Dentists must work with trusted legal and tax advisors who understand the operational and business issues involved with a dental practice to ensure the choice of entity provides the maximum benefit for each dental practice and its dentist-owners.1. 100 (3d Cir. The newsletter ($199 a year) and consulting information are available from Blair/McGill and Company, 2810 Coliseum Centre Drive, Suite 360, Charlotte, NC 28217, call (704) 424-9780 or visit the Web site at www.bmhgroup.com. Any portion of gross receipts generated by either the shareholders involvement or in the act of assisting employees in performing services must be compensated as wages and subject to employment taxes. Best case, you have very little professional expenses and maybe $17k is flowing thru as s-corp div saving you approx. $57,203 / yr. Of course, part of the savings provided by the S Corp may be offset by the expense of preparing a corporate tax return (which may be more costly than the requisite tax forms for a single-member LLC) and the other costs associated with satisfying the additional formalities of an S Corp. Apart from the modest tax savings described above, most dentists favor the LLC because of its operational simplicity and flexibility. There is then the question of "reasonable compensation." The dentist's advisor should be questioned about the . Rather, the S Corp designation is a special election made by an LLC or C Corp with the IRS that allows the business to offer the same liability protection as corporations and LLCs, protecting the owners personal assets against debts and lawsuits of the company. Sec. What You Need to Know About Dental Corporations So its not about a ratio of wages to dividends, its about fair or reasonable compensation for services rendered. Under the guise of customer service, says this author, "dentists often become the underdogs in their patient relationships." Please enable JavaScript on your browser and try again. Dentists are required to pay themselves wages and to pay self-employment tax, but the taxes can be deducted from their business income. All Rights Reserved. If this is the case, the shareholder must be paid wages comparable to similar services compensated for similar industries. As a result, unlike the traditional C corporation, there is no double taxation in most situations because there are no income taxes due on the income at the entity level. S Corp status will begin the next calendar year if your business misses the deadline. The term "employee benefit plan" that is subject to ERISA creditor protection does not include any plan under which there are no employees as participants covered under the plan. S Corp owners must pay "reasonable compensation" to each shareholder/employee in exchange for any services provided by the shareholder-employee. Let's say you have a business that generates enough gross profit to pay a reasonable salary: 1:10 up to 1:1. LLC Vs. S-corp: What Are They And How Are They Different? Dentists typically go through four years of dental schooling after completing a bachelor's Read more, Our data indicates that the highest pay for a Dentist is 99k / year, Our data indicates that the lowest pay for a Dentist is 30k / year.
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