Now, Doctors Can Reduce Taxes Without Needing PC Group Approval

    /24-7PressRelease/ - KEEGO HARBOR, MI, February 17, 2007 -- A group of Financial planners including Keith L. Mohn, CLU, CHFC (www.benefitsolutionsgroup.biz) today announced a better way for doctors to structure their PCs if the requirement for unanimous agreement gets in the way of sound business strategies. While working with thousands of doctors, the two advisors found that a simple structural change in a PC can save individual doctors hundreds of thousands of dollars—yearly. Yet most physicians do not know about it. Nor do they know how to implement the change.

The following scenario is all too common, they say, and need not happen.

Dr. John Smith, age 40, makes $500,000 per year but doesn't want to pay $200,000 in taxes again this year. After researching tax reduction and supplemental benefit solutions, he proposes a plan to the partners that will allow each to put away about $75,000 per year in a tax favorable manner—if they want to. He believes the physicians in his 20-doctor practice will concur.

Participation is voluntary, as is payment for the plan. Like all non-qualified income tax reduction plans, it requires a "corporate deduction," so, all partners must approve the use of the corporation to implement. Dr. Smith is willing to indemnify the corporation should there be any adverse consequences.

Sounds great, but just 5 founding members (who make up the Corporate Board) decide after little or no review that there is no upside for them. They vote against the plan—for anyone.

Smith is out of luck—like thousands of others in practices or hospitals in which a small number of physicians or a CEO can VETO asset management strategies desired by an individual.

"This scenario is unnecessary," says Keith Mohn. "Because there is a better structure available. But few multi-physician medical offices know about this "ideal corporate structure." Most still have a "mother" company (usually a C or S corporation) that employs physicians and the employees. All employees take their income from the "mother" company usually via W-2 income.

Should a physician wish to implement an income tax reduction plan for him- or herself, it must be done inside the "mother" company and there must be total partner agreement. It is virtually impossible to get five plus physicians to agree on anything; so, one has little chance of taking advantage of an advanced plan.

The "ideal corporate structure" exchanges a Professional Corporation (P.C.) for the physician as the income receiving entity. Instead of Dr. Smith receiving a W-2 paycheck, Dr. Smith P.C. receives the paycheck and then pays Dr. Smith.

"It's not complicated to create such a P.C," says Mr. Mohn. One simply re-writes his contract with the mother PC to show "Dr. Smith's P.C." will be paid the W-2 income instead of Dr. Smith.

In Smith's 20-physician group, Smith might well be the only one who names a P.C. as the payee. But, any or all of the doctors--owners or employees--can do so—or not.

Once Dr. Smith has money in his own P.C., he can do whatever he wants, without asking permission of the "mother" practice. The same goes for practices where physicians are not allowed to write off automobile lease payments, cell phones or food.

The biggest benefit of this "ideal structure" is that each physician can enjoy his/her own tax reduction plan without having to beg for partner approval. A variety of income tax reduction plans fit the parameters -- most of which can be implemented by an individual physician's P.C.

There is no reason not to take advantage of available tax reduction strategies. Tens or hundreds of thousands could be saved or deferred in non-qualified supplemental benefit plans.

This ideal corporate structure can also be utilized (along with one or two LLCs) to protect a doctor's practice equipment and Accounts Receivable from lawsuits.

Keith L. Mohn, CLU, CHFC is financial consultant, lecturer and president of Benefits Solutions Group, LLC, Keego Harbor, Michigan, (www.benefitsolutionsgroup.biz), a full service financial consulting and planning firm working with high net worth individuals, owners and professionals. Mohn has served the financial needs of medical professionals since 1983, is a member of The Wealth Protection Alliance.


Contact:

Adrienne Lenhoff Wise
248-366-0388
[email protected]

Keith L. Mohn, CLU, CHFC is financial consultant, lecturer and president of Benefits Solutions Group, LLC, Keego Harbor, Michigan, (www.benefitsolutionsgroup.biz), a full service financial consulting and planning firm working with high net worth individuals, owners and professionals. Mohn has served the financial needs of medical professionals since 1983, is a member of The Wealth Protection Alliance.

A 40% discount is available on Jarvis & Mandell's, Wealth Protection M.D., or audio CD on Asset Protection call (800) 554-7233 or email [email protected].


Contact:

Adrienne Lenhoff Wise
248-366-0388
[email protected]

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