Tax Reduction
In their landmark book, “The Millionaire Next Door”, authors Stanley and Danko clearly point out that financial independence is often achieved by those who seek ways of reducing their taxes. One often overlooked method of reducing your income taxes is by taking advantage of deductions made available through corporate resolutions.
One example is the medical benefits resolution which will allow you to deduct expenses related to health care. These tax-deductions for personal expenses are not available to you if you are taxed as a sole proprietor or even an LLC being taxed as a general partnership. Only the “C” or “S” Corp will give you complete access to all of these deductions. There are dozens of these corporate resolutions that will help you pay for regular expenses that would be paid for with after-tax dollars in any other situation.
Income shifting is another way to defray income taxes. This is done by using the FLP as a means of giving financial help to children or elderly parents with untaxed dollars. A child needing financial help through his or her college years could take income from the FLP and pay taxes on that income at their tax rate, making it so you will not pay taxes on the monies at all.
Again these are just a few of the many strategies and techniques available through your legal entities that can help you lower your income taxes. Others exist that can help you reduce your capital gains and estate taxes, too.
Conclusion
Very few people in medical professions enter their chosen fields because they wanted to become expert business men and women. As physicians you do what you do because you love helping people in their time of need and not because taking time to understand business law sounds like fun. But taking the time to understand the legal entities available to you is a worthwhile investment, and can improve your ability to serve your clients better by keeping your focus on serving them and not on protecting yourself against frivolous lawsuits. Also it can have a positive impact on your bottom line, which can then pass through to your clients in the form of lower prices and costs.
If you would like more information on these and other legal entity strategies, contact Legally Mine, LLC at 800-375-2453 or info@legallymineusa.com. We are also available for presentations at your local and state association meetings.
