When speaking with physicians, whether it is one on one, or in a group setting, two topics of conversation are a virtual constant, taxes and asset protection. Notwithstanding the litigious environment we live in, I can clearly see why physicians want to do whatever possible to protect their assets. Reducing taxes is something everyone wants to do.
Even if someone pays very little in taxes, they still want to pay less, so it only make sense that physicians want to keep more of what they make, especially after paying insurance and education costs. So if you would like protect your assets and pay less in taxes, read on.
Form a Physician Corporation
Establishing a Physician Corporation will allow you to pay various expenses from the corporation. Since these expenses are paid before you take your salary, they are deductible from your overall income, and are not taxed at all. Owning a Physician Corporation will also enable you to take advantage of other options which are only available to corporations. Pay Yourself a Salary – Of course you want to make as much money as possible, but in the end, it is really about how much you get to keep. By paying yourself the lowest possible salary, your overall tax burden will be lower, because you will not have to pay FICA taxes on the dividends you take from your Physician Corporation.
Contribute to Retirement Accounts
Your retirement accounts aid you in both reducing your taxes and protecting your assets. From a tax perspective, retirement plan contributions are not subject to income or FICA taxes, so the more you can contribute, the lower your tax bill. As it pertains to protecting your assets, in most states, retirement accounts are not subject to levy as payment in the event of a civil judgment. Therefore, the more you contribute to these plans, the more assets you have protected. Create a Physician
As the owner of your Physician Corporation, you are able to establish a Physician Pension for yourself. This does two things. First, it allows you to fund a retirement vehicle for yourself as an expense to the business. These funds are not taxed, and do not require you to take a significant salary in order to make the contributions. Second, as a retirement account, these funds are also protected from civil judgment in most states. READ MORE