Frequently Asked Questions

Generally when earning $130,000+ as a 1099 contractor. Below that, the administrative costs may outweigh tax savings. If you're earning $200,000+, you could be leaving $15,000-$25,000 on the table annually without an S-Corp structure.

Typical savings: $15,000-$25,000 annually on $200,000 income. The key is paying yourself a reasonable salary (40-50% of income) and taking the rest as distributions, which avoid the 15.3% self-employment tax.

The IRS requires S-Corp owners to pay themselves fair market value. For physicians, this is typically 40-60% of net income. We help determine the right split based on your specialty, location, and income level to ensure IRS compliance while maximizing your tax savings.

Yes, you can file Form 2553 anytime, but timing matters for maximizing benefits. Converting at year-start is most efficient. If converting mid-year, you'll have a split year with different tax treatment for each period. We handle all the paperwork and ensure proper timing.

Usually your home state where you practice. Delaware/Nevada advantages are mostly myths for small businesses—you'd still pay taxes in your home state anyway, plus pay Delaware fees. We incorporate you in the most cost-effective state for your situation.

CME courses, medical licenses, malpractice insurance (if you pay it), professional dues, home office, vehicle mileage, health insurance premiums, equipment, professional subscriptions, and travel to work sites. We'll help you identify all eligible deductions.

Yes, if you use a dedicated space exclusively for business. This includes a portion of rent/mortgage, utilities, and internet. The home office deduction can save $2,000-$5,000 annually and is perfectly legitimate for physicians who do administrative work from home.

You'll pay federal and state taxes quarterly (April 15, June 15, September 15, January 15). We calculate these for you based on your salary, distributions, and deductions to avoid underpayment penalties. We send reminders and provide exact amounts to pay.

Absolutely. A Solo 401(k) lets you contribute up to $69,000 (2024) as both employee and employer, all tax-deductible. This can save an additional $15,000-$25,000 in taxes annually. We can help you set this up and coordinate with your financial advisor.

Yes, you typically owe a non-resident tax return to every state where you earned income, plus a resident return to your home state. Your home state provides a credit for taxes paid elsewhere, preventing double taxation. See our Multi-State Taxation Guide for detailed state-by-state requirements and sourcing rules.

Yes. California imposes both an $800 minimum franchise tax AND a 1.5% entity-level tax on S-Corporation net income, plus personal income tax up to 13.3%. A physician earning $600K pays roughly $75,000 in California state taxes alone. Our California S-Corp Guide covers strategies to minimize this burden.

New York requires physicians to form a PLLC (not a standard LLC), publish formation notices in two newspapers for six consecutive weeks (costing $300-$1,800 depending on county), and file proof of publication. The entire process takes 4-5 months. See our NY S-Corp Formation Guide for the complete timeline and requirements.

Generally, income is sourced to the state where you physically perform the work. If you're working from your home office in Texas for a California company, that's Texas-source income (zero state tax). However, New York and Connecticut have "convenience of employer" rules that may override this. Multi-state sourcing is complex and we handle this analysis as part of our service.

Changing tax domicile requires establishing clear residency in the new state: driver's license, voter registration, primary residence, spending 183+ days there, and severing California ties. California aggressively audits high-income taxpayers claiming they left. Annual savings for a $700K earner: $75,000. We coordinate residency changes to survive FTB scrutiny. See our California Exit Strategy section.

Usually no. Entity registration (foreign qualification) and tax filing are different requirements. Most states only require entity registration if you maintain a physical office, have employees, or exceed specific revenue thresholds (California: ~$711K). However, you personally still owe non-resident tax returns regardless. We analyze your specific situation and handle both entity registration and personal filings.

Physicians can deduct up to 20% of qualified business income, but the deduction phases out above $383,900 (single) or $479,900 (married) for 2026. S-Corporation salary reduces QBI, while distributions count toward it. Strategic salary planning around these thresholds can save $5,000-$15,000 annually. See our QBI Deduction Complete Guide for detailed scenarios and calculations.

Yes. QBI phase-out is based on combined household taxable income. If your spouse earns $400K W-2 and you earn $300K through your S-Corp, your combined $700K income completely eliminates your QBI deduction, costing roughly $21,000 in lost tax benefits. Strategic planning (spousal employment, retirement contributions, timing) can help preserve some QBI benefit. We model this in your specific situation.

Cash Balance Plans allow significantly higher retirement contributions than Solo 401(k) alone. A 55-year-old earning $650K can contribute $200K-$250K annually (vs. $72K with 401k only), saving $50K-$100K in annual taxes. Best for physicians 48+ earning $400K+ with stable income. Setup costs $4K-$8K annually. See our Cash Balance Plan Guide for contribution limits by age and real scenarios.

Yes, but options narrow significantly. We can still optimize: year-end retirement contributions, equipment purchases, prepaying expenses, adjusting final payroll, and estimated payment true-ups. However, S-Corp formation requires being done by December 31, and some strategies (Cash Balance Plans) need earlier implementation. Contact us by October for maximum year-end planning flexibility.

Malpractice insurance, CME courses, professional licenses, medical equipment, home office (if exclusive use), professional subscriptions, retirement plan contributions, health insurance premiums (if not eligible for spouse's plan), business travel, meals with colleagues (50%), and technology. We help maximize legitimate deductions while maintaining IRS-compliant documentation. Each dollar deducted saves roughly 50 cents (combined federal + state + self-employment tax).

IRS requires "reasonable compensation" benchmarked to MGMA data for your specialty and region. We analyze your income, work hours, and specialty to determine defensible salary. Generally 30-40% of net S-Corp income for most physicians. Too low triggers audit risk; too high wastes self-employment tax savings. We monitor this quarterly and adjust as your income changes.

TurboTax can't: determine reasonable compensation benchmarked to MGMA, optimize salary/distribution split for QBI thresholds, coordinate multi-state sourcing, proactively plan retirement contributions, monitor quarterly estimates, or handle S-Corporation formation and ongoing compliance. A $600K physician using TurboTax typically overpays $15K-$30K annually in missed optimization opportunities. The software doesn't know what it doesn't know.

Generalist CPAs typically miss: MGMA reasonable compensation benchmarking (using generic IRS data instead), QBI threshold optimization for married-to-high-earner physicians, multi-state sourcing nuances, Cash Balance Plan timing for older physicians, and locum-specific contract structuring. Each gap costs $3K-$15K annually. See our Why Choose Physician-Specific Expertise guide for detailed comparison.

Absolutely. We coordinate with your current CPA to obtain prior records, review year-to-date tax position, and implement optimization strategies for the remainder of the year. Switching mid-year is common and usually still generates significant savings. We handle the transition seamlessly.

We exclusively serve independent contractor physicians (locums, 1099, part-time), not employed physicians or general small businesses. This focus means we understand physician-specific scenarios: multi-state locum work, MGMA benchmarking, QBI phase-outs for dual-physician households, malpractice tail coverage deductibility, and state-specific medical licensing entity requirements. We're not generalists trying to serve everyone.

Base annual service (S-Corp management, payroll, business and personal tax returns): $15,000. Multi-state filings add $1,500-$7,000 depending on complexity and number of states. Cash Balance Plan coordination adds $4,000-$6,000. S-Corp formation is $2,500-$4,500 depending on state. For a physician earning $400K+, the tax savings typically exceed fees by 3-5x annually.

It depends on the contract structure. If you're becoming a W-2 employee, you won't need an S-Corp. If you're contracting as a 1099 independent contractor or becoming a partner with K-1 distributions, S-Corp structure may still provide benefits. Some groups require specific entity structures. We review the contract and advise accordingly before you sign.

Technically yes, but usually not advisable. Multiple S-Corps double administrative costs, complicate reasonable compensation allocation, and create unnecessary complexity. Most physicians benefit from one S-Corp that handles all 1099 income streams. Exceptions exist for liability separation or if operating truly distinct businesses (clinical work vs. consulting vs. real estate). We analyze whether multiple entities are justified in your situation.

Your S-Corp can remain dormant (inactive but registered) while you're W-2, or you can formally dissolve it. If there's any chance you'll return to 1099 work within 2-3 years, keeping it dormant is usually cheaper than re-forming. You'll still have minimal annual compliance costs ($800-$1,500) but avoid re-formation fees later. We help you evaluate based on your career plans.

Both can flow through your S-Corp. 1099-NEC is for services (clinical work, consulting). 1099-MISC is typically for other payments (expert witness fees, speaking honoraria, royalties). All qualify as business income for S-Corp purposes. The form type doesn't affect your tax planning strategy.

S-Corp formation doesn't change malpractice requirements. You still need individual malpractice coverage in your personal name (most policies require this). The S-Corp provides limited liability for business debts and contracts but does NOT shield you from personal malpractice liability. That requires proper insurance. Your S-Corp can pay malpractice premiums as a deductible business expense.

It depends on your visa type. H-1B visa holders generally cannot operate their own business or receive 1099 income (must be W-2 through sponsoring employer). J-1 physicians during residency/fellowship face similar restrictions. Green card holders and US citizens have no restrictions. O-1 visa holders and certain other visa categories may permit 1099 work and S-Corp formation. We coordinate with immigration attorneys to ensure compliance before proceeding.

Payroll processing, payroll tax deposits (941s), bookkeeping, bank reconciliation, quarterly financial statements, annual corporate tax return (1120-S), K-1 preparation, registered agent service, and annual state filings. Essentially, everything needed to keep your S-Corp compliant and optimized.

You don't need to send us every receipt monthly, but you must keep them for 7 years for IRS compliance. We'll set you up with a digital expense tracking system (like Expensify or Receipt Bank) that makes this effortless. Just snap photos of receipts and the system does the rest.

Typically 2-3 weeks from when we receive your information. Some states are faster (Delaware: 1 week) vs slower (California: 3-4 weeks). We handle all paperwork including articles of incorporation, EIN application, and IRS Form 2553 for S-Corp election.

A registered agent receives official state correspondence and legal documents on behalf of your business. This is required in all states. We handle this so official documents don't show up at your home address, and we ensure nothing gets missed.

Annual state reports (due dates vary by state), quarterly payroll tax returns (Form 941), annual corporate tax return (Form 1120-S), and your personal K-1. We handle 100% of these filings—you don't need to worry about any deadlines or paperwork.

State penalties for late annual reports range from $50-$500, and IRS penalties for late payroll taxes can be 2-15% of the amount due. We track all deadlines and file everything on time so you never face these penalties. That's part of what we do.

Wait until you've actually started 1099 work. You don't want corporate maintenance costs and filing requirements while still W-2. Contact us when you're 3-6 months from making the transition so we can plan the optimal timing.

Yes. Your 1099 income goes through the S-Corp. W-2 income is separate. You'll have a W-2 from your employer AND a W-2 from your own S-Corp. This is a common setup for physicians who moonlight or do locums work alongside a primary W-2 position.

Absolutely—locums physicians are ideal candidates since you're typically 1099 contractors and earning above the $130K threshold. Many locums physicians save $20,000-$30,000 annually through proper S-Corp structuring.

We can pro-rate services for shorter periods. However, annual tax filing and compliance requirements remain the same, so there's a minimum annual cost regardless of months active. We'll analyze whether the tax savings justify the cost in your specific situation.