It is important to have the necessary precautions in place to protect your license from legal problems. Most doctors have at least one lawsuit against them, so there is a major risk to your career if you don't protect it. Malpractice insurance does not cover the needed protections. It is best to create a business that can protect your assets from legal issues regarding your medical practice and other common problems like creditors and issues on your real estate. There are also tax exemptions that you may not be considering. Consult with DocFunds to obtain the best professional advice whether you are a physician in the early, middle, or late stages of your career or you have a practice start-up.
2. FAQ For Medical Professionals
- Should I worry about someone suing me?
- Many people will come after doctors because they usually have high incomes. Patients also may not understand that their doctor did the best they could. If they don't see the results they want, they blame the doctor. Additionally, they doctor is responsible for the work of his/her subordinates. This is outlined in the law under Respondeat Superior.
- Does my LLC/Corporation protect me?
- Your entity separates your personal assets from the entity's assets. Since you are personally liable for the medical damages, your entity is not liable. This type of legal issue does not fall under the entity's purview.
- Does my medical malpractice insurance protect me?
- It will protect you up to the coverage amount. If it exceeds that number, you will have to pay. Additionally, once the insurance is claimed, your name will be reported to the National Practitioner's Data Bank (NPDB). This can increase your insurance premiums and result in a loss of privileges or even your license. Health insurers may be hesitant to cover your practice.
- Do I need to worry about retirement plans since I already have one?
- a. Tax deferred plans means instead of paying tax now you pay when you later or when you withdraw from the plan. There is a high possibility that taxes will be higher in the future when you retire. It is better to consider a plan that uses after tax money.
b. Additionally, you may be in a higher tax bracket when you retire. Your tax bracket depends on your income and your deductions. At retirement, you will probably have paid off most of your debt, so you won't have your current deductions.
- So, what is the best retirement plan?
- a. Regular retirement plans are unreliable. They do not have a guaranteed amount that you will receive. An Investment Grade Insurance Contract uses after tax money and has a guaranteed principal that will increase. You can also take a loan using the cash value as collateral.
b. An IGIC is similar to a Roth IRA because you use after tax money. However, there is no limit for contributions with an IGIC and you can keep investing despite your age or income increases. There are no penalties for using the cash value before 59 years.
- Does any of this apply to me since I am an employee with student loans, not a business owner?
- An upcoming doctor should still take care to protect their license. Especially since you have student debt, an IGIC is great for paying off that debt and conserve money for retirement
- What happens if this program is ended by the government?
- It is very improbable that such would happen. There was on attempt to shut it down but Congress did not let it happen. And if it did happen, if you already have it, you would be able to continue using the IGIC.
- How does a single entity differ from a business structure?
- Any pass-through entity holds you personally liable for any taxes or legal matters. We will help you arrange your assets to get as many deductions as possible and use the upstreaming method to eliminate state income tax. This will lower your tax bracket and save you thousands.
- Why come to Avant Tax?
- Many CPAs and financial advisors don't have the expertise that we do. We know the current legislation and strategies that will maximize your savings. This is only one aspect of the multiple strategies we put to use.