Want to Keep More of Your Money? Start with the Right Business Structure

Physicians who want to save more, protect assets, and build long-term wealth often overlook one key strategy:

Choosing the right business structure.

Let’s explore how U.S. tax law treats business entities, what structures can benefit you as a high-income physician, and how the right tax advisor can help you stay ahead.

Why Business Structure Matters for Physicians

The entity you choose impacts everything from tax rates to liability to retirement plan options.

Physicians who work as W-2 employees often have:

• Limited control over taxes
• Fewer deductions
• Less flexibility for wealth building

But as a 1099 contractor, self-employed doctor, or practice owner, you have options. And those options can lead to massive tax savings.

Common Business Structures for Physicians

Sole Proprietorship

• Easiest to set up
• No legal separation between you and the business
• All income reported on your personal tax return
• Limited protection, limited planning opportunities

LLC (Limited Liability Company)

• Offers legal protection from liability
• Can be taxed as a sole proprietorship, partnership, or S Corporation
• Often used by side hustlers and solo practice owners

S Corporation

• Reduces self-employment taxes
• Allows for reasonable salary + profit distributions
• Requires payroll and corporate formalities
• Learn more about the best structure for doctors

C Corporation

• Flat 21% federal tax rate
• Ideal for certain long-term strategies or if reinvesting profits
• Can trigger double taxation if not structured properly

How the Right Structure Saves You Money

A well-chosen business structure can help physicians:

• Lower self-employment taxes
• Unlock deductions (home office, vehicle, equipment)
• Open solo 401(k)s or defined benefit plans
• Deduct healthcare premiums
• Shift income to family members

Example: An S Corporation allows you to pay yourself a salary and take the rest of your income as a distribution—which isn’t subject to self-employment tax.

That single move could save thousands each year.

The Bigger Picture: Tax Planning for Physicians

A tax advisor doesn’t just set up your LLC or file your return. They help you build a coordinated strategy to keep more of your money.

Here’s how:

1. Entity Optimization

• Review income, expenses, and goals
• Choose or adjust your structure based on real data
• Revisit annually as laws or income shift

2. Advanced Strategies

• Structure your business to take advantage of retirement plans
• Use private or captive insurance to protect against risk
• Offset capital gains with losses
• Pay family members legally to shift income brackets

3. Asset Protection and Wealth Preservation

• Set up the right entity to reduce liability
• Explore self-insurance strategies
• Coordinate with estate planning to build generational wealth

Why DIY Entity Setup Falls Short

Online services make setting up an LLC or S Corp look easy.

But without tax strategy, it’s just paperwork.

Only a qualified tax advisor:

• Knows the latest IRS rules
• Helps you file the right elections on time
• Integrates structure with deductions, credits, and planning tools
• Reviews annually to ensure your setup still fits

Start with the Right Partner

If you’re a physician earning high income through 1099 contracts, a group practice, or side ventures, you can’t afford to ignore your business structure.

Work with a tax advisor who helps you:

• Choose the right entity
• Customize strategies to your income and goals
• Stay ahead of tax changes
• Avoid costly IRS mistakes

FAQ

Is an S Corp always better than an LLC for physicians?
Not necessarily. It depends on your income level, risk tolerance, and goals. A tax advisor can run both scenarios.

Can I switch my business structure mid-year?
Yes, but some elections have strict deadlines. It’s best to plan early.

Can I have multiple entities?
Yes. Some physicians use one entity for clinical income and another for consulting, real estate, or insurance strategies.

Will a structure change trigger an audit?
No—as long as it’s done legally and supported by real income patterns.

How soon should I review my setup?
Immediately if your income has increased, you took on new contracts, or you’re planning to expand.

Ready to structure your income for savings, growth, and protection?

Start with a tax advisor who knows physicians and knows how to help you keep more of what you earn.

Ready to talk strategy? Start here.

Visit contact physiciantaxsolutions.com to schedule a consultation and learn how we can help you take control of your tax strategy today.

This post serves solely for informational purposes and should not be construed as legal, business, or tax advice. Individuals should seek guidance from their attorney, business advisor, or tax advisor regarding the matters discussed herein. physiciantaxsolutions.com assumes no responsibility for actions taken based on the information provided in this post.