¶ Choosing Between LLC and S-Corporation
Are you incorporated as an S-Corporation or LLC ? The most important thing , before we even decided between LLC and S-Corporation , is we're starting a company where we're taking care of people in a medical-related fashion , so we need a way to protect ourselves from what we do from a business standpoint versus what we do in a personal standpoint .
So if someone sues us or if there is a major calamity that occurs with work , should that necessarily bleed into how we pay for our mortgage or how we save money or how we pay bills or anything like that , and the way in which most people protect themselves is by creating a company and do something that's called an LLC .
So when you become a limited liability corporation , you're telling the state , the federal government , and you're telling anybody else that this is a corporation . This corporation , this company , is separate than Nidarko and Rene . All right , what's good everyone . Welcome to another episode of Docs Outside the Box .
This is actually another episode of what Y'all Say , friday .
What y'all say is Friday . What y'all say is Friday . What you got to say Friday . Tell me what you it's Friday . What you got to say it's Friday . Tell me what you say it's Friday yeah .
So we do need theme music . It would be nice if we could have theme music and we should check out maybe like seeing if one of the users or one of the listeners can send us some beats . Really , yeah , because I think it would be nice to have theme music for this . How much are you ?
willing to pay for that .
DM us . Let us know if you are interested in wanting to create some background music for us , and we'll talk about some prices . Or . I can just sing , or we can ask someone to do some background music for us . All right , y'all , we are on location . So this weekend , me and Renee decided to go to .
You know , take three , four days off , three days Away from the kids . We are at a resort . We're not going to say where because they don't sponsor they don't sponsor us . So I'm not featuring anybody who doesn't sponsor us on the show . I ain't featuring nobody .
They gave us the space .
No , we took this space right . So to anybody out there who knows what I'm talking about being , you know , raising kids , and being , you know , just being two professional , two professional couple . I don't know what I'm trying to say , why it's taking me so long , but basically it's hot as hell in this room . Shit is tough . Yo , it's tough right , like I .
The last time we took a vacation , just me and renee took a vacation . I cannot recall the last time that we took a vacation just by ourselves , not related to work and not taking the kids . It was our honeymoon which is over 11 years ago , folks . Right 2014 . So 2013 , late 2013 .
So it's just like you know , it comes to a point where , like you're so busy making the kids a priority that you forget about yourself . You forget about the other person . So you know , we just decided to fuck them kids .
We dropped them asses off yes , this is valentine's day weekend , which is a long weekend because it ends on today , which is President's Day , so it really worked out well . My brother came through big time . My brother , my sister-in-law and my niece and nephew Our kids are essentially chilling with them had a great weekend .
Yeah , they had a gluttonous weekend . They got all the chocolate , all the sugar , sugar , all the chuck .
E .
Cheese , all the Xbox , all the Roblox that they can play yes , that they don't get at home because , yeah , yeah , we don't play video games at home , not like that so for everybody who's listening right now , and if you know exactly what I'm talking about , text us or DM us , let us know , because we are just like we everyday couple , you know which is we try
to prioritize each other . but then you , you end up realizing that your life , your daily schedule , revolves around your kids . And what happens on day one then happens on day 30. , but then happens on day 365 , year five , and you're like , oh snap , we have any time off whatsoever .
So it was great to have these three days to just sleep , sleep in , not have anybody jump into our beds and wake us up , or it was amazing . I loved it .
Do you remember what you had said ? When was it ? I think I was pregnant with our first and you're like I'm not , I'm not going to have my schedule revolve around no kids Remember ? Yes , I remember that conversation we had .
I didn't want to have that . I didn't want to have my schedule revolve around kids where , um , it basically it wasn't that I didn't want to have my schedule to revolve around kids , but I didn't want to have my entire day like based upon like busing around my kids to different things which I don't approve of .
Like I'm like , well , why am I busing them to baseball , basketball , football , curling in the same day ? Curling ? It's like shit , like pick one thing or two things and it will go from there .
But for me , I just I had a hard time when people would say , oh , yeah , yeah , they go to this travel baseball team and they go to this travel swimming team , and then they go and they do flight school and then they do all they podcast at the end Four things in a day . Like , nah , I ain't doing all that .
But you're kind of close to that .
We're getting close to that , because I think I've learned to just kind of just chill acquiesce and I also know that that's what you want you think that that's what I want . There's certain things that I'm just no , for real , we do what . We have the kids in martial arts and we have the kids in swim class . That's it .
I prefer to just choose one , and that's it . You say no . You want them to learn how to swim and all these different things .
Swimming is a life saving skill potentially . That's why they're in swimming . They're not in martial arts . Ok , you know when was the ?
last time somebody came to you , know , fight you and you defended yourself using freaking karate . Well , if I had learned karate , or if I had learned martial arts when I was younger , you'd be alive today . I would be alive , but it'd get me out of trouble . How much trouble did you get into ? It would diffuse a lot of things for me .
Okay , oh yeah , no doubt . Okay . So you're acquainting martial arts for swimming .
Either way , all I'm saying is that I prefer choose one activity and go really hard on that .
As opposed to . If you think about it , it's more than just two activities . There's other activities also in there too , like what tap outs . Yeah , but that's at home , that's a little online , whatever at home . I don't . I'm not carting him anywhere for that .
So everybody , we just like y'all . So you know you do one thing and then it creeps into another activity , which creeps into another activity and next you know so . So we had a great weekend and we love being here with you guys .
Thank you for everyone who's watching us on youtube .
Thank you for everyone who's listening to us on the podcast . Yo , what up um listen . Before we jump into this episode real quick . I yo , I am shocked that so many people who are watching our podcast , who I did not know were paying attention . Mr Evans , I just dropped off mail at the post office . Oh really , I paid attention to your podcast .
I was like ooh , mr Evans at the post office , mr Evans . Shout out to Mr Evans at the post office Rather rain or squeeze , or what's the .
¶ Entrepreneurs Discuss LLC vs S-Corp
Not everything has to be a song , renee oh okay . But shout out , Mr Evans .
I was going to sing a song for you , mr Evans , but sometimes I think about that but need to put the kibosh on that .
But sometimes I think about it . I'm like yo , like we got to watch what we say .
No , you got to watch what you say Really , why ? Yeah , you are completely like . Sometimes I worry about you , man .
Listen , I'm just listen guys .
I'm saying , you are sometimes , I think , most people think that I'm like you know .
I think people think that I'm one way when they meet me and then on the podcast I'm somebody else , and I think that's the big shock for people .
Really .
And the question is is who really is me ? Who is me , who am I ?
What am I ? I know who Nii is , you should know , I do know who Nii is , you should know , I do .
All right . So , an important part of us guys is how we run our business . So I got my laptop here . Remember that game show , what was the game show where the guy used to do this and then he'd say what the secret word was , and shit . Remember , I don't know , this is like from the 80s and stuff . You remember Anyway . So we got a question .
Password the password is microphone .
Yeah , the password is . They used to whisper . The password is so .
This is the show . This is the question that we have . This is about LLC versus S Corp .
It was based on a reel that we posted .
Well , we have two questions about the same thing , right ? So we got this one on Instagram . This was about the reel where we talk about ever thought about doing locum super close to home and how it works . Well , here's the breakdown . And we talk about IRS , mileage and some other things , right ?
And in there someone asks a question are you incorporated as an S corporation or LLC ?
Yeah , that's a comment .
That's a comment .
Who asked that question ?
And then another question we have , which is the same thing , is hi , dr Nee , I've seen a couple of your videos for starting your own locums companies . What will be the best to start From talking to other just talking to other hospitals about having your new team as locum option and grow from there ?
But have you had an LLC company set up in contract price in mind already ? Anything else recommended ? I don't know who wrote this one .
Yeah , it doesn't say .
That's a textable , so we won't .
Oh , that's the text . Okay , so that was the text . Listen , if you guys want to send us either a question , a comment or whatever , you can put something actually in the comments in our reels and posts , especially on Instagram comments in our reels and posts , especially on Instagram . You can send us a text if you go down to the show notes .
But if you send us a text , put your name or your whatever , your pen name or your real name or your initial , something so that we can identify who you are , and then you know DM us . And then you know , dm us . You know , send us a message at docsoutsidetheboxcom . Yeah , ready to answer these questions . Who was the first question from Kimmy K ?
OK , so I think the way we look at this , the question is is when you start a company , or when you decide that you want to have your own business , when you want to start working as a locums doc , should you start ? What kind of business should you start ? Should you start as an LLC or should you start as an S corporation ?
These are different types of , in essence , tax categorizations that the IRS looks at . But , more importantly , even before that , the most important thing that we thought about before we even decided between LLC and S Corporation is we're starting a company where we're taking care of people in a medical-related fashion , and it's highly litiginous , right ?
So what we mean is that people sue all the time . So we need a way to protect ourselves from what we do from a business standpoint versus what we do in a personal standpoint . That is the number one thing that we were focused on , right ?
So what we do in the hospital , what we do in the hospital , cannot necessarily bleed over into what we do personally , into what we do personally , right ? So if someone sues us or if there is a major calamity that occurs with work per se , should that necessarily bleed into how we pay for our mortgage or how we ?
save money or how we pay bills or anything like that , and the way in which most people protect themselves is by creating a company and specifically getting specific and saying we're going to incorporate ourselves and do something that's called an LLC and go from there .
¶ LLC to S-Corp Transition Explanation
Okay , so when you become a limited liability corporation , then what you're doing is you're telling the state , you're telling the federal government and you're telling anybody else that this is a corporation . This corporation , this company , is separate than Nidarko and René .
Right and like Mitt Romney said , corporations are people too .
Now they are , but they're separate people than you .
Right , they're not you . Right , there's me , you and the corporation .
And that's super important , right , because you know what you bring in when you so we get paid . We created a company , an LLC , we got paid . And when we get paid , we don't get paid as Renee . We don't get paid as Nee , we get paid as the name of our company . Our name of our company is Equal Access Health and that check says Equal Access Health on it .
It doesn't say our name on it . It doesn't have our social security number on it . The business has its own , in essence , social security number . They call it a TIN number , right ? Tax ID number .
And I just want to , before you go on , say that there are some people , because sometimes people get confused as to can you use your name as the LLC ? Yes , you can , right , and so even though we have Equal Access Health as our business name , it doesn't mean that we could not have created , for example , you know Renee , you know me and Renee Darko LLC .
That still would have been a separate business name , meaning it's not just me , darko , or Renee Darko , it would be me and Renee Darko LLC or knee Darko LLC , as long as you are registering your company with you know , with the government , to let them know , even though it's the same name as you , but it's not you . Does that make sense ?
Yeah , yeah . So , you could call your company anything you want . You can give it your own personal name if you want to , but the key thing is to make sure that you're a limited liability corporation . There's also what's called sole proprietorship , right ?
So sole proprietorship is you are working on your own and you're working as a locums , and when they pay you , they pay you as your name , with your social security as your person . And that's fine . But just know that you know you leave yourself open for protection .
You know for a lawsuit that could possibly go after your personal assets and that's why , for me , I don't recommend that . I think , as a doctor , there's going to be so many times clinically , even also outside of a hospital , that you're a target , right , so you know we can close that , that you are a target . So I would just say , you know , create an LLC .
And you know people ask about S-Corporation we'll get into that later on but , yeah , create an LLC to protect yourself so that whatever's in the business is liable . Everything outside of the LLC is not liable . Is there ways you can get around that ? But that's limited liability . Corporation 201 , right , Like , let's keep it basic for right now .
So that's what we did , right . So we started off by having an LLC called the Equal Access Health Hospitals . Pay the company . The company then pays us . We have a salary from that , based off of that .
So we are employees in our company .
Correct Right , and then afterwards we decided to do something called an S-corporation election Right , and that is a special type of categorization that you give to the state as well as to the federal government and , in essence , you can do more with your company Right , you can hire more employees , you can deduct more .
There's just so many different things , without getting too complex , that you can do .
So my question is so you said , we did an S-corporation election . Does that mean that Equal Access Health is no longer an LLC ? No , and that you changed it now to an S-corp business entity .
So good question . So Equal Access Health is still an LLC , but there's an additional categorization that you can create .
And there's S-corporations and there's C-corporations and I'll put in the show notes like basically in the show notes I'll put down like the difference between a C-corporation corporation , basically for someone like me and you like , s corporation is way more favorable at this point , and then for other people , c corporation may be favorable , but we had to do like an
additional paperwork to be considered an s corporation .
But we're still an llc that's where it gets confusing right right , so it's not so , that's so .
It's not like should you do an S-Corp versus do an LLC . It's become an LLC and then you can decide afterwards do you want the additional categorization of being an S-Corporation ?
And why would you do that ?
For what the ?
S-Corporation . Yeah , no , why would you be an LLC ? So , in other words , why would you be an LLC and then do an S-corporation election , instead of just becoming an S-corp from the beginning ?
No , that's not how it works .
But I'm asking what the people would be asking .
But that's why I just explained to them . That's why I said the first thing you want to do is become an LLC . Once you become a company right , you are a limited liability corporation , whatever the name is Then the additional step after that is becoming an S-Corp . And when you do that right , like you can't just start off and become an S-Corp Okay .
But that's what I said .
I didn't . I didn't say start off as S-Corp , I said start off as an LLC .
No , I know , but somebody may not know that . That's that that's a possibility , right ? Because the question was are you an LLC or are you an S-Corp ? Right , and people might be thinking well , why should I be an LLC and then do S-Corp ? Can I just be an S-Corp from the beginning ? That's what I'm just asking , what the people might be asking .
Y'all shouldn't be asking those type of questions , why not ? Listen to what I'm saying . They don't know . I'm telling them start an LLC and then decide if you want to be a C-Corp or if you want to be an S-Corp . That's it . Look at my face . What's the point of listening to the podcast if you ain't going to follow steps one and two ?
Listen to us .
But they may not know . Don't try to do anything creative .
Just listen to what I'm saying , guys . No , no , no , no . They have questions and you got to answer the questions . But he asked the question .
Yo , my man asked the question . He said hold on , stop he asked the question about should I be an S-corp versus an LLC ? Right , and we went down and we talked about yo . The first thing you want to do is make sure you protect yourself Right , and the way how you protect yourself is by creating a company .
That company is going to be a limited liability corporation right . That protects whatever you make and whatever you do as a business from what you do personally in your life , right ? So that's the first step . Then the next step after that is to decide do you want to be an S corporation ? Or do you want to be a C corporation ?
Those two things , the S corporation versus C corporation doesn't have anything to do with protecting your assets . What it does is it gives you more tax benefits .
There you go .
But that's what we said . I don't know if you were listening . I was listening .
I was listening , but first of all , I already know this . I was listening , but I'm saying that the way you were saying it , that the person still might have the question .
Could I just skip being an LLC and just go to S-Corporation , because I know that you went from LLC to S-Corp , but could you just go to S-Corp and still get the same protections as well as the tax benefits ? That's all I was asking .
Gotcha , listen , listen , write into us , text us whatever , dm us and let me know if you think that I'm legit in asking these questions or if Nia is correct in that he explained it the right way to begin with .
So that's what we are guys . We are an S-Corp begin with . So that's what we are , guys . We are an S-Corp and I think the most important thing that I always wanted to make sure was that whatever I do is protected in that company and it doesn't affect our personal assets .
That was really big for me and stuff when I first started , maybe the first couple of months actually . Yeah , I think when you first started , were you a company ?
No , when I first started , I would have been considered sole proprietorship .
Yeah , I think that was me also . So I gave them my name , I gave them my social security number and then , after a couple of times it's not until after we got married , actually , that we created Equal Access Health , yeah , yeah , yeah .
So about a year and a half a year and a half for just operating like that .
There are some protections , even as a sole proprietor . But you know , and obviously guys don't forget , you have medical malpractice . Also you'll have medical malpractice working as a locums . You'll have medical malpractice if you're employed .
So there's no way that you can practice medicine , at least that I can think of , outside of the state of Florida and I think California , where you have to carry medical malpractice . I think in those states you don't have to .
but you have to show a certain amount of net worth assets , things like that to forego medical malpractice in California and Florida .
Because I think the prices are so high . But yeah , that's a little bit about how we operate our businesses . So , do things change ? Yeah , things could possibly change .
I think a couple of years ago there was a point where a C corporation was more favorable than an S corporation , but , without getting into too many details , we decided to stay as an S corporation . Yeah , and that's what we do . That's what makes it easy for us to have payroll . That's what makes it easy for us to have a solo 401k .
That's what makes it easy for us to have a solo 401k . That's what makes it that's the s corp . Yes , yeah , so that's why we do that . Um , what are the questions that they might have about that ? What are the creative questions that they that you may make ? Oh , not now you want me now .
You want me to ask questions .
Now you want me to ask questions ?
okay . So let's say that you're in . Let's say that you're in s-Corp , right . Or let's say you're an LLC , but you haven't done the S-Corp election or designation , right ? Can you hire someone even though you're an LLC , or do you have to become an S-Corp in order to hire someone else ? No , no , no .
Let's say we had an assistant . No , no , no , no . If you wanted to hire , like you could be an LLC and hire someone Right , Right and that like you don't have to . You don't have to take the next step of saying that I'm going to be an S-corp , no-transcript employees , whether or not you have your S incorporated or not .
Okay . So if you wanted to have more for example , if you wanted to be a locum's agency right because we get a lot of questions because at one point we had a locum's agency right where we had other docs who weren't necessarily employed by us but they were essentially subcontracted by us right to be able to go to do different assignments at a hospital .
So do you have to have , you know , an S-corp designation in order to do something that big ? And or ? The other part of that question is does it matter how much money you're actually making to then either designate yourself an S-corp for tax purposes or is it more beneficial to stay an LLC , depending on how much money you're making ?
I think you have to pick . So once you become an S corporation , you have to pay a little bit more to file your taxes right . So I can't remember what the big difference is , but I don't think it's a big monetary difference . I think it's like a couple of hundred dollars more .
I think , I think when you are an LLC , it's like a very minor fee that you pay on a yearly basis to fill out like an annual report , Like once you become a business , like there's it's not just doing your taxes , Like you have to do things that businesses do , Like you have to fill out reports Like um , you want .
And then once you become a S S corporation , I think you have to release , like I forget what it is . There's certain things I forget . I have to go back and take a look , but there's some things that I know you have to do when you become an S corporation . That is a bit more entailed than just a regular LLC .
So how would people be able to kind of know what are the things that they have to do ? In other words , how do you and I keep up with all of those requirements ?
That's a good question and I'll be really honest with you . There's looking it up on Google , but , more importantly , we talk with our CPA about this .
Our accountant .
Yeah , we talked with our accountant about it and we get advice from them . Sometimes they'll even say sometimes you may have to talk to a tax lawyer about that I have not gotten to the point where we've had to talk to a tax lawyer about that .
I have not gotten to the point where we've had to talk to a tax lawyer specifically about this , but what we normally do is we speak with our CPA because they're a professional and we go from there . But , I haven't had any opportunities to have to speak to a tax lawyer , thank goodness , possibly .
Yeah , one of the other things that I think is a question about starting your own business . You kind of mentioned that you touched on it was essentially providing those benefits that you would normally get as an employee that now , as your own business , you might have to provide for yourself .
So you talked about you know your retirement , for example , right so creating an IRA or 401 , not IRA a 401k for yourself . Even you know your health insurance , disability insurance , those kinds of things that typically you know as employees . We kind of take for granted that my employer is taking care of that , but now you are your own employer .
Yeah , I would say definitely , once you start getting to that point where you have employees and you have to start or you yourself are your employee and you have to start doing that .
Even when we just did it ourselves , we spoke with our CPA and you know we did the research to find out did it even matter if we were S-Corp or not to do certain things that we did ? And what we found out the majority of times is no , it doesn't matter , you do not like .
Being an S-Corp doesn't doesn't mean that you can't have health insurance or the company can't pay for your health insurance Doesn't mean that you can't have an IRA . All of those things are possible as a plain old LLC .
¶ Navigating Business Entities and Benefits
There's some additional things that I think we could talk about in a different show that I without . I just don't want to say something that confuses everybody because , to be honest with you 100 percent , I'm not 100 percent about all that stuff with S-Corporation also . But specifically speaking about the question that they ask us are we at S-Corporation ?
Yes , we are , yeah , we are . So I think the next episode or another episode , we'll have to bring on an expert to kind of talk about the differences , specifically about S Corp versus C Corporation , and then even just talking about LLC and what that brings you .
We did episodes in the past where we talked about sole proprietorship , llc , and then S Corp and C Corp and all those things . You might find those and put those in the show notes . Yeah , we'll have to talk about that .
Yeah , but I mean , I think the most important thing , right , even if we don't give people specifics , right , because you have to understand , we are not attorneys , we are not tax professionals , so you know , and other professionals , you know , that can guide us through the process to make sure that we're meeting all the requirements .
One of the , or some of the things that we've done through our business is make ourselves employees . We run payroll , so we do payroll taxes so that we can contribute to , you know , to Social Security , eventually get Medicare . You know , when we get older , we buy our own health insurance through the business .
Actually , I should say the business buys our health insurance , so we ourselves , as Renee and me , don't buy our health insurance . Equal Access Health provides health insurance for us . Equal Access Health provides a 401k for us , so we've been able to set up a 401k through our business , equal Access Health . That's been huge .
What else Our disability insurance is not provided .
No , we don't do that . We don't do disability insurance through the company , because if the company pays , then we are likely to be taxed . If we became disabled and we were to get money from it , we would be taxed on it . So , we pay for that personally .
Yeah , we pay for that personally . And then there was one thing I think that Jamie Fleischner mentioned . I think that Jamie Fleischner mentioned she said that . So for those of you who are considering or you're getting up there in age , but the long-term care insurance right can be purchased by that part .
I don't know . Yeah , I think she said that We'd have to get a professional on that part .
Yeah , we'd have to get a professional , but I think that that's one thing that she said that your long-term care insurance actually can be purchased by your business , so that might be something for those of you who are , you know , approaching 50 or past 50 .
Talk to your professional about that ? Yeah , of course you don't know , of course , yeah , so .
but yeah , jamie Fleischman was on our previous episode , so you can take a look at that .
We'll put that in the show notes as well , but yeah , I think that's it , guys , in terms of the questions , pretty straightforward . We have some other things coming up on the episode . There's a lot to talk about on a regular episode , so make sure you stay tuned to that . But we figured we answered this really quick question and keep writing us .
You know we check all of the social media . We get texts . We check everything on Instagram . You guys know how to reach us so you never can do the rundown . I can never do it because there's so many different ways that people get in contact .
Well , ok , I'll go through it . Do our go to our posts on Instagram . You can even go to our posts on TikTok . That's the one he checks . I don't take TikTok . You can do a text , you can do the fan mail . All of that is below in the show notes and you can comment or send us a question at docsoutsidetheboxcom . How'd I do you ?
did good .
Thank you , alright y'all .
We'll catch you guys on another episode of what Y'all Say , Friday .
What y'all say Friday what y'all ? Say Friday what . Y'all say Friday what y'all say Friday .
Make sure you write in those beats please .
What y'all say . It's Friday .