C-corp end-of-the-year tax strategies

[Chief6124]

Hi-

I am in a 20 physician-owned practice (C-corp), who at the end-of-the-year bonuses out all profits to avoid corporate taxes.  We use cash-basis accounting.  I believe this to be common in physician practices.

My questions is how have other practices handled then need for operating expenses come Jan 1.  Do you use a line of credit from your bank? Do the partners re-up the funds on Jan1?  Other methods I am unaware of?

 

Thank you in advance,

Chief

[The White Coat Investor]

Both seem like good options to me. We're an LLC taxed as a partnership and they keep a certain amount of money in the accounts (but we pay taxes on it I presume) which eliminates that issue.

[RDB]

We use a line of credit from our bank. My first year as a partner it felt a little odd, our accountant told us it is very common. The other option we discuss is borrowing money back to the company, we have not yet done that.