The Urgency of Now: A Guide for Physicians on Launching Their Micro-Corporation

In the fast-evolving landscape of healthcare, many of you are increasingly seeking new avenues to take control of your professional destinies. This becomes especially clear during this time of the year when doctors are reminded of the tax inefficiency of W-2 employment. It can be painful to see that large number, averaging $85, 000 to $100, 000+, for you.

What if I told you that through my professional micro-corporation, my effective tax rate this past year was <5%?

Yes-that is not a typo.

In the end, many high-income earners, like yourself, find that starting a business or getting involved in real estate are the two most valuable options for reducing their tax burden. That's why I have nine micro-corporations, including my professional corporation. Among these micro-corporations, several are real estate assets.

Choose The Low Hanging Fruit

The cheapest, easiest, and most straightforward business that every physician can start is to incorporate themselves as a professional micro-corporation. By doing so, you will have only one employee (yourself) and can utilize your micro-corporation to stack jobs and diversify your income channels. This approach has worked out fantastically for me, and I believe it will do the same for you. Here are the reasons why:

• Being a professional micro-corporation does not imply that you are entering private practice and dealing with the complexities of managing multiple employees and insurance contracts. In fact, it's much simpler than that.

• It's a business in which you are already an expert—based on your specialty specific professional services.

• There is a high demand for your business product, specifically your professional services. However, due to the fact that your services are not easily scalable, you have to limit the number of contracts you can handle simultaneously.

• Your overhead expenses are minimal.

• You only have to manage yourself.

• It enhances your tax efficiency.

• It enhances your professional autonomy.

The concept of forming professional micro-corporations is gaining traction as a powerful solution to help you regain control over your life. In this post from SimpliMD Business School, I will explore the benefits, challenges, and actionable steps for those who are looking to embark on this transformative journey.

The Urgency of Now

"The best day to start is yesterday. The second best day is today."

This ancient proverb carries profound wisdom, especially when applied to the world of micro-corporations for physicians. In an era of unprecedented change, waiting for the perfect moment to start your professional micro-corporation may mean missing out on opportunities for growth, autonomy, and financial stability. Today, I will delve into why now is the opportune moment for you to embrace the micro-corporation model.

To be honest, starting a professional micro-corporation is something I wish someone had told me about at the onset of my career, rather than having to learn about from a group of bunch of business consultants 15 years later. My ignorance about the option to micro-incorporate while I toiled away as a W-2 employee cost me a million dollars due to taxes and fair market value issues. This is one of the fundamental reasons that I started SimpliMD was to help all physicians see that there are better options than traditional W-2 employment.

Benefits of Micro-Corporations for Physicians

Autonomy and Control: Micro-corporations empower you to regain control over your professional life. From choosing your primary job and side jobs to making strategic business decisions, you can shape your professional life to align with your values, goals, and lifestyle.

Wealth Accumulation: Operating as a micro-corporation allows you to diversify your income streams. By leveraging entrepreneurial skills, you can create additional revenue sources beyond traditional clinical practice, ensuring financial stability in an ever-changing healthcare landscape.

Tax Efficiency: Micro-corporations foster a more diverse menu of tax strategies that will allow you to retain more of your income. You can structure your unique micro-corporation to mirror your personal and professional goals all while reducing your effective tax rate in comparison to traditional W-2 employment.

Challenges and Solutions

Navigating Legal & Business Considerations: The healthcare industry is heavily regulated, and when you venture into creating a professional micro-corporation you must be well-versed in legal and business requirements. Seeking legal advice and establishing robust personalized micro-business structuring is critical to help mitigate risks. I would love to help you with this via a $99 micro-business consultation meeting here.

Balancing Clinical and Business Roles: Striking a balance between providing quality patient care and managing the business aspects of a micro-corporation can be challenging. The power of a professional micro-corporation is that you are the only employee you have to manage—it’s that simple! Yet, you will still be operating a micro-business, thus you must develop effective time management strategies and consider outsourcing certain non-clinical business tasks—which can done inexpensively. At SimpliMD we have a growing professional network of trusted professionals who understand physicians and I would love to match you with the best professional to help you via an inexpensive business consultation here.

Actionable Steps for Starting a Micro-Corporation

Define Your Vision: Clearly articulate your motivation and goals for your professional micro-corporation. For most of you, this means you need to determine how you want to stack jobs to meet the lifestyle and quality of life goals for you and your family. This foundational step will guide your decision-making and business strategies. You can download my free e-book on Job Stacking here. Then I invite you to re-imagine your professional life as a self-employed doctor—even if includes a combination of W-2 and 1099 work. My Dare to Dream Guide can help you walk through this.

Make A Micro-Change: So many of you feel trapped in your full-time W-2 job that seems to control your personal and professional life. You have created a lifestyle around it, and your dependency on the regular paychecks makes it hard to leave. Here is a suggestion for you that I see many physicians all over the country doing—downshift from a 1.0 FTE W-2 position to something like 0.7 to 0.8 FTE. Most employers will let you do this. This change will create a margin that allows you to back-fill those hours with self-employed (1099 income) side jobs that flow through your professional micro-corporation. This is a great way to ease into the self-employment stream, without jumping in full force. Later you can make more changes that reduce your W-2 income channels and increase your 1099 income channels.

Build a Support Network: Join a small business community like SimpliMD to connect with like-minded physicians. Networking and seeking business coaching can provide invaluable insights and support throughout your micro-corporation journey. I encourage you to become a SimpliMD member today and join our community exclusively built for doctors. Your membership will provide you with an exclusive haul of small business products created exclusively for doctors—with more resources be added regularly. If you want something a little more personalized, I also offer coaching services here as well.

Invest in Education: Continuous learning about micro-business operations is key. SimpliMD provides a library of products that will support the growth of your micro-business competency and your $99 membership at SimpliMD unlocks $2500 in products for you. I encourage you to attend workshops, enroll in a SimpliMD course like my “Doctor, You Are A Business” course, and stay informed about the latest trends in healthcare, entrepreneurship, and micro-corporations via our newsletter and blog posts.

Conclusion

As physicians, the journey towards establishing a micro-corporation is not just a professional choice but a transformative leap towards empowerment and fulfillment. Remember, "The best day to start is yesterday. The second best day is today." Seize the opportunity to shape your destiny, contribute to the evolution of healthcare, and thrive as both a healer and an entrepreneur. The time is now, and the possibilities are boundless.

So many of you who started in traditional employment, come to regret that decision, yet you often feel powerless to break away from the inter-dependency of working at a job that you don’t love. The first mindset that I invite you to embrace is to not make it an all-or-nothing endeavor. You can stay at your current job and begin exploring the idea of a modern approach to work-life balance called Job Stacking whereby you work a mixture of W-2 and 1099 jobs to support a preferred lifestyle.

So your first actionable step would be to start a professional micro-corporation and then slip into the marketplace stream as a business by taking on some 1099 side jobs.

After you get comfortable, you could consider transitioning your current W-2 job into a long-term independent contracting job called Employment Lite. That is what I did over 10 years ago, and it was the best decision I ever made professionally!