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Payout structure of LLC group.

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  • #16
    The original group wasn't democratic and is being dissolved. Original owner is officially retiring. Currently have a new contract with the hospital with the old group and clause to transition over to the new group once 2019 is over. Average patient load of around 45 a day with 32 hours of coverage by 3 doctors. Not in CA and didn't have to do s-corp. It just made sense when the wage was lower. Saved a good bit on FICA. Now not so much, especially when factoring in over $4k in CPA fees to do payroll and corporate tax returns. Income will be increased and W2 compensation needs to be raised to be considered adequate. Won't need to be raise too much but should be increased around $50k yr. Tax situation isn't getting any better with S corp. Now CPA saying that a C corp designation might be best. We are kind of under the gun time wise, but want to get this right the 1st time.

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    • #17
      Originally posted by ShredtheGnar View Post
      The original group wasn't democratic and is being dissolved. Original owner is officially retiring. Currently have a new contract with the hospital with the old group and clause to transition over to the new group once 2019 is over. Average patient load of around 45 a day with 32 hours of coverage by 3 doctors. Not in CA and didn't have to do s-corp. It just made sense when the wage was lower. Saved a good bit on FICA. Now not so much, especially when factoring in over $4k in CPA fees to do payroll and corporate tax returns. Income will be increased and W2 compensation needs to be raised to be considered adequate. Won't need to be raise too much but should be increased around $50k yr. Tax situation isn't getting any better with S corp. Now CPA saying that a C corp designation might be best. We are kind of under the gun time wise, but want to get this right the 1st time.
      I am having trouble imagining many - if any - situations in which a C corp for a physician group w/be a good idea.
      Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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      • #18
        Originally posted by jfoxcpacfp View Post

        I am having trouble imagining many - if any - situations in which a C corp for a physician group w/be a good idea.
        I think he was referring to C corp for individual partner, but that makes even less sense to me. Seems like sole proprietorship might be best? Not sure if that is even allowed. I might need to find a new CPA. I don't think he is a fiduciary. He tried to steer us towards a FA too.

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        • #19
          You need to find competent professionals that can review your situation and provide expert advice based on specifics.

          Caveat that I don't know specifics, my best guess is a PARTNERSHIP structure is best for your DEMOCRATIC GROUP, with INDIVIDUALS owning partnership interest, not S CORPs owning partnership interest.

          And. The group needs a PARTNERSHIP AGREEMENT that is written so as to take most advantage of section 199A - minimizing guaranteed payments, maximizing QBI deduction.

          Again. This is just my guess. A higher amount of income may favor S CORP over PARTNERSHIP. But that seems unlikely to me at the hourly rate you're talking about.

          There are so many pieces to this puzzle I don't see how this happens in a considered, optimized way by 12/31.

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          • #20
            Update: We have found another CPA that seems to have a better grasp of our situation. He actually does another EM group's accounting too. He recommended MMLLC with individual owners or filing as S corp. Standard partnership arrangement seems best.

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            • #21
              what's a "standard partnership agreement" ?

              edit: sorry "standard partnership arrangement"
              Last edited by jacoavlu; 12-12-2019, 10:58 AM.

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              • #22
                This does not appear to be an standard arrangement unless it is an investment which is split by the hospital and the physicians. If is for professional services, it is interesting because it is non-standard. I would be interested in confirming the specialty. Standard hourly payments for call pay and hospital based employees like EM, as mentioned, and Hospitalists are more common.

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