional services, you get to actively shape the scope of your practice and your preferred patient profile, which in turn keeps you in your sweet spot professionally while providing medical care.
2. Set your schedule. You determine your accessibility to your patients. This control allows you to choose the cadence of your work and scale the economic translation of your work volume and time commitment associated with your medical care. If you are in an employment lite or locums contract, this will all be negotiated within the terms of your contract.
3. You are the boss.  As the owner of your corporation, you get to set the rules, answer to yourself, and make all the decisions about your professional life and whom you contract your services with.
4. You confidently form your reputation. Your time and effort to help individualized services forge your identity and you become a brand with loyal followers in your community. As a micro-corporation, this can include your website, logo, SM content, and influencing power.
5. You can be creative. Rather than follow a pre-determined script. You can focus on patient-centered processes that result in the best outcomes rather than the rigid and cumbersome workflows of large corporations.
6. You can multiple your income channels.  You can maximize your active, passive, and retained income opportunities, including tapping into tax advantages that are baked into small business entities.
7. You can involve your family.  By employing family members in your corporation, you can open up additional streams of income in your household.

Many of these benefits are lost when you choose to become traditionally employed.  Here, your employer now becomes your boss, usurps your identity, requires conformity to their standard operating procedures & policies, and ultimately exerts control over your schedule and professional services. As time goes on, the associated loss of power and autonomy within your professional life can lead to a tipping point of job dissatisfaction and even burnout.
The most important step you will make to thrive during the roughly 30 years of your professional career is to unlock the power you have earned to incorporate yourself and then use that small business power to preserve your autonomy. It will lead to a notable improvement in your well-being and as well as enhance your financial health.