Category: Tax Planning for Doctors and Medical Practices

Critical Areas of planning for Medical Practices and Physicians include:

1.  Asset Protection – Studies suggest that one out of every four physicians will be sued this year and six out of ten have been sued at least once in their careers.  While statistics can be manipulated and misleading, the statistics clearly indicate in our litigious society, physicians get sued a lot.  Contingency fee arrangements with law firms, coupled with runaway jury awards, mean no risk and great reward for a patient to go after a lottery type award.  Physicians are always deemed to have deep pockets, and litigation against them is very attractive.

As with all asset protection, or litigation liability limitation planning, physicians need to proactively protect the family home, personal savings, investments, real estate, rental property, vacation homes, life insurance, retirement plans, personal property, and future inheritances.  However, unlike other business owners, physicians need asset protection planning for the accounts receivables of the medical practice. The leveraging of the practice’s receivables can provide opportunities for planning in the areas of asset protection, retirement planning, and Estate planning.

The goal of an effective asset protection plan should be to render the physician and the practice “unattractive” to litigation because no assets are at risk to satisfy a litigation award.  An asset protection plan MUST be in place and practiced before the event that is the cause of action of the litigation clam.

2.  Choice of Entity and the Optimal Multiple Entity Structure – The utilization of the optimal combination of S-Corporations, C-Corporations, LLCs, and other entities can create the best personalized structure for full utilization of tax planning and minimization, payroll tax planning, compensation options, fringe benefit planning, retirement planning, and tax and income deferral opportunities.  Strategies and plans vary based on practice size and practice areas, personal and business assets, existing practice agreements and outside contractual relationships, and other specific facts and circumstances of the practice and its physicians.

3.  Advanced Tax and Business Planning – Specific consideration needs to be given to the individual costs to the practice of individual physicians.  How should asset protection planning or the utilization of a captive insurance company impact the ever increasing cost of insurance and malpractice insurance.  Advanced retirement plans and how the legal structure of the practice and its doctors can open up tremendous opportunities in the area of qualified and nonqualified retirement planning and funding.  Taking advantage of these plans can have a tremendous impact on the wealth building capacity of each individual doctor and take the place of a portion of the taxes paid in Congress’ attempt to redistribute wealth.


Copyright 2010 The Business Wealth Preservation Group, LLC.