RE: Voting on Practice Setup so far

[Guest guest]

I suspect that more people would choose

LLC if it were available in all states. I was under the impression that a

sole proprietorship was easier but very risky as you assume 100% liability for

all debts & liabilities of the business (ie, your personal assets are

totally unshielded). I’m not an attorney but that is my

understanding. S-corps & C-corps are too complicated too maintain,

that is what I was told by a health care attorney. He said that (in Ohio) he had not set up one

of those in about 10 years for a physician. He advised an LLC as the best

all around entity type.

Voting on Practice Setup so far

Here are the percentages

so far.

31% - Sole proprietorship

18% - LLC

6% - C-corporation

43% - S-corporation

Based on the table below,

would any of you who voted so far change your business setup?

Just curious.

Locke, MD

Practice entities at a

glance

Sole proprietorship

General partnership

Limited liability company (LLC)

Limited liability partnership (LLP)

Professional corporation (C

corporation)

Professional corporation (S

corporation)

Provides personal liability protection from one's

own negligence

No

No

No

No

No

No

Provides personal liability protection from a

partner's negligence

N/A

No

Yes

Yes

Yes

Yes

Provides personal liability protection

from claims against the practice

No

No

Yes

No

Yes

Yes

Provides personal liability protection from

creditors

No

No

Yes, except to the extent of one's investment in the

LLC

No

Yes

Yes

Taxation rules

Net income passed through to owner

Net income passed through to partners

Net income passed through to members

Net income passed through to partners

35-percent tax on net income

Net income passed through to shareholders

[Guest guest]

I suspect that more people would choose

LLC if it were available in all states. I was under the impression that a

sole proprietorship was easier but very risky as you assume 100% liability for

all debts & liabilities of the business (ie, your personal assets are

totally unshielded). I’m not an attorney but that is my

understanding. S-corps & C-corps are too complicated too maintain,

that is what I was told by a health care attorney. He said that (in Ohio) he had not set up one

of those in about 10 years for a physician. He advised an LLC as the best

all around entity type.

Voting on Practice Setup so far

Here are the percentages

so far.

31% - Sole proprietorship

18% - LLC

6% - C-corporation

43% - S-corporation

Based on the table below,

would any of you who voted so far change your business setup?

Just curious.

Locke, MD

Practice entities at a

glance

Sole proprietorship

General partnership

Limited liability company (LLC)

Limited liability partnership (LLP)

Professional corporation (C

corporation)

Professional corporation (S

corporation)

Provides personal liability protection from one's

own negligence

No

No

No

No

No

No

Provides personal liability protection from a

partner's negligence

N/A

No

Yes

Yes

Yes

Yes

Provides personal liability protection

from claims against the practice

No

No

Yes

No

Yes

Yes

Provides personal liability protection from

creditors

No

No

Yes, except to the extent of one's investment in the

LLC

No

Yes

Yes

Taxation rules

Net income passed through to owner

Net income passed through to partners

Net income passed through to members

Net income passed through to partners

35-percent tax on net income

Net income passed through to shareholders

[Guest guest]

Thanks, .

That was my understanding, too...real Sole Proprietroships expose you to risk since you, your assets, and the "business" are all in the same bucket so to speak. So if you are sued because someone slips on your sidewalk at your place of business, your assets are at risk.

I was surprised so many so far have said they have this set up -- I wondered if they are really set up as an LLC or Corp, but just think of themselves as the sole owner of their business or if they really are set up as a "sole proprietorship".

Here is what this site said about this set up...it has lots of good info about pro/con of Corp (S & C) and LLC's, etc, too.

http://www.sba.gov/starting_business/legal/forms.html

SOLE PROPRIETORSHIPS

The vast majority of small business start out as sole proprietorships. These firms are owned by one person, usually the individual who has day-to-day responsibility for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one in the same with the business.

Advantages of a Sole Proprietorship

Easiest and least expensive form of ownership to organize.

Sole proprietors are in complete control, and within the parameters of the law, may make decisions as they see fit.

Sole proprietors receive all income generated by the business to keep or reinvest.

Profits from the business flow-through directly to the owner's personal tax return.

The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship

Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk.

May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans.

May have a hard time attracting high-caliber employees, or those that are motivated by the opportunity to own a part of the business.

Some employee benefits such as owner's medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income).

Locke, MDBasalt, COUniversity of Kansas Medical School 1991Eau (WI) Family Medicine Residency 19945 Years in Air Force -- [Laughlin AFB (Del Rio, TX) // Spangdahlem AB, Germany]Alpine Medical Group -- Private Group Practice since 1999http://www.alpinemedical.mdJob Share w/ WifeAMG went independent from hospital MSO 10/04AMG made downpayment on Centricity EMR 12/04AMG went "live" with Centricity EMR 15 April 2005

From: [mailto: ] On Behalf Of Brock DOSent: Tuesday, May 02, 2006 12:57 PMTo: Subject: RE: Voting on Practice Setup so far

I suspect that more people would choose LLC if it were available in all states. I was under the impression that a sole proprietorship was easier but very risky as you assume 100% liability for all debts & liabilities of the business (ie, your personal assets are totally unshielded). I’m not an attorney but that is my understanding. S-corps & C-corps are too complicated too maintain, that is what I was told by a health care attorney. He said that (in Ohio) he had not set up one of those in about 10 years for a physician. He advised an LLC as the best all around entity type.

[Guest guest]

Thanks, .

That was my understanding, too...real Sole Proprietroships expose you to risk since you, your assets, and the "business" are all in the same bucket so to speak. So if you are sued because someone slips on your sidewalk at your place of business, your assets are at risk.

I was surprised so many so far have said they have this set up -- I wondered if they are really set up as an LLC or Corp, but just think of themselves as the sole owner of their business or if they really are set up as a "sole proprietorship".

Here is what this site said about this set up...it has lots of good info about pro/con of Corp (S & C) and LLC's, etc, too.

http://www.sba.gov/starting_business/legal/forms.html

SOLE PROPRIETORSHIPS

The vast majority of small business start out as sole proprietorships. These firms are owned by one person, usually the individual who has day-to-day responsibility for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one in the same with the business.

Advantages of a Sole Proprietorship

Easiest and least expensive form of ownership to organize.

Sole proprietors are in complete control, and within the parameters of the law, may make decisions as they see fit.

Sole proprietors receive all income generated by the business to keep or reinvest.

Profits from the business flow-through directly to the owner's personal tax return.

The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship

Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk.

May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans.

May have a hard time attracting high-caliber employees, or those that are motivated by the opportunity to own a part of the business.

Some employee benefits such as owner's medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income).

Locke, MDBasalt, COUniversity of Kansas Medical School 1991Eau (WI) Family Medicine Residency 19945 Years in Air Force -- [Laughlin AFB (Del Rio, TX) // Spangdahlem AB, Germany]Alpine Medical Group -- Private Group Practice since 1999http://www.alpinemedical.mdJob Share w/ WifeAMG went independent from hospital MSO 10/04AMG made downpayment on Centricity EMR 12/04AMG went "live" with Centricity EMR 15 April 2005

From: [mailto: ] On Behalf Of Brock DOSent: Tuesday, May 02, 2006 12:57 PMTo: Subject: RE: Voting on Practice Setup so far

I suspect that more people would choose LLC if it were available in all states. I was under the impression that a sole proprietorship was easier but very risky as you assume 100% liability for all debts & liabilities of the business (ie, your personal assets are totally unshielded). I’m not an attorney but that is my understanding. S-corps & C-corps are too complicated too maintain, that is what I was told by a health care attorney. He said that (in Ohio) he had not set up one of those in about 10 years for a physician. He advised an LLC as the best all around entity type.

[Guest guest]

BTW, do those of you in a Corp (S or C) find the documentation burdensome?

Our 4 doc (3 full partners since my wife and I are an FTE) S-corp does the documentation.

At least in Colorado, it doesn't seem to burdensome. We keep minutes of meetings...which should probably be done anyway to document what was agreed upon.

Then submit a yearly report for $10.

There is the cost of the initial setup which can get expensive esp if you have a lawyer involved, but it looks like this could be done online in Colorado.

What has been everyone else's experience with maintaining a Corp?

Locke, MDBasalt, COUniversity of Kansas Medical School 1991Eau (WI) Family Medicine Residency 19945 Years in Air Force -- [Laughlin AFB (Del Rio, TX) // Spangdahlem AB, Germany]Alpine Medical Group -- Private Group Practice since 1999http://www.alpinemedical.mdJob Share w/ WifeAMG went independent from hospital MSO 10/04AMG made downpayment on Centricity EMR 12/04AMG went "live" with Centricity EMR 15 April 2005

[Guest guest]

: I changed from an S Corp to a C Corp so I could set up a health reimburement account. I anly pay for expenses incurred but it covers more than traditional insurance. This makes all these expenses pretax expenses to the C corp. I use www.base105.com. Other structures are supported as well check with your accountant and attorney. Locke's in Colorado wrote: Here are the percentages so far. 31% - Sole proprietorship 18% - LLC 6% - C-corporation 43% - S-corporation Based on the table below, would any of you who voted so far change your business setup? Just curious. Locke,

MD Practice entities at a glance Sole proprietorship General partnership Limited liability company (LLC) Limited liability partnership (LLP) Professional corporation (C corporation) Professional corporation (S corporation) Provides personal liability protection from one's

own negligence No No No No No No Provides personal liability protection from a partner's negligence N/A No Yes Yes Yes Yes Provides personal liability protection from claims against the practice No No Yes No Yes Yes Provides personal liability protection from creditors No No Yes, except to the extent of one's investment in the LLC No Yes Yes Taxation rules Net income passed through to owner Net income passed through to partners Net income passed through to members Net income passed through to partners 35-percent tax on net income Net income passed through to shareholders

Yahoo! Messenger with Voice. Make PC-to-Phone Calls to the US (and 30+ countries) for 2¢/min or less.

[Guest guest]

: Documentation should include an annual report. To be blunt, we have not done one yet, but eventually will. Our lawyer reminds us we have the option to file one annually. As our corporation grows we will establish appropriate pratices along the way. Locke's in Colorado wrote: BTW, do those of you in a Corp (S or C) find the documentation burdensome? Our 4 doc (3 full partners since my wife and I are an FTE) S-corp does the documentation. At least in Colorado, it doesn't seem to burdensome. We keep minutes of meetings...which should probably be done anyway to document what was agreed upon. Then submit a yearly report for $10. There is the cost of the initial setup which can get expensive esp if you have a lawyer involved, but it looks like this could be done online in Colorado. What has been everyone else's experience with maintaining a Corp? Locke, MDBasalt, COUniversity of Kansas Medical School 1991Eau (WI) Family Medicine Residency 19945 Years in Air Force -- [Laughlin AFB (Del Rio, TX) // Spangdahlem AB, Germany]Alpine Medical Group -- Private Group Practice since 1999http://www.alpinemedical.mdJob Share w/ WifeAMG went independent from hospital MSO 10/04AMG made downpayment on Centricity EMR 12/04AMG went "live" with Centricity EMR 15 April 2005

Talk is cheap. Use Yahoo! Messenger to make PC-to-Phone calls. Great rates starting at 1¢/min.

[Guest guest]

-

Why did you change from an S corp to a C corp for reasons of setting up an

HRA? I'm in the process of applying for an HRA through base105 , thanks to

your previous suggestion, and they seemed to think that the S corp would

work fine. Also, is there a clear advantage to HRA compared to HSA? I

can't really seem to figure it out. Seems to me there might be more savings

advantage to the corporation via the HRA in terms of the tax savings on FICA

and medicare and you can also deduct the insurance premium, but with the HSA

you personally get to keep the tax free money in your account and earn

interest on it. Sort of trying to compare apples and oranges, I think I'm

going to have to actually run through both scenarios with different

projected health care outlays to see which would be better. Seems like a

painful exercise to me, so I'll probably procrastinate for a while. Has

anyone from the group looked at this?

As regards filing for the S corp, I have legalese-type minutes from the

annual meeting which my lawyer advised me to have once yearly with myself

and file in the corporation book. She was very insistent that I have the

meeting and post the minutes, which essentially say I met with myself and

there was no further business that needed to be addressed; she said that

unless I document this meeting yearly, my corporation can be made null and

void if there is a problem (such as a law suit, etc.) ( I can post them as

an attachment if any one wants to copy them and insert their practice name.)

Outside of taxes and the RI $50 annual corporations fee, this is all the

paperwork I need to do to maintain my S corp here. She did charge me about

$1100 to incorporate as an S corp, but one of my physician friends here in

the state went on line and downloaded the forms and did it herself for much

less (free? or somthing under $100) using a software package.

Do you need an annual report as a C corp and is it more detailed than just

the annual meeting letter?

Lynn

>

>Reply-To:

>To:

>Subject: RE: Voting on Practice Setup so far

>Date: Tue, 2 May 2006 19:20:25 -0700 (PDT)

>

>:

>

> Documentation should include an annual report. To be blunt, we have not

>done one yet, but eventually will. Our lawyer reminds us we have the

>option to file one annually. As our corporation grows we will establish

>appropriate pratices along the way.

>

>

>

>Locke's in Colorado wrote:

> @font-face { font-family: Wingdings; } @font-face {

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>FONT-FAMILY: Arial } DIV.Section1 { page: Section1 } OL {

>MARGIN-BOTTOM: 0in } UL { MARGIN-BOTTOM: 0in } BTW, do those of

>you in a Corp (S or C) find the documentation burdensome?

>

> Our 4 doc (3 full partners since my wife and I are an FTE) S-corp does

>the documentation.

>

> At least in Colorado, it doesn't seem to burdensome. We keep minutes of

>meetings...which should probably be done anyway to document what was agreed

>upon.

>

> Then submit a yearly report for $10.

>

> There is the cost of the initial setup which can get expensive esp if

>you have a lawyer involved, but it looks like this could be done online in

>Colorado.

>

> What has been everyone else's experience with maintaining a Corp?

>

> Locke, MD

>Basalt, CO

>University of Kansas Medical School 1991

>Eau (WI) Family Medicine Residency 1994

>5 Years in Air Force -- [Laughlin AFB (Del Rio, TX) // Spangdahlem AB,

>Germany]

>Alpine Medical Group -- Private Group Practice since 1999

>http://www.alpinemedical.md

>Job Share w/ Wife

>AMG went independent from hospital MSO 10/04

>AMG made downpayment on Centricity EMR 12/04

>AMG went " live " with Centricity EMR 15 April 2005

>

>

>

>

>

>

[Guest guest]

Lynn: It has been about a year since I made the change. Two issues were prompting my change one was the HRA and the other was the individual or self directed 401K. It may have actually been the latter that required a C corp status to fully fund profit sharing contributions to 25% of employee income. I wish I could be more specific. Either way it provides corporate structure and protects personal assets from business liabilities except for malpractice. I plan on continuing to provide salaries and profit sharing to legally avoid the 35% tax on professional corporation. In terms of HRA and HSA both are used to pay medical expenses. The HSA does grow tax deferred in your personal account. My current understanding is that the HSA must be combined with a high deductible insurance plan. The HRA does not. You can actually pay insurance premiums with the HRA,

actual medical expenses, ? term life insurance, and disability insurance. The decision for me was that all the insurance companies wanted high premiums to insure my wife and myself. At that point we were off Cobra (1100-1200/ month premium) and she was pregnant with our third child. The lowest quote still put our cash flow for health insurance at $14000 with $5000 deductible. Our actual cost for all health expenses was $10500 fully reimbursed by our C Corp. The same cost out-of-pocket would have been equivalent to approximately $18000 of salary and tax expense to my corporation. I will need to reprice insurance again this year, but I hate to pay the insurance company thousands each year. You can also have two accounts. I believe you could set up both an HRA and a HSA. You could use it to maximize pretax savings if you had

already maxed out all other pretax savings. Hope this helps Lynn lynn ho wrote: -Why did you change from an S corp to a C corp for reasons of setting up an HRA? I'm in the process of applying for an HRA through base105 , thanks to your previous suggestion, and they seemed to think that the S corp would work fine. Also, is there a clear advantage to HRA compared to HSA? I can't really seem to figure it out. Seems to me there might be more savings advantage to the corporation via the HRA in terms of the tax savings on FICA and medicare and you can also deduct the insurance premium, but with the HSA you personally get to keep the tax free money in your account and earn interest on

it. Sort of trying to compare apples and oranges, I think I'm going to have to actually run through both scenarios with different projected health care outlays to see which would be better. Seems like a painful exercise to me, so I'll probably procrastinate for a while. Has anyone from the group looked at this?As regards filing for the S corp, I have legalese-type minutes from the annual meeting which my lawyer advised me to have once yearly with myself and file in the corporation book. She was very insistent that I have the meeting and post the minutes, which essentially say I met with myself and there was no further business that needed to be addressed; she said that unless I document this meeting yearly, my corporation can be made null and void if there is a problem (such as a law suit, etc.) ( I can post them as an attachment if any one wants to copy them and insert their practice name.)

Outside of taxes and the RI $50 annual corporations fee, this is all the paperwork I need to do to maintain my S corp here. She did charge me about $1100 to incorporate as an S corp, but one of my physician friends here in the state went on line and downloaded the forms and did it herself for much less (free? or somthing under $100) using a software package.Do you need an annual report as a C corp and is it more detailed than just the annual meeting letter?Lynn>>Reply-To: >To: >Subject: RE: Voting on Practice Setup so far>Date: Tue, 2 May 2006 19:20:25 -0700 (PDT)>>:>> Documentation should include an annual report. To be blunt, we have not >done one yet, but eventually will.

Our lawyer reminds us we have the >option to file one annually. As our corporation grows we will establish >appropriate pratices along the way.>> >>Locke's in Colorado wrote:> @font-face { font-family: Wingdings; } @font-face { >font-family: Tahoma; } @page Section1 {size: 8.5in 11.0in; margin: 1.0in >1.25in 1.0in 1.25in; } P.MsoNormal { FONT-SIZE: 12pt; MARGIN: 0in 0in >0pt; FONT-FAMILY: "Times New Roman" } LI.MsoNormal { FONT-SIZE: 12pt; >MARGIN: 0in 0in 0pt; FONT-FAMILY: "Times New Roman" } DIV.MsoNormal { >FONT-SIZE: 12pt; MARGIN: 0in 0in 0pt; FONT-FAMILY: "Times New Roman" } >A:link { COLOR: blue; TEXT-DECORATION: underline } SPAN.MsoHyperlink

{ > COLOR: blue; TEXT-DECORATION: underline } A:visited { COLOR: blue; >TEXT-DECORATION: underline } SPAN.MsoHyperlinkFollowed { COLOR: blue; >TEXT-DECORATION: underline } TT { FONT-FAMILY: "Courier New" } >P.sidebarhead { FONT-SIZE: 12pt; MARGIN-LEFT: 0in; MARGIN-RIGHT: 0in; >FONT-FAMILY: "Times New Roman" } LI.sidebarhead { FONT-SIZE: 12pt; >MARGIN-LEFT: 0in; MARGIN-RIGHT: 0in; FONT-FAMILY: "Times New Roman" } >DIV.sidebarhead { FONT-SIZE: 12pt; MARGIN-LEFT:> 0in; MARGIN-RIGHT: 0in; FONT-FAMILY: "Times New Roman" } P.body { >FONT-SIZE: 12pt; MARGIN-LEFT: 0in; MARGIN-RIGHT: 0in; FONT-FAMILY: "Times >New Roman" } LI.body { FONT-SIZE: 12pt; MARGIN-LEFT: 0in; MARGIN-RIGHT: >0in; FONT-FAMILY:

"Times New Roman" } DIV.body { FONT-SIZE: 12pt; >MARGIN-LEFT: 0in; MARGIN-RIGHT: 0in; FONT-FAMILY: "Times New Roman" } >P.sidebarbody { FONT-SIZE: 12pt; MARGIN-LEFT: 0in; MARGIN-RIGHT: 0in; >FONT-FAMILY: "Times New Roman" } LI.sidebarbody { FONT-SIZE: 12pt; >MARGIN-LEFT: 0in; MARGIN-RIGHT: 0in; FONT-FAMILY: "Times New Roman" } >DIV.sidebarbody { FONT-SIZE: 12pt; MARGIN-LEFT: 0in; MARGIN-RIGHT: 0in; >FONT-FAMILY: "Times New Roman" } SPAN.EmailStyle22 { COLOR: navy; >FONT-FAMILY: Arial } DIV.Section1 { page: Section1 } OL { >MARGIN-BOTTOM: 0in } UL { MARGIN-BOTTOM: 0in } BTW, do those of >you in a Corp (S or C) find the documentation burdensome?>> Our 4 doc (3

full partners since my wife and I are an FTE) S-corp does >the documentation.>> At least in Colorado, it doesn't seem to burdensome. We keep minutes of >meetings...which should probably be done anyway to document what was agreed >upon.>> Then submit a yearly report for $10.>> There is the cost of the initial setup which can get expensive esp if >you have a lawyer involved, but it looks like this could be done online in >Colorado.>> What has been everyone else's experience with maintaining a Corp?>> Locke, MD>Basalt, CO>University of Kansas Medical School 1991>Eau (WI) Family Medicine Residency 1994>5 Years in Air Force -- [Laughlin AFB (Del Rio, TX) // Spangdahlem AB, >Germany]>Alpine Medical Group -- Private Group Practice since 1999>http://www.alpinemedical.md>Job Share w/ Wife>AMG went independent from hospital MSO 10/04>AMG made downpayment on Centricity EMR 12/04>AMG went "live" with Centricity EMR 15 April 2005>>>>>>

[Guest guest]

RE:

Voting on Practice Setup so far

As regards filing for the S corp, I have legalese-type

minutes from the

annual meeting which my lawyer advised me to have once yearly with

myself

and file in the corporation book. She was very insistent that I have the

meeting and post the minutes, which essentially say I met with myself and

there was no further business that needed to be addressed; she said that

unless I document this meeting yearly, my corporation can be made null and

void if there is a problem (such as a law suit, etc.) (

I can post them as

an attachment if any one wants to copy them and insert their practice name.)

I would

love to pirate your template for the annual-meeting-with-myself.

Thanks,

Annie

[Guest guest]

RE:

Voting on Practice Setup so far

As regards filing for the S corp, I have legalese-type

minutes from the

annual meeting which my lawyer advised me to have once yearly with

myself

and file in the corporation book. She was very insistent that I have the

meeting and post the minutes, which essentially say I met with myself and

there was no further business that needed to be addressed; she said that

unless I document this meeting yearly, my corporation can be made null and

void if there is a problem (such as a law suit, etc.) (

I can post them as

an attachment if any one wants to copy them and insert their practice name.)

I would

love to pirate your template for the annual-meeting-with-myself.

Thanks,

Annie

[Guest guest]

Thanks ! That helps, though my health expenses are so paltry compared

with yours that I may end up losing money on the HRA- guess I still have to

run the dreaded numbers.

One more question- isn't there some odd rule about if the company pays your

disability/life insurance premiums, then you have to pay more taxes on that

money when/if it is awarded?

Lynn

>

>Reply-To:

>To:

>Subject: RE: Voting on Practice Setup so far

>Date: Tue, 2 May 2006 21:15:26 -0700 (PDT)

>

>Lynn:

>

> It has been about a year since I made the change. Two issues were

>prompting my change one was the HRA and the other was the individual or

>self directed 401K. It may have actually been the latter that required a C

>corp status to fully fund profit sharing contributions to 25% of employee

>income. I wish I could be more specific. Either way it provides corporate

>structure and protects personal assets from business liabilities except for

>malpractice. I plan on continuing to provide salaries and profit sharing

>to legally avoid the 35% tax on professional corporation.

>

> In terms of HRA and HSA both are used to pay medical expenses. The HSA

>does grow tax deferred in your personal account. My current understanding

>is that the HSA must be combined with a high deductible insurance plan.

>The HRA does not. You can actually pay insurance premiums with the HRA,

>actual medical expenses, ? term life insurance, and disability insurance.

>

> The decision for me was that all the insurance companies wanted high

>premiums to insure my wife and myself. At that point we were off Cobra

>(1100-1200/ month premium) and she was pregnant with our third child. The

>lowest quote still put our cash flow for health insurance at $14000 with

>$5000 deductible. Our actual cost for all health expenses was $10500 fully

>reimbursed by our C Corp. The same cost out-of-pocket would have been

>equivalent to approximately $18000 of salary and tax expense to my

>corporation.

>

> I will need to reprice insurance again this year, but I hate to pay the

>insurance company thousands each year.

>

> You can also have two accounts. I believe you could set up both an HRA

>and a HSA. You could use it to maximize pretax savings if you had already

>maxed out all other pretax savings.

>

> Hope this helps Lynn

>

>

>

[Guest guest]

Lynn: Disability if paid by employer is taxable. Iam not sure the same is true with life insurance. Not planning on dying, but if I do someone will pay the taxes. I need to clarify the details with my accountant, but the point was that the HRA is flexible. Why would you lose money on your HRA? It only costs $199 to administer each year. lynn ho wrote: Thanks ! That helps, though my health expenses are so paltry compared with yours that I may end up losing money on the HRA- guess I still have to run the dreaded numbers.One more question- isn't there some odd rule about if the company pays your disability/life insurance premiums, then

you have to pay more taxes on that money when/if it is awarded?Lynn>>Reply-To: >To: >Subject: RE: Voting on Practice Setup so far>Date: Tue, 2 May 2006 21:15:26 -0700 (PDT)>>Lynn:>> It has been about a year since I made the change. Two issues were >prompting my change one was the HRA and the other was the individual or >self directed 401K. It may have actually been the latter that required a C >corp status to fully fund profit sharing contributions to 25% of employee >income. I wish I could be more specific. Either way it provides corporate >structure and protects personal assets from business liabilities except for >malpractice. I plan on continuing to provide salaries

and profit sharing >to legally avoid the 35% tax on professional corporation.>> In terms of HRA and HSA both are used to pay medical expenses. The HSA >does grow tax deferred in your personal account. My current understanding >is that the HSA must be combined with a high deductible insurance plan. >The HRA does not. You can actually pay insurance premiums with the HRA, >actual medical expenses, ? term life insurance, and disability insurance.>> The decision for me was that all the insurance companies wanted high >premiums to insure my wife and myself. At that point we were off Cobra >(1100-1200/ month premium) and she was pregnant with our third child. The >lowest quote still put our cash flow for health insurance at $14000 with >$5000 deductible. Our actual cost for all health expenses was $10500 fully >reimbursed by

our C Corp. The same cost out-of-pocket would have been >equivalent to approximately $18000 of salary and tax expense to my >corporation.>> I will need to reprice insurance again this year, but I hate to pay the >insurance company thousands each year.>> You can also have two accounts. I believe you could set up both an HRA >and a HSA. You could use it to maximize pretax savings if you had already >maxed out all other pretax savings.>> Hope this helps Lynn>> >

Yahoo! Messenger with Voice. PC-to-Phone calls for ridiculously low rates.

[Guest guest]

Lynn: Disability if paid by employer is taxable. Iam not sure the same is true with life insurance. Not planning on dying, but if I do someone will pay the taxes. I need to clarify the details with my accountant, but the point was that the HRA is flexible. Why would you lose money on your HRA? It only costs $199 to administer each year. lynn ho wrote: Thanks ! That helps, though my health expenses are so paltry compared with yours that I may end up losing money on the HRA- guess I still have to run the dreaded numbers.One more question- isn't there some odd rule about if the company pays your disability/life insurance premiums, then

you have to pay more taxes on that money when/if it is awarded?Lynn>>Reply-To: >To: >Subject: RE: Voting on Practice Setup so far>Date: Tue, 2 May 2006 21:15:26 -0700 (PDT)>>Lynn:>> It has been about a year since I made the change. Two issues were >prompting my change one was the HRA and the other was the individual or >self directed 401K. It may have actually been the latter that required a C >corp status to fully fund profit sharing contributions to 25% of employee >income. I wish I could be more specific. Either way it provides corporate >structure and protects personal assets from business liabilities except for >malpractice. I plan on continuing to provide salaries

and profit sharing >to legally avoid the 35% tax on professional corporation.>> In terms of HRA and HSA both are used to pay medical expenses. The HSA >does grow tax deferred in your personal account. My current understanding >is that the HSA must be combined with a high deductible insurance plan. >The HRA does not. You can actually pay insurance premiums with the HRA, >actual medical expenses, ? term life insurance, and disability insurance.>> The decision for me was that all the insurance companies wanted high >premiums to insure my wife and myself. At that point we were off Cobra >(1100-1200/ month premium) and she was pregnant with our third child. The >lowest quote still put our cash flow for health insurance at $14000 with >$5000 deductible. Our actual cost for all health expenses was $10500 fully >reimbursed by

our C Corp. The same cost out-of-pocket would have been >equivalent to approximately $18000 of salary and tax expense to my >corporation.>> I will need to reprice insurance again this year, but I hate to pay the >insurance company thousands each year.>> You can also have two accounts. I believe you could set up both an HRA >and a HSA. You could use it to maximize pretax savings if you had already >maxed out all other pretax savings.>> Hope this helps Lynn>> >

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[Guest guest]

Went through this with my CPA and Insurance agent already.

Disability AND life insurance should be paid out of personal funds, not the business account or the proceeds (benefits) will be taxable.

Overhead insurance can be paid out of the business account. The proceeds will be taxed, but they will be used for business expenses anyway, and are tax-deductible.