Ds2660ParticipantStatus: PhysicianPosts: 37Joined: 11/20/2016
The attorney for my small radiology group insists that we are best served by filing taxes as a c corp. Currently, we have 9 shareholders, 4 employed radiologists, 3 PAs, and 8 other nonHCE employees. Partners income is 650-700k including retirement contributions. We have a 401k, CBP, and HSA. I do not see how we are better served filing as a C Corp instead of S. I am wondering if other PP groups out there file as a C and if so, why? Would also be interested in hearing about other PP groups corporate structure.May 14, 2019 at 10:01 am MST #214482jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 1848Joined: 03/01/2018
it shouldn’t be that hard for a professional to run comparison / what-if numbers C corp vs S corp
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVAjfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 7326Joined: 01/09/2016
I really don’t see how you are better served by a C corp – I would ask for concrete examples of how you are better off. As @jacoavlu implied, this is math. Maybe not totally straightforward, but should be within the capabilities of a professional advising you as such. Otherwise, how the heck does s/he know?!?
The problem is that, moving from a C to an S typically means a rather vicious tax hit in the year of transition. That’s because you are cash basis (I’m going to bet) and you are required to report your patient receivables as taxable when they are “passed through” to the owners of the C when it elects S. You get to offset your liabilities against the receivables but, as I’m sure you all know, receivables in a medical practice far outpace payables.
So, yes, I run across C corporations from time to time who would be better off as S corporations but who are essentially frozen in place. I imagine the CPA or attorney who recommended this setup is not about to make that call and deal with the fallout. I can understand that, you know what I mean?
btw, subchapter S was enacted into law in 1958, so it’s rarely an excuse that the option was not available. Very fair to say that it took 20 or so years for it to really catch on, but that’s still 40 or so years ago.
Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555