Frequently Asked Questions

Your CPA typically owns the tax return. Your financial advisor typically owns the investment portfolio. A Physician CFO owns neither of those regulated functions. The job is making sure the decisions across them fit together.

Your entity and compensation structure affect your taxes. Your retirement plan affects both taxes and cash flow. Insurance decisions affect risk and liquidity. Multi-state work can affect all of them. Each specialist may do excellent work in their lane, but no single one is necessarily responsible for the household outcome as a whole.

A Physician CFO fills that coordination gap. We work across the financial picture of your practice and household and coordinate with the CPA, attorney, actuary, investment advisor, or other licensed professional when specialized or regulated work is required.

We coordinate the decisions. The appropriate licensed professionals execute the regulated work.

The threshold is wherever your payroll tax savings start to exceed the cost of running the entity, which is usually somewhere in the low six figures of net profit. That cost includes payroll processing, a separate business return, and bookkeeping. The savings depend on your net profit and on what a reasonable salary looks like for your specialty and hours, so the crossover point is different for every physician. We run your actual numbers in the Financial Diagnostic rather than applying a rule of thumb.

Less than most calculators suggest, and the amount does not scale the way people expect. Savings come from paying Social Security and Medicare tax on a reasonable W-2 salary instead of on all of your net profit. Social Security stops at the annual wage base, so once your salary passes it, the only remaining saving on distributions is the 2.9% Medicare rate plus the 0.9% additional Medicare tax. A physician at $600,000 does not save three times what a physician at $200,000 saves. Your reasonable salary drives the result, and that is a facts-and-circumstances determination benchmarked to market pay for your specialty, region, and hours, not a percentage of revenue. We model your actual numbers in the Financial Diagnostic.

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.

Form 2553 has a deadline. For the election to take effect for the current tax year, it generally must be filed no later than two months and 15 days after the beginning of that tax year, which is March 15 for a calendar-year business. Filed after that, the election normally takes effect the following tax year. Late election relief is available under Rev. Proc. 2013-30 if you had reasonable cause and meet the requirements, but it is relief you have to qualify for, not a second deadline. Converting at the start of a tax year is cleanest. A mid-year conversion splits the year into two periods with different treatment. We handle the filing and the timing.

Usually your home state where you practice. Delaware/Nevada advantages are mostly myths for small businesses. You would 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 regularly and exclusively for business. That covers a proportional share of rent or mortgage interest, utilities, and internet. The value depends on the size of the space relative to your home, your total housing costs, and your marginal rate, so it varies too much to quote a figure. It is a legitimate deduction for physicians doing administrative work from home, and an S-Corporation usually claims it through an accountable plan reimbursement rather than as a direct deduction.

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.

Yes. A Solo 401(k) allows up to $72,000 in combined employee and employer contributions for 2026, with additional catch-up contributions available from age 50. Pre-tax contributions reduce current taxable income, so the benefit in any year is the contribution multiplied by your marginal rate. Worth being precise about what that is: most of it is deferral rather than permanent savings, since the money is taxed on withdrawal. Your employer contribution is also capped as a percentage of your W-2 salary, which ties the plan back to your compensation decision. We 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 is about where your life is centered, not a day count. California looks at the totality of the facts: where your permanent home is, where your family lives, where your professional and social ties are, where your vehicles and licenses are registered, and where you spend your time. Day counts matter as evidence, but crossing a threshold does not by itself end California residency, and California audits high-income taxpayers who claim they left. What you would save depends on your income, how much of it remains California-source, and your new state's tax, so it is specific to your situation rather than a fixed number. 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.

Medicine is a specified service trade or business, so the 20% qualified business income deduction phases out over an income range rather than applying at every income level. For 2026 the phase-out begins at $201,750 (single) and $403,500 (married filing jointly), and the deduction is fully eliminated at $276,750 and $553,500 respectively. Above those upper figures a physician gets no QBI deduction at all. S-Corporation salary reduces qualified business income while distributions count toward it, so your compensation decision moves you within that range. What it is worth depends on your income, filing status, and W-2 wages paid. 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 substantially higher retirement contributions than a Solo 401(k) alone. There is no published contribution table: the limit is set by an actuary each year based on your age, compensation, and the lifetime benefit ceiling under IRC section 415(b), which is why any specific number you see quoted is an illustration rather than a limit you can count on. Contributions are older-skewed, so the capacity grows considerably through your fifties. The tradeoff is commitment. These plans expect consistent funding across several years and carry annual actuarial and administration costs, which makes them suited to physicians with stable, sustained income rather than variable years. See our Cash Balance Plan Guide for how the limits are determined.

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 a Physician CFO, Not Another S-Corp Service page for the 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.

Two things. First, we exclusively serve independent 1099 physicians, so we understand physician-specific scenarios: multi-state locum work, MGMA benchmarking, QBI phase-outs for dual-physician households, malpractice tail deductibility, and state licensing entity requirements. Second, and more important: most physician tax services stop at the tax return. We act as your Physician CFO, coordinating tax with retirement, cash flow, insurance, and entity decisions so they work as one system. The tax expertise is the foundation. The coordination is the job.

Annual Physician CFO engagements start at $10,000. At that level, a typical single-state engagement includes S-Corp formation, payroll, bookkeeping, and both your business and personal tax returns. Scope and fee depend on your complexity and the states involved: for example, multi-state filings add $1,500-$7,000 depending on the number of states, and Cash Balance Plan coordination adds $4,000-$6,000.

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, so you do not 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.

Locum tenens physicians are often strong candidates, since assignments are typically paid on a 1099 and the income is high enough for payroll tax savings to exceed the cost of running an entity. Whether it works for you depends on your net profit and on what a reasonable salary looks like for your specialty. Multi-state work is the complication: every state you work in may require its own registration and filing, and those costs offset part of the benefit, so the analysis is different from a physician working in one state. See our Locum Tenens Tax Guide.

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.