It’s Personal
Every professional corporation will be as unique as you are personally. Just like there is no one else in the world just like you, the same is true for your PC
It is meant to be a micro-business structure that surrounds and fits you like a glove. In that context, you will personalize and make it your own such that yours may be similar to others but never the same. This is a fundamental concept to understand when you form a modern PC, and it’s what makes it so much different than it’s the older more traditional version that was shaped as a private practice, not just a person.
Multiple professionals such as lawyers, attorneys, dentists, and engineers can form a professional corporation. Although their legal structure and function are similar to yours, the exact nature of your articles of incorporation, by-laws, fringe-benefit structure, tax entity declaration (S corp vs C corp), and overall purpose are distinctly different as a physician.
Individualize Your Corporation
Most physician PCs will be designated as an S corp, meaning there is pass-through taxation to you. But you should consult your tax professional to determine what is best for you. Just because you are an S corp, you should not assume your S corp is just like all others. It is not a one size fits all designation.
When you set up your PC, a good lawyer will take some time to understand you, your household, your professional interests, your financial health, your dreams, goals, and plans. Because of the tightly intertwined nature of your PC to your household, it should all be considered together in totality. Your small business should be shaped into an asset that maximally benefits you and your household in the long run.
So rather than regret forming a generic PC through legal zoom, find a physician-centric agency that creates a comprehensive business structure for you and your household. It should be a highly personal and highly individualized PC.
You have Unique Professional Skills
Just because you chose your specialty and have been trained to be a great doctor, doesn’t mean that everyone in your specialty does the same thing. For example, I am a family doctor and there is a huge variation in how family doctors practice medicine today. My version is the old-style rural doctor who still sees patients in the acute care hospital in addition to my outpatient clinic. I do surgical obstetrics, function as a sports medicine doctor for our local school, provide nursing home care, have medical students and residents that rotate with me, oversee two nurse practitioners, and do pediatric-newborn-OB hospital calls. I love office-based procedures from lump-bump removal to joint injections to colposcopy and obstetrical ultrasounds.
On top of these professional elements, my PC has to layer in my interests in running, my faith community, family life, and operating my 9 businesses. These unique facets interface with my company and how it is structured to support each of my professional and personal interests.
In the end, this means my PC may have some similarities to another family doctor’s PC, but it will also be organized and operated differently because I am personally unique.
The Enterprise
Due to your high income, you will have opportunities to make your money work for you through passive investments. This can include a host of income-generating sources that add to the income from your primary job. Developing diverse income channels is one of the secrets to wealth management with the average millionaire having 7 or more income channels.
This can include your side jobs that use your professional skills as a physician, for example, I serve as an assistant nursing home director for a monthly stipend. Then you can add in any other passive income sources that include among other things real estate, small businesses, and investments.
All of these components should be organized to support you and benefit your personal and professional goals. You will want to fit them all together to maximize your net worth and your tax strategies.
Taxes
Speaking of taxes, your small business structure will provide you with multiple tax strategies and advantages that are not available to the individual W-2 taxpayer. There are many aspects to this and I highly recommend you work with your tax consultant on how to best maximize all of this, but should include spouse employment as touched on in my last post. But also can include employing children-family members, the Augusta Rule-DURPs, tax-advantaged retirement funds, HSA’s, charitable donations and DAFs, SALT considerations, and multiple fringe benefit considerations that can include things like car leasing, private school tuition for your children, among other creative ideas.
Control
In the end, when you have a PC you are the sole decision maker when it comes to deciding how your professional services are distributed between your primary job and your side work. You get to stay in control, which translates to holding onto your autonomy.
