Join us on this episode of the Practice of Therapy Podcast as Yonasan dives into crucial tax strategies for mental health practitioners. He covers common pitfalls, such as the importance of forming an LLC from the start and the complexities of transitioning to an S corporation. Yonasan also demystifies S corps, explaining how they can significantly reduce self-employment taxes while highlighting the necessary administrative considerations. With valuable insights into tax-saving techniques and real-world examples, this episode is packed with practical advice to help practitioners optimize their financial strategies and avoid costly mistakes. Don’t miss out on these essential tips to enhance your practice’s financial health!
Meet Yonasan Sanford ![Yonasan Sanford | Avoiding Tax Pitfalls in Private Practice | TPOT](https://practiceoftherapy.com/wp-content/uploads/2024/07/Yonasan-Sanford-Avoiding-Tax-Pitfalls-in-Private-Practice-TPOT.jpeg)
With over ten years of experience in small business accounting, advising as well as tax planning and preparation, Yonasan is passionate about helping small business owners in the mental health profession to grow their businesses and save money.
In the fall of 2022, he fulfilled a long-time dream and moved with his family to Israel. That being said, he’s still fiercely loyal to his native Seattle sports teams and has strong roots in the Pittsburgh area after living there for over 12 years and starting and growing his business with local Pittsburgh clients. Today, he works remotely from Israel, serving clients all across the United States. When he’s not working, you’ll find Yonasan exercising, exploring the amazing country of Israel, and spending time with his wife and five kids.
Effective Savings, Common Pitfalls, and Understanding S Corporations
Yonasan highlights several key areas that are crucial for mental health practitioners regarding tax strategies. Firstly, he emphasizes the importance of understanding and implementing the most effective tax-saving strategies specific to mental health practitioners. Secondly, he discusses common mistakes practitioners make concerning taxes. He also plans to delve into S corporations, a popular but often misunderstood tax strategy. Yonasan notes that there’s a lot of information floating around on social media platforms like TikTok and Instagram, which can be unreliable.
Yonasan suggests starting with the most pressing issue for most practitioners: the best ways to save on taxes. The primary focus here is on choosing the right entity type for a business, which can significantly impact tax liabilities. The common entity choices include sole proprietorship, LLC, partnership, and corporation, each with distinct tax implications. He emphasizes that the S corporation is a tax designation, not a legal entity, which can be elected for an LLC or corporation to optimize tax savings. Lastly, if time permits, he intends to touch upon bookkeeping practices.
Maximizing Tax Savings for Self-Employed Practitioners
Yonasan explains the practical benefits of S corporations (S corps) for self-employed practitioners, particularly in terms of tax savings. He begins by noting that self-employed individuals, such as sole proprietors or LLC owners, must pay self-employment tax, which covers both the employee and employer portions of Social Security and Medicare taxes. This tax amounts to about 14-15% of profits, on top of regular income tax.
He illustrates that for someone earning $100,000 annually, self-employment tax alone could be around $14,000. S corps offer a way to reduce this burden. In an S corp, the owner pays themselves a reasonable salary, subject to self-employment tax, while the remaining profit is taken as a shareholder distribution, which isn’t subject to this tax. For instance, with a $100,000 profit and a $60,000 salary, only $60,000 is taxed at the 14-15% rate, while the remaining $40,000 is not, saving the owner about $5,600 annually.
Yonasan stresses that S corps primarily serve to save on self-employment taxes and that this structure is beneficial once a business reaches around $100,000 in profit. Below this threshold, the additional administrative requirements and complexities of managing an S corp may not justify the tax savings.
Navigating IRS Scrutiny: Ensuring Reasonable Compensation in S Corporations
Yonasan discusses past practices and current scrutiny regarding S corporations. Historically, business owners would form S corps and pay themselves very low salaries to maximize tax savings by minimizing the portion of income subject to self-employment tax. However, the IRS has cracked down on this practice, auditing S corps to ensure that salaries are reasonable.
A reasonable salary must reflect factors such as the time spent working, geographic location, industry standards, and the individual’s expertise. For example, a mental health practitioner in New York City should not have the same salary as one in Kansas City. To justify their salaries, business owners need to document these factors thoroughly. Yonasan highlights that there is no strict formula for determining reasonable compensation, but practitioners must provide detailed support beyond simplistic comparisons, such as job listings on employment websites.
Understanding Disregarded Entities and the Intricacies of S Corporations
Yonasan explains the concept of a disregarded entity, specifically in relation to LLCs and their tax implications. When a single-owner LLC is formed, it is considered a disregarded entity for federal tax purposes, meaning it doesn’t file a separate tax return. Instead, its income and expenses are reported on the owner’s personal tax return (Schedule C). In contrast, corporations, including S corps, file their own tax returns, and profits are passed through to owners via a K-1 form.
He highlights the complexities and considerations of forming an S corp. While S corps can provide significant tax savings by reducing self-employment tax, they also require filing a separate business tax return, which can increase CPA fees. Additionally, S corps must distribute profits in proportion to ownership percentages, complicating matters for businesses with multiple owners. The location of the business also matters, as some places, like New York City, do not recognize S corps, potentially nullifying any tax benefits.
Yonasan notes that S corps necessitate meticulous bookkeeping, including maintaining a balance sheet, often requiring software like QuickBooks and possibly incurring additional costs. He concludes that while S corps can offer substantial tax savings, especially for businesses with high revenues, these benefits must be weighed against the increased administrative and financial burdens.
Why Starting with an LLC Matters for Private Practice
Yonasan shares his experience working with mental health practitioners and highlights a common mistake: not forming an LLC when starting a practice. He explains that many practitioners begin as sole proprietors to avoid the hassle and cost of forming an LLC. However, this decision can create significant issues when they later want to save money by electing S corp status, as S corps requires an LLC or corporation.
He describes the major headache of transitioning from sole proprietorship to LLC, particularly concerning insurance billing and NPI numbers. When forming an LLC after initially starting as a sole proprietor, practitioners often face challenges with insurance companies recredentialing them, which can severely disrupt billing processes for several months.
Yonasan emphasizes that from a tax perspective, there’s no difference between a sole proprietor and an LLC regarding deductions and credits. However, starting as an LLC simplifies the process of electing S corp status later, allowing for easier paperwork and potential retroactive S corp elections. He advises forming an LLC from the outset to avoid future complications and ensure smoother transitions and tax savings down the road.
Gordon Brewer: Well, hello everyone. And welcome again to the podcast. And I'm happy for you to get to know today, Yonason Sanford. Welcome Yonason.
Yonasan Sanford: Thank you so much. My pleasure to be here.
Gordon Brewer: Yes. And as I start with everyone, why don't you tell folks a little bit more about yourself and how you've landed where you've landed?
Yonasan Sanford: Sure. Sure. So I am a CPA and run my own practice for about the past eight years now, been a CPA for around the past 10 years, and I'm located now over in Israel spend about the past 12 years living in Pittsburgh, Pennsylvania, and a couple years ago, moved over here to Israel with my family.
Still all my clients are based in the U S the vast majority in the, in the Pittsburgh area. And the focus of my practice is really on tax saving strategies and tax savings consulting for mental health practitioners psychology, psychologists, psychiatrists, therapists, counselors as well as some other professionals in various health.
Health related fields, but the strong focus is really on mental health practitioners.
Gordon Brewer: Yes, yes, that's it. That's yeah, and I know for a lot of us in these professions, of course, as folks have heard from me on the podcast before, it's just most of us get very little, if any, business training or financial training and that sort of thing.
And so when we make the transition into private practice in particular, Being aware of tax strategies and taxes and all of that sort of thing is, is important stuff. So so where, where shall we begin here with just thinking about this topic? What are some things that really stand out for you?
Yonasan Sanford: So I think the main areas that, you know, that I wanted to focus on, and I think that would be the most beneficial for your listeners A few areas.
One would be, you know, looking at the most important tax saving strategies for mental health practitioners. Another area I want to definitely wanted to touch on was the biggest mistake. That I see practitioners making when it comes to taxes. I also wanted to spend some time focusing on S corporations because S corporations are, you know, one of these things that everyone's probably, well, I don't want to say everyone, but a lot of people have probably heard about them.
And especially now you see so much of so many tax strategies and. You know, so called export experts putting out information on TikTok and Instagram and things like that. And you're kind of never sure. Is this really legit or not? So I wanted to spend some time on on S corps in particular. And if we have time, maybe we could touch on bookkeeping a little bit as well.
Maybe we'll start with, you know, probably what most people are interested in, which is the best way to save money to save taxes when it comes to mental health practitioners. There's, there's a few, there's a few areas and the, probably the number one most important subject is what's called the entity choice for your business.
So when you're starting out, you know, as a new practitioner in your form of business, you have to form some type of entity with the state where you're practicing, you know, so that type of entity could be. The default status, which is called a sole proprietor. That's where essentially you're just kind of operating as you, you don't have any other separate business entity.
Then you have forming an LLC is a common choice. If you're in business with someone else, you might form a partnership or you can form a corporation. Those are typically, you know, the, the four options of sole proprietor, LLC. Partnership or corporation, and they each have different, you know, different tax implications.
So making sure you have the right entity choice is for sure the probably the most single impactful tax strategy that is that is out there for practitioners. And, you know, as I kind of hinted at already before, the S Corp is Is a very very common choice and and a very powerful strategy for reducing your tax liabilities.
And I wanted to just clarify kind of off the top that an S corp, if you noticed was not one of the things that I mentioned, one of the entity choices. Right. And that's, that's because an S corp is not a legal entity. There's no state where you can go to and form an S corp with the state rather the S corp is purely a tax designation that's something that you you Make let's say an LLC Or a corporation with with the state and then you submit paperwork to the IRS and tell the IRS Hey, I want you to tax my existing entity as an S corp so the you know having the right You Entity choice is.
Like I said, is extremely important for a variety of reasons, but it can definitely impact your, your tax savings strategies as well. Your tax savings potential as well.
Gordon Brewer: Yeah. Yeah. So you know, one of the things that, and this is a question that in the consulting I do with folks that, that, that.
Particular topic comes up and I love the way you explained it. Because sometimes it's hard to explain to people that an S corp is not an entity of itself, but it's really a choice. You have to make about how you want to be taxed. You know, at the end of the year or throughout the year or whatever. And you know, one of the things that I've heard, and hopefully you can help clarify this, is that you really, until you are making a certain amount of money, becoming an S corp might not be to your advantage.
So you want to say some things about that.
Yonasan Sanford: Yeah, yeah, let's jump kind of into the S corp topic because there's a lot to discuss there and I think it's very practical for a lot of practitioners. So, you know, first of all, the question is, why does the S corp make sense for people, you know, why does the S corp, why is it a common choice, how does it work in terms of saving taxes.
So, You know, I don't want to bore listeners and get into too many, too much nitty gritty tax stuff. But the, the, the, the essential concept is that when you are, when you open your own business and you are self employed, which is kind of the default status for a sole proprietor, or if you form an LLC, let's say your profits from your business are subject to what's called self employment tax.
And the self employment tax is the way that you as a self employed individual. Pay into your social security and Medicare fund, you know, as, as opposed to if you're a w two employee with someone with a company, so you pay half and the employer pays half. And that's. done through your pay stubs. When you're self employed, basically the IRS says you have to pay both the employee side of those taxes and the employer side of the taxes.
And that comes to roughly 14 to 15 percent when it's all said and done. And that's totally separate and in addition to any income tax that you owe. So on, on a tax return, Every individual, if you're self employed, you're gonna pay both income tax and self employment tax. It's all, it's all done on the single tax return you file.
Now, that extra kind of 14 to 15 percent can really add up. You know, if someone's making 100, 000 a year, let's say, So besides for whatever amount of federal income tax they're going to pay, depending on what tax bracket they're in, they've got right off the top, another 14, 000, let's say of self employment taxes.
So this is where the S corp comes in because when you have an S corp, the way it works is that you are required to pay yourself a reasonable salary, what the IRS calls reasonable compensation. And that means that you literally write yourself a paycheck as if you were an employee of a, of another company, you're going to get a monthly pay stub or every, every two weeks or whatever, whatever schedule you want to do it on, but you're going to get an actual pay stub and a W2 at the end of the year.
Now the benefit is that. Let's say a business you know, a practitioner is profiting 100, 000 a year and they determine, and I'll speak up about this a little bit more in a second, they determine the region, reasonable salary is going to be, let's say, 60, 000 for the year. Okay. So on their 60, 000 salary.
They're still going to pay that 15 percent self employment tax, but the other 40, 000 that they've, of profits that they have, because they were at, you know, a hundred thousand of profit subtract your 60, 000 a salary, and you're left with 40, 000 of profit left over. So that 40, 000 is not subject to the self employment tax.
And you can take that out as what's called when you have an S corporation, you take out that money through what's called a shareholder distribution. And it's as simple as just transferring the funds to your personal bank account. It doesn't have to be anything fancy. But the point is that that 40, 000 of profit in that, that example is not subject to that self employment tax.
So, you know, right off the top there, you have 40, 000. Let's take 14 percent as the average savings that saving you about 5, 600 per year. And that's going to continue to be the case every year. So that's the. In a nutshell, that's the reason why people do S corps. There's really no other reason for it. The only reason most small business owners elect S corp status is to save on self employment taxes.
Now to get back to your, your question of when does it make sense to do an S corp? So yes, there is definitely a certain threshold because of this requirement to have a reasonable salary. So what I see for most practitioners. And my opinion is that you need to be at about 100, 000 of profit before the S Corp is really going to start making sense or being beneficial to you.
And again, the reason for that is, is because whatever your salary is, you're not doing, you're not creating any tax savings up until that amount. So if your reasonable salary is 60, 000 and your profit was only 70, 000, You only have a 10, 000 gap there, which is not gonna be worth it when factoring in the other complications and headaches of being an S Corp.
Gordon Brewer: Yes, yes. So is is an S Corp, is the, the proportion of profit that you're not paying yourself as an S Corp, is that taxed in a different way? Or is that taxed at all? Or how does that work?
Yonasan Sanford: So, yeah, that, that is still taxed. But essentially that's only subject to income tax, whereas your salary effectively is subject to both income tax and self employment tax.
Gordon Brewer: I gotcha. I gotcha. Yeah. So it just depends on your tax bracket and all of that sort of thing as well. You have to factor all that in.
Yonasan Sanford: Correct. Correct. Yeah. And you know, what was done in the past. You know, the past many decades, quite frankly, was people would form S corps and pay themselves very extremely small salaries because again, that's how you create the savings.
The smaller your salary is, the more of that gap you're creating, that's not subject to the payroll taxes. That's the self employment taxes, right? So you might have had a business, you might've had a business owner. You know, profiting 250, 000 a year and they pay themselves a 20, 000 salary. Well, if you're working full time, probably 20, 000 is not going to be a reasonable salary.
especially for a mental health practitioner or an accountant or a lawyer or, you know, for most, most self employed people. So the IRS started cracking down on this and they, and they still do today audit S corporations specifically on the topic of reasonable compensation, which means that they're going to check and see how much time do you spend working in the business?
What geographic area are you based in? Because someone who lives in New York City. It's not going to have the same salary as someone who's based in Kansas City, you know, so they're going to check where you live, what industry you're in, what's the typical pay for your industry, how much time you spend, what's your level of expertise in the field.
And based on all that, they're going to piece together what they, what they deem to be a reasonable salary. So you need to be able to support how you as a practitioner arrive at your reasonable salary. You can't just say, well, I think 40, 000 sounds good. So I'm just going to pick that number. You know, you have to have good support for it.
is there a
Gordon Brewer: formula that the IRS uses or is that
Yonasan Sanford: there's no real formula. It's, it's, it's kind of a combination of those factors that I, that I mentioned, you know, they're going to look at all of those things. And those are the types of things you want to document yourself to justify your salary. It's, you know, the IRS, IRS is probably not going to accept.
Well, I, I, I searched for you know, mental health therapists on Craigslist in the jobs section and or on Indeed or LinkedIn and found a bunch of jobs listing salaries at 45, 000. So I deem that to be my salary. They're going to want it to be more detailed than that. Yeah,
Gordon Brewer: yeah. And I'm sure they would look at To your history.
If you switch from to being an S corp, they're going to look at what you paid yourself in the past, I would think.
Yonasan Sanford: Yeah. Yeah,
Gordon Brewer: definitely. Yeah. That's cool. Yeah. So, yeah. So what, one of the things I know too, is being able to explain to people the difference between an S corp and a disregarded entity, which I know that's a, that comes up If you have an LLC, you want to explain that a little bit about that?
Yonasan Sanford: Sure. Yeah, sure. So a A disregarded entity is the kind of official tax term for an LLC. So again, if someone's starting out and they form an LLC with whatever state your business is based in, assuming that you personally are the only owner of that LLC, you know, it's not some complicated structure where it's owned by another business or something like that, but.
You personally are the only owner of the LLC. So for federal tax purpose, that's called a disregarded entity, which means that that business does not file its own tax return. Instead, all of the business income and expenses get reported on the business owner's personal 1040 tax return on what's called your schedule C.
So that's a disregarded entity versus when you have, let's say, a corporation, then the corporation is going to file a completely separate tax return. So the S corp is going to file its own separate tax return, reporting income and expenses. And then whatever profit is left. Gets what's called passed through to the individual.
The business issues a tax form called a K 1, and the individual uses that K 1 form to enter their share of the profits on their personal return. So, an LLC is a disregarded entity, whereas a corporation or a partnership, you know, is not a disregarded entity. It files its own separate tax return.
Gordon Brewer: Yeah.
Yonasan Sanford: And that's, that's one of the important things to think about when you do an S Corp is that It's not only about the tax savings, and this is a mistake that, you know, I see a lot of people make, or there's a lot of advice out there on social media.
Okay. Once you hit this profit level, go ahead and do an S corp. You're going to save money on taxes. Well, it's true. You may be saving some money, but there's also a lot of complexities involved with having an S corp that you have to, you have to consider those complexities as well as part of the equation.
So one of the complexities is. Having to file a totally separate business tax return, which means, frankly, your CPA is definitely going to charge you more money to file an S Corp return than just to file a personal tax return. So some of your savings from doing the S Corp Are going to go out the window right there just from your increased tax tax prep fees.
Another consideration that that's very common is if you have whether or not you're a group practice or you're, you know, a soul, a soul practitioner, so to say, because if you have, if you have multiple owners in your practice, the S corp gets extremely complicated and may not be the best move. And the reason for that is when you have an S corp.
Any distributions, any money that the owners want to take out as profits have to be what's called pro rata, which means they have to be in line with the ownership percentage of each owner. So if you have two partners and let's say they're set up as 40 partners, one owns 60%, the other owns 40 percent and you decide you want to be an S corp, that means any money you pull out of business as profits.
Has to be split 60, 40. You're, you can't say, well, I want to share this month profit 50, 50. So that gets really complicated when you have multiple business owners, or if you have multiple business owners and let's say they each want to contribute different, significantly different amounts to their retirement accounts, that can also complicate things if you have a single S corp.
So there's, and then the other factor I wanted to mention, actually, is Is location, because there are some states or even municipalities that won't recognize an S Corp. The most well known example of that is New York City. If you're based in New York City, New York City has its own Local tax code in addition to the New York State tax law and New York City does not recognize S corps, which means that if you form an S corp in New York City, they're going to subject you to their regular corporate tax rates, which are high enough that it's almost certainly going to cancel out any benefit from being an S corp.
So I have a couple of clients based in New York City that if they were. You know, across the river in New Jersey and S Corp would have made a lot of sense for them. But because they're in New York City, they're just kind of stuck with it and it doesn't make sense for them. So location can make a big difference also.
And then, and then the other important factor of the S Corp, I wanted to mention real quickly is kind of increased bookkeeping complexity or the need to have more proper books, I would say, because that S corp tax return is going to have to report a balance sheet in addition to just an income statement.
And you're going to want to have a proper set of books through something like a QuickBooks or, you know, any other, you know, Proper online accounting software. So, and there's going to be additional expenses for that as well. So again, you have on the one hand, a potential for a lot of tax savings, especially as your revenue increases well above the a hundred thousand mark.
And you can really stretch that gap between your profit and your salary number. You're going to have a lot of savings there, but on the other hand, you've got to factor in these other costs and complexities of being an S corp.
Gordon Brewer: Right, right. Yeah, I love the way that you explained that because I think it's as people have heard from me a good bit in the past is just the importance of knowing your numbers and understanding how all of that works together.
And, and also the importance of having someone like you, a professional that knows the complexities of the taxes and how it all interplays. It's just, it's worth, you get the return on your investment of that, as I like to say investing in having professionals that help with, with all of that.
Yonasan Sanford: Sure, sure.
Yeah, absolutely. Yeah.
Gordon Brewer: Yeah.
Yonasan Sanford: Absolutely.
Gordon Brewer: Yeah. So, you know, some one of the things that no, we talked about is that you had mentioned some of the big mistakes you see people make. What are those? Yeah.
Yonasan Sanford: So. Yeah, so it's interesting, you know, since I, my practice kind of evolved over the years in terms of which demographics I was working with and going back about five years ago now, I, five or six years ago, I kind of got my first client in the mental health practitioner field and that led to a lot of other referrals in the field and I realized that I really actually enjoy working with Mental health practitioners and generally speaking, they've always been a pleasure to work with and that exposed me to, on the one hand, a lot of opportunities to help them and kind of on the other side, one particular mistake that I see happening a lot, and that number one mistake, believe it or not, goes back to that entity choice, and it's, It's such a simple step and that is not the number one mistake I see is not forming an LLC when you start your practice.
In other words, I see many practitioners that start with just being a sole proprietor because either they don't want the headache of doing the LLC and additional paperwork, or they want to save some money and it may be cheaper to just start as a sole proprietor instead of an LLC for whatever reason it may be.
They start out as a sole proprietor and then let's say three, four years into their practice, sometimes sooner, they're making enough money where they'd reach out to a tax practitioner to help them and they want to save some money. They heard on social media about an S corp and that, you know, they're ready to take this step.
Well, unfortunately, if you don't have an LLC or a C or a corporation formed, you can't do an S corporation, right? Mm-Hmm. . It's impossible to take a sole proprietor. Tell the IRSI want you to tax me as an s s-Corp. You have to have an LLC or a, or a corporation in place now. So that begs the question, if that's, if that's the case.
So what's the big deal? Let's just form an LLC. When I get to that point and I'm ready to start, you know, with an S corp election, let's say, well, what I realized from working with my clients in the industry right away was forming an LLC at that point comes with one major headache, many, many smaller things, but one major issue.
And that has to do with. Insurance billing and and you're going to know much more about this than I will but I familiarize myself, familiarize myself a little bit with the NPI requirement and as all your listeners know, there's what's called an NPI one and an NPI two. And you'll correct me if I, you know, say something wrong here, but the NPI one is kind of your personal number that stays with you as the individual practitioner and the NPI two is tied to the group practice itself.
So what, what I found was that if someone started their business as a sole proprietor and now they want to form an S corp, but they don't have an LLC. So they're going to have to form an LLC. And that LLC is then going to most likely have to get credentialed. It's going to have to get an NPI too, which can be an awful process.
Apparently many of my clients, their insurance companies did not want to reconnect, recredential them. And, you know, their whole billing process got essentially kind of slowed down significantly. And then there's this dragged on for four or five, six months. As a result of not having had that LLC when they initially started.
So it sounds like a kind of a silly thing, but. It's, it, it really, whenever I talk to someone and, you know, a new potential client and they tell me they're making X amount and they're ready for an S Corp, and I asked, do you have an LLC? And they say, no, I'm just a sole proprietor. It's always like, oh boy, here we go.
You know, this is not going to be fun. And it's, it's, it's a bit of a shame because. Contrary to what you might hear on social media and social media, there actually is absolutely zero difference from a tax perspective in terms of deductions or anything like that. Tax credits between being a sole proprietor or an LLC.
So even though you may hear people on Tik TOK say, well, if you form an LLC, now you get to deduct this, this, and this. The truth is that anything you can deduct as an LLC, you can also deduct as a sole proprietor. So there's literally no difference from a tax perspective. When you start out of being a sole proprietor versus being an LLC, but if you start as an LLC, then down the line, whenever you're ready to do the S Corp election, it's a very easy process to do that paperwork.
You can even retroactively do the S Corp election to the beginning of for sure the current year that you're in and potentially even. Two or three years back, depending on the situation. But you have to have that S corp in, in, in place. So doing that as your step one, just sets you up for a lot of success down the road.
Gordon Brewer: Right, right. Yeah. And I, I agree with every bit of that. And the other thing for people to take into consideration is just creating a legal entity gives you a little more protection as well. I mean, as far as if. You know, worst case scenario, somebody were to be sued and you know, and if their practice.
is an LLC, they can't in, in most states, in most cases, they can't really go after you individually, your individual assets, they can only go after your business assets. So, I mean, that's, you know, fortunately in our business, that doesn't happen too much, but it is a possibility in that. In that sense. Yeah.
Yonasan Sanford: Yeah. Yep. And that's, that's absolutely another key point that I often bring up, you know, with clients thinking of doing well, what type of entity should I form? So, you know, that that's more of a legal consideration than a tax consideration, but it's 100 percent correct that generally speaking, you will get an extra layer of protection just purely by having that LLC.
And, and that's important, especially today, because think how many practitioners over you know, since COVID started, especially how many practitioners are now working from home on a regular basis. You know, this is kind of become the norm for most, most practitioners. Yeah. And if you're working from home and you don't have that LLC and, you know, God forbid someone sues you.
Well, like you said, your, your home could be potentially at risk there in a lawsuit and your car. And so, you know, it's, it's just a smart move from a lot of different perspectives to form that LLC. And it's, and it's not that expensive or complicated to do.
Gordon Brewer: Right, right. I know when I formed Vine, I was able to do, do it all online.
you know, just through the state. I mean, it's just a matter of filling out a few forms and then paying the fee. One, one thing I will mention is, is that it's probably a good idea to, to talk to an attorney at some point with that, because you're supposed to have a oh, shoot. What is the name of it?
It's a, it's a, it's just a document that says how your LC is run, even though you're, yeah, article of part
Yonasan Sanford: article. Yeah.
Gordon Brewer: Yeah. Articles. Articles of
Yonasan Sanford: corporation or every state calls it something different, but yeah.
Gordon Brewer: Right, right. Right. And so, and but yeah. So, well yes, Yonason, I have to be respectful of your time and this has been a great conversation and I think hopefully just really helpful for people.
Tell folks how they can get in touch with you if they want to find out more about your work and what you do and that sort of thing.
Yonasan Sanford: Sure. Sure. I appreciate that. Yeah, I didn't get to get into some of the other strategies as well for, for therapists. There's, there's, you know, a lot of other good deductions out there, but.
I'm happy to, you know, talk on an individual basis with, with the practitioners also on some of these strategies. So my website is brookbayconsulting. com. That's B R O O K B A Y. And then you know, especially for for your listeners of the podcast, I made a special appointment link for them to do essentially a free tax consultation where they can upload to me.
You know, the most recent tax return. And or their financial statements from their practice. And I'll kind of do a free tax review to see, you know, are you taking advantage of the most tax savings opportunities that are out there for you? And, you know, kind of do an analysis of the, of the tax return in that sense, or your financials.
So the link for that will be https://calendly.com/yonasan/podcast my pleasure to to have a free consultation with you listeners.
Gordon Brewer: Well, that's great. That's very generous of you such a pleasure to meet you and hopefully we can have another conversation again.
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