I'm Not A Businessman, I'm A Business, Man
Aug 10, 2024
I’m A Fan
As a devoted Chicago Bears enthusiast, I must admit that the franchise has endured a prolonged drought when it comes to elite quarterback talent. For many decades, Bears fans have yearned for a true game-changing signal-caller to lead the team. Now, with the selection of Caleb Williams as the first overall pick in the NFL draft, there's an palpable sense of excitement and optimism surrounding the team's future.
Williams, a highly touted prospect from the University of Southern California, brings a rare combination of arm talent, athleticism, and football IQ to the Bears' offense. His collegiate career was marked by impressive statistics and highlight-reel plays, earning him the Heisman Trophy and cementing his status as a potential franchise quarterback. The anticipation among Bears fans is reaching fever pitch, as we eagerly await Williams' debut on the professional gridiron. Many are hopeful that he will not only break the team's long-standing quarterback curse but also elevate the entire offense to new heights. The prospect of witnessing Williams' arm strength, accuracy, and playmaking ability in action has created a buzz of excitement that hasn't been felt in Chicago for years.
I Am A Business, Man
However, I have also been observing closely what he's doing off the field as a businessman, and it has been just as impressive as his athletic prowess. His entrepreneurial endeavors span various industries. This diversification demonstrates his strategic thinking and ability to leverage his personal brand beyond the confines of his sport. His business acumen is evident in the successful partnerships he has forged with major corporations and the calculated risks he has taken in emerging markets. Moreover, his commitment to community development through his foundation showcases a holistic approach to success that extends far beyond his athletic achievements. The way he balances his professional sports career with his burgeoning business empire is a testament to his work ethic, time management skills, and vision for long-term success. As he states, “he is not a businessman, he is a business, man.” I love this awareness that his professional services make him a unified individual and business all rolled into one. This would account for why his legal team tried to convince the NFL to allow his rookie contract to flow through his own micro-corporation.
Much like our group of doctors who deal with large hospital corporations serving as contractual gatekeepers, aiming to retain the power to classify us as employees or contractors, Caleb Williams discovered that the powerful NFL still had the authority to act as a gatekeeper and require him to sign as an employee. However, you should note that this doesn't prevent him from job stacking and running all his endorsements and other commercial contracts through his micro-corporation. Watch and learn from this pro who is acting like a pro in the marketplace!
There is much to learn from Caleb Williams; let's unpack this a bit. Although most doctors are business illiterate and large corporations seek to make us hopelessly dependent on them, Caleb Williams reminds us that as professionals who provide a service, we are truly businesses—and I'll keep shouting this from the mountaintops!
In the dynamic worlds of sports, entertainment, and medicine, high-income professionals can significantly benefit from channeling their earnings through a professional micro-corporation rather than receiving them as W-2 employees. This strategy not only optimizes tax obligations but also facilitates long-term wealth accumulation planning. Caleb Williams provides us with a compelling example from the sports world on the importance of this approach.
Caleb Williams: A Case Study in Tax Optimization
Caleb Williams’ recent contract negotiations were heavily focused on structuring his earnings through a micro-corporation. Williams is signing a four-year, fully guaranteed contract worth $39 million, according to CBS Sports lead NFL insider Jonathan Jones. It includes a $25.5 million signing bonus, per ESPN. Although the NFL and the players' union ultimately did not allow his entire rookie contract to be routed this way, Williams’ strategy highlights the immense benefits of this financial structure. Prior to joining the NFL, Williams ensured that his Name, Image, and Likeness (NIL) earnings at USC—totaling $2.7 million his senior year—flowed through his micro-corporation, maximizing tax efficiency and leveraging his income for future investments.
Tax Savings: A Closer Look at Caleb Williams’ Rookie Contract
Let’s break down the potential tax savings Caleb Williams could have achieved with his rookie contract. Assuming his rookie contract is worth $39 million over four years, if he were to receive this income as a W-2 employee, his federal tax rate could be as high as 37%, not including state taxes.
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W-2 Employee Tax Scenario:
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Federal Tax: $39,000,000 * 37% = $14,430,000
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State Tax (assuming 5%): $39,000,000 * 5% = $1,950,000
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Total Taxes: $14,430,000 + $1,950,000 = $16,380,000
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In contrast, by routing his earnings through a micro-corporation, Williams could take advantage of various business deductions, retirement contributions, and other tax strategies to lower his taxable income.
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Micro-Corporation Tax Scenario:
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Potential Business Deductions: $4,000,000
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Adjusted Income: $39,000,000 - $4,000,000 = $35,000,000
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Corporate Tax Rate (21%): $35,000,000 * 21% = $7,350,000
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Distribution Tax (Qualified Dividends, 15%): ($35,000,000 - $7,350,000) * 15% = $4,155,000
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Total Taxes: $7,350,000 + $4,155,000 = $11,505,000
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By structuring his earnings through a micro-corporation, Williams could potentially save around $4.875 million in taxes over the course of his rookie contract. Wow, that is a lot of money to give to the government! I don’t blame him for trying to use a micro-business structure. Although none of you will make $39 million over 4 years for your professional services, the size of your income does make this all scalable. According to my calculations, Caleb could have retained about 12.5% of his earnings through a small business structure. This is the same range that typically see with my SimpliMD members—around 10-15%. That’s a lot of money you are giving away each year! To learn more, you can download my free e-book 4 Strategies For How Doctors Can Retain More of Their Earnings
Doctors: Learn from the Sports World
Doctors, while you might not earn millions annually like top athletes, the principle remains the same. Hospitals often entice you with lucrative financial packages to keep you as dependent employees. However, forming a professional micro-corporation enables you to retain more of your hard-earned income. This structure allows for numerous tax benefits, from deducting business expenses to setting up retirement plans that would not be available to you as a W-2 employee.
The Benefits of a Micro-Corporation
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Tax Efficiency: By routing income through a micro-corporation, you can take advantage of business deductions, lower corporate tax rates, and strategic income distributions to reduce your overall tax burden.
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Retirement Planning: Micro-corporations offer greater flexibility in retirement planning, allowing you to contribute more towards your retirement savings than typical W-2 employee plans.
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Expense Deductions: Business-related expenses such as home office costs, travel, and professional development can be deducted, further reducing taxable income.
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Wealth Accumulation: By retaining more of your earnings, you can invest in other ventures, grow your business, and build a robust financial future.
Establishing Your Micro-Corporation
Establishing a micro-corporation during your training, similar to Caleb Williams, sets the stage for greater financial independence and success. By managing your professional earnings through a micro-corporation, you gain control over your financial destiny, ensuring that a larger portion of your income stays with you rather than being siphoned off through taxes.
Get Started with SimpliMD’s Course
To help you embark on this transformative journey, SimpliMD offers a comprehensive course, "Creating a Practice Without Walls." This course provides step-by-step guidance on forming your micro-corporation, equipping you with the tools to thrive both as a healer and an entrepreneur. Celebrate the launch of this evergreen course with us and enjoy it at half price using the coupon code "EARLYBIRD" at checkout. Take charge of your financial future today!
