Announcement

Collapse
No announcement yet.

S-Corp vs SMLLC

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • The White Coat Investor
    replied
    "It's not a do it yourself process. You should hire me to do it!" I've heard that about a lot of things in life. It's probably true about some of them but I dislike it as a blanket answer. Why not just explain what it takes to do and let the person decide if they want to try to do it themselves or not instead of trying to generate business?

    I don't know. It's not that complicated. It cost me $70 to form an LLC and $15 a year to maintain it. It was very easy to form. But if you're not educated on the topic enough to know which of those entities you want, hiring a pro is probably a good idea.

    Here's the basic idea behind either forming a corporation (and choosing to have it taxed as an S corp) or choosing to have your LLC taxed as an S corp. You're trying to save on Medicare taxes. The income you call "distribution" you don't owe Medicare taxes (2.9%) on. So if you call $200K of your $400K income wages and $200K distribution, you can still max out an individual 401(k) but you get to save $5800 every year in Medicare taxes compared to a sole proprietor or an LLC taxed as a sole proprietor or a C corp which distributes all $400K of income as wages.

    Hope that helps.

    Leave a comment:


  • jfoxcpacfp
    replied




    If OP works as an IC without employees and without owning/leasing physical practice property (ie., practicing either in a hospital or an outpatient location- in which she/he has no stake), does it make sense to operate simply as a sole proprietor? Or is that decision affected by the income in question?
    Click to expand...


    It might, depending upon specific facts and circumstances (insurance coverage) and annual cost of SMPLLC. If you have a home office, you would need to coordinate your liability policies (home and umbrella).

    For only $175/yr in KY, for example, I would prefer to have the LLC wrapped around the business activities - you'll still be filing a schedule C. Some states are lower, others charge more.

    Leave a comment:


  • gsastow
    replied
    Docbeans, depending upon the individual circumstances, there may in fact be little or no benefit from having a legal entity and being a sole proprietor may work.  This is particularly the case since there is no escaping professional liability in any event.  This is where insurance considerations come in which should be reviewed with an insurance professional.  Going back to the original post, this is not a DIY undertaking.  Working with an accountant, lawyer and insurance professional is strongly advised.

    Leave a comment:


  • Docbeans
    replied
    If OP works as an IC without employees and without owning/leasing physical practice property (ie., practicing either in a hospital or an outpatient location- in which she/he has no stake), does it make sense to operate simply as a sole proprietor? Or is that decision affected by the income in question?

    Leave a comment:


  • childay
    replied
    The two are not mutually exclusive.  A PLLC is for liability protection.  Whether you need that will depend on your type of practice, if you have any liabilities it will actually protect (it won't protect you against your own malpractice).  The LLC can then be taxed as an s-corp or not.  Setting up the LLC may be quite easy but agree you should talk to your CPA or others about the S-Corp decision.

    Leave a comment:


  • jfoxcpacfp
    replied
    I should have mentioned a business attorney - Gary is correct.

    Leave a comment:


  • gsastow
    replied
    I concur with jfoxcpacfp.  I am a health law attorney with over 20 years of experience in this area and the decision is not a DIY process.  The choice of entity is driven by tax and liability considerations that vary from state to state.  Accordingly, an experienced CPA and attorney should be consulted in the state in which you will be practicing.  When it comes to professional entities, many states will not allow a professional entity formed in another state to operate in their state.  Therefore, at a minimum, I can advise to wait until you determine the state in which you will be practicing and then seek professional advice as to what the available choices of entities are available in that state and which one will work best for you.  Please feel free to contact me to discuss further.  Thanks, Gary Sastow.

    Leave a comment:


  • jfoxcpacfp
    replied
    Probably a SMPLLC (the P is for Professional), unless you are moving to CA, in which case that is not an option.

    With all due respect, this is not a DIY process. You need to be working with a professional (best bet is a CPA) who has a lot of experience in this area (including multi-state taxation). There is a lot more than a step-by-step list to check off and it takes quite a bit of discussion to ensure you are making the best choices for your particular situation and that you are structured to optimize your tax situation.

    Leave a comment:


  • homanga
    started a topic S-Corp vs SMLLC

    S-Corp vs SMLLC

    As a graduating resident I am working on getting all my ducks in a row for post residency life. I previously posted a post residency planning plan/guide with the help of others input https://www.whitecoatinvestor.com/forums/topic/post-residenct-planning/.

     

    My question now is someone had mentioned a SMLLC vs S-Corp; which do I want and what exactly are the benefits I would expect to see by establishing one or the other vs none at all. Income wise I expect to have a 350-400k IC 1099 job as my sole source of income.

     

    And now that we have picked either of these as the preferred option can anyone provide a step by step guide as how best to set this up and if I am moving in 2 months should I wait to establish once at my new state of residence (where my attending job will be paying me).

     

    Thanks Again
Working...
X