Is That Deductible? Navigating Tax Surprises and Business Adventures

Welcome back to the "Is That Deductible?" series, where we dive into the ins and outs of business ownership, cash flow, and the everyday adventures of running a professional micro-corporation. This week has been a roller coaster of experiences, from unexpected tax bills to meaningful conversations with fellow physicians, all intertwined with the celebration of Easter—a time of reflection and renewal in my Christian faith.

Tax Surprises and Financial Insights

First and foremost, let's address the elephant in the room: taxes. As a business owner, I've learned to expect the unexpected, but on Monday morning, I received a call from our accountant. The news wasn’t pleasant: After filing our annual corporate taxes, one of my LLC’s owed $25,000 in federal and state taxes. It turned out that this particular business performed much better than expected last year, and while I knew taxes were inevitable, the magnitude caught me off guard. As a business owner, it’s crucial to set aside funds for tax obligations. Thankfully my wife and I are pretty conservative and thus had money set aside for unexpected needs like this—since the money was due in less than a month—we were prepared for it! This served as a reminder of the importance of proactive tax planning and staying ahead of potential liabilities. Fortunately, this experience sparked valuable discussions with my accountant and prompted me to reevaluate our tax-saving strategies moving forward. We meet with the accountant quarterly to do tax planning, so I’m not sure how we missed this. We’ll plan to do a tax audit on that business in May to determine exactly went wrong—in the medical world this is akin to doing an autopsy. There will be things to learn.

And the truth is, it's part of the micro-business journey for all of us - learning from things that went well, and also from things that didn't go as expected.

Navigating Business Logistics

In the midst of tax-related revelations, I also found myself grappling with the bureaucratic hurdles of business ownership. One particular challenge was getting the utility company to change the name on my medical office building's account from my personal name to that of my business. It's a seemingly simple task that, in reality, can be frustratingly complex. Yet, every obstacle presents an opportunity to refine our processes and strengthen our business operations. I finally got it done after having to submit multiple applications and documents, in addition to having to pay a large security deposit—which was kinda frustrating since I have never missed a payment for over a decade—and the account has been in both my name and business’s name. You might ask why I went to all this trouble? The answer is asset protection for my household.

Collaboration and Innovation:

Amidst the hustle and bustle of business management, I had the privilege of engaging with various teams and professionals dedicated to advancing our ventures. From productive meetings with my business coaches, who provide invaluable guidance and support, to brainstorming sessions with our startup business engineering team and patent lawyer, each interaction fueled my passion for innovation and entrepreneurial growth.

The wisdom and experience of my business coaches are invaluable. We discussed growth strategies, marketing tactics, and financial planning. Their encouragement fueled my determination to build a thriving business enterprise while I pivot and wrap up my 25 years as rural doctor running a primary care clinic. I’m thankful for my past experience of serving our community, but now I’m off to pursue new business ventures that can help the entire country—not just my little county.

Empowering Physicians for Success

One of the highlights of my week was connecting with multiple SimpliMD business consult physicians who share my vision of greater independence and tax savings. These conversations reaffirmed the transformative impact of empowering physicians to embrace their entrepreneurial spirit and navigate the complexities of business ownership with confidence. Together, we're forging a community committed to achieving financial freedom and professional fulfillment.

One of the other exciting developments for the week was the discovery that I was chosen to deliver a lecture for an online conference for SoMe Docs. My lecture is titled “Why You Should Start A Practice Without Walls” and I would love to have you join me for this virtual conference titled Private Practice 101: Starting Your Own May 31st-June 2nd and you can sign up here for only $249!

Having Fun

At the end of the week, we met up with 3 other couples that are dear friends whom we team up to do something fun once a quarter. We had hoped to go bowling this week, but alas the lanes were filled with a bowling league. Thus we pivoted and heading to country club watering hole that was hosting their weekly trivia session over dinner. Our team didn’t win, but we got 3rd place and had a ball formulating our best guesses. The good news it that we the best dressed team because we had special t-shirts made bear our facial images in comic-style form—they a great team jersey’s for events like this. Having friends to laugh, talk, exchange life stories and pray for one another is so special!

Easter Reflections

Reflecting on the events of this week, I am reminded of the deeper significance of Easter—a time of renewal, hope, and gratitude. As a Christian, this holiday holds profound meaning for me and my family. It is a time to celebrate the gift of redemption and the promise of new beginnings. Amidst the demands of business life, Easter serves as a poignant reminder to cherish moments of connection, love, and faith. Three of my five children were able to make it home, and we enjoyed a holiday meal with my sister and her family around her dinner table, collectively reflecting on the grace we have all experienced. It humbly reminds us of the new life made possible by Jesus.

Is That Deductible?

Well this the part where we discover what could and should be considered and pre-tax business purpose encounter and what is a post-tax personal experience.

Tax Surprise: A painful business expense

Utility Navigation: My time was primarily involved in this, which is not deductible. The $3000 plus utility deposit was a business expense. Now that the utility use is set up as auto-pay in the business name, it qualifies as a business expense.

Collaboration and Innovation: These are business expenses associated with my need for coaching services, which I highly value. One of the coaching sessions was converted into a home business rental meeting as we met in my home. The startup innovation work is also considered a business expense.

SimpliMD Meetings: These are business expenses related to the infrastructure necessary for me to perform my work, which benefits all members of our community.

Fun with Friends: No business expenses, just enjoyable time with precious friends.

Easter: No business expenses, just family time and time with the faith community.

This week has been a whirlwind of challenges, revelations, and moments of celebration. From navigating tax surprises to fostering collaboration and innovation, each experience has contributed to my journey as a physician entrepreneur. As we continue to explore the intricacies of business ownership in the "Is That Deductible?" series, I invite you to join me in embracing the joys and trials of entrepreneurial life—and to remember the importance of faith, family, and community along the way.

And if you are not a member yet in our community, I invite you to move from being a subscriber to becoming a member—it will unlock $2500 in products for you!