Tax/Business Structuring Advice

[TeslaCoil]

Hello all,

I am looking for any friendly advice that may point me in the right direction. I am currently paid as a W-2 employee by my clinic which is an LLC. My effective tax rate is ridiculous as I am not able to make any deductions for business purposes for myself. My group is very flexible in how I get paid, and I have been thinking of opening an LLC which the clinic would then pay. My question is, with the additional 15% self employment tax considered, would it be advantageous for me to structure things this way. In other words, all deductions considered (startup and opertions, car, milage, education costs, home office, meals, travel, supplies) would this likely afford a tax advantage for me when all is said and done. I know there are more details to consider than this, Im just wondering, from a birds eye view, is this advantageous or am I chasing my tail. Thanks!

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[callmeanesthesia]

Hello all,

I am looking for any friendly advice that may point me in the right direction. I am currently paid as a W-2 employee by my clinic which is an LLC. My effective tax rate is ridiculous as I am not able to make any deductions for business purposes for myself. My group is very flexible in how I get paid, and I have been thinking of opening an LLC which the clinic would then pay. My question is, with the additional 15% self employment tax considered, would it be advantageous for me to structure things this way. In other words, all deductions considered (startup and opertions, car, milage, education costs, home office, meals, travel, supplies) would this likely afford a tax advantage for me when all is said and done. I know there are more details to consider than this, Im just wondering, from a birds eye view, is this advantageous or am I chasing my tail. Thanks!

I’ve been considering the same thing for my whole group. We are currently a C-corp. I’m going to try to set up a meeting with our attorney and CPA to discuss whether changing to an S corp would help. We are in CA so it does help get around the SALT cap, and the employer-paid payroll taxes come out of my profit center whether the company pays them or I do.

 

[Doctodd]

i have 2 corporations under one roof. My accountant set me up years ago as an S-corp. My umbrella group has me as an LLC. You should probably ask your accountant.

 

[GoBeers]

Just do the math. Cost of expected employer taxes and scorp franchise tax vs the amount you can deduct. The more aggressive you deduct, the more reason you should be 1099.

 

[pastafan]

You also have the ability to set up a defined benefit retirement plan with unlimited contributions.

 

[cowboydoc]

My financial planner tried to get me structured as a 1099 for significant tax benefits and retirement options as described above. Employer wouldn't do it.

 

[Pain Applicant1]

I have many LLCs. All are pass thru entities filling as an s corp. Just run any tax questions by your accountant. Your attorney won't know. He/she will only know about the liability part.

 

[mid|ine]

You also have the ability to set up a defined benefit retirement plan with unlimited contributions.

I don't think its unlimited, but it is really high. This may be one of the best ways to protect some of your income now, though you will have to pay taxes on it later (hopefully at a lower rate).

 

[pastafan]

I don't think its unlimited, but it is really high. This may be one of the best ways to protect some of your income now, though you will have to pay taxes on it later (hopefully at a lower rate).

I stand corrected. You can also have a 401k along with the defined benefit plan.

Retirement Topics - Defined Benefit Plan Benefit Limits | Internal Revenue Service

Retirement Topics - Defined Benefit Plan Contribution Limits

www.irs.gov

 

[mid|ine]

The maximum cash balance plan annual contribution can reach as high as $341,000

The current maximum cash balance plan at retirement is $3.4 million. But this is indexed annually for inflation by the IRS.

https://www.emparion.com/cash-balan...its are much higher,reach as high as $341,000.

All of this can be rolled into a 401k once you close out the plan.

 

[Baron Samedi]

Would appreciate some advice on a W2 vs 1099 structure:

W2: 45% net collections, 250k base, malpractice covered, 1/2 tail covered, 401k without a match, wouldn't use the offered health benefits

1099: 48% net collections, no base, malpractice deducted from the collections, no tail coverage.

My gut instinct is that the W2 deal is better but I would love some additional input. Thank you!

 

[CleanUp]

The maximum cash balance plan annual contribution can reach as high as $341,000

The current maximum cash balance plan at retirement is $3.4 million. But this is indexed annually for inflation by the IRS.

https://www.emparion.com/cash-balance-plan-lifetime-contribution-limits/#:~:text=The limits are much higher,reach as high as $341,000.

All of this can be rolled into a 401k once you close out the plan.

And you can legally close the plan out every handful of years and roll it into a 401k then restart a new DBP