buildmymedicalpractice
buildmymedicalpractice
Hey everybody, this is Dr. Deb from "15k a Day Doc". In order for us to own a business and stay in the game for the long haul, we have to have some incredible resilience. It's hard to go to work every single day and deal with problems that are occurring inside the office. Whether it's employee or patient issues and we feel like we're not getting paid enough. We've got to pay everybody else and make them happy. Oftentimes in business, we set it up so we pay ourselves last.
Begin to structure your salary. Your salary should be set at what you would be earning if you worked for someone else. If there's a big gap, for example you've set your salary at $30,000 but if you worked for someone else you would be earning $110,000. You should strive for a salary of $110,000. Maybe that doesn't seem possible at this moment but you can step that up each year. For example this quarter you increase it to $40,000 and the next quarter you increase it to $50,000 and so forth. If you don't have the cash flow for this increase then you have to adjust your spending so you pay yourself first.
Sometimes it might not come and if it does, you'll just take whatever you feel you can from the practice, but it's not going to be enough for you to really earn what you deserve.
If you set it up and structure it right the first time, you will have no problem paying yourself. Trust me, the money will come. It's always been there. It's just that you look at it differently.
Dividend income is taxed at a different rate than W2 income. If you're an S Corp, you have to take some W2 income. Most of the time what the IRS wants to see is that you're taking an income that's comparable to what you would make someplace else.
Are you the one making all the business decisions? If the answer is yes than you're the CEO.
Are you seeing the clients? Then you are a pracittioner.
You should have a salary set for both positions. Technically you will have 3 sources of income, pracitioner, CEO and dividened income. That's the profits that you take later.
Some accountants will tell you to take more dividend income than you take W2 income and some will tell you to take more W2 income than dividend income. You really want to talk with your financial planner and see how this affects you. You can pay yourself for both positons in W2 income, but write a contract between you and your business that shows what your salary is for both positons.
Dvidened income is your profit at the end once all your expenses are paid. This is like a bonus in my mind. You can take it monthly, quarterly or annually.
Pay yourself first |
Consult your financial planner |
Take W2 income as well as dividend income |
Write a contract with yourself |