Do you need a quick recap on how to invest for the best outcome for your private practice? What’s the benefit of filing an S-Corp? Why should you consider your retirement plan as a second business?
In this podcast episode, Joe Sanok speaks about investing, S-Corp, LLCs, tax strategy, and growing wealth with Ryan Derousseau, CFP.
Podcast Sponsor: Alma
Going in-network with insurance can be tough. Filing all of the right paperwork is time-consuming and tedious, and even after you’re done, it can take months to get credentialed and start seeing clients.
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Once you’ve joined Alma’s insurance program, you can see clients in your state of licensure regardless of where you’re working from.
Learn more about building a thriving private practice with Alma at helloalma.com/joe
Meet Ryan Derousseau
Ryan Derousseau, CFP®, is a fee-only financial planner who specializes in working with therapists and private practitioners to help manage their personal finances so they can focus on clients. He’s taken his years of experience working for himself and his deep knowledge of the financial space to build a process to help clients shape their business with their goals, family, and future at the forefront. He shares this process with clients at United Financial Planning Group, based in Long Island.
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In this Podcast
- Common finance mistakes among therapists
- What you should be doing financially in your private practice
- Investing 101
- S-Corp and tax structures
- Ryan’s advice to private practitioners
Common finance mistakes among therapists
In Ryan’s experience, there are two common mistakes that he sees people often make:
- From a mindset perspective, people are fearful of money.
- Where people are trying to make as much money as possible without being concerned as to why or how it is being done.
Both [of these] can be detrimental because if you’re afraid of money you’re maybe not raising fees like you need to, or setting your rates where they need to [be], or if you’re trying to make as much as possible, you’re just running on a treadmill with no end, and we don’t want that either. (Ryan Derousseau)
You want to make sure that you are matching your professional and financial goals with whatever your principles and goals are for life in general. Remember that money is just a means to afford what you want to achieve in life. A great way to track your progress is to include your goals in your mindset.
Whenever we’re talking about finances we need goals because we need something to reach. (Ryan Derousseau)
What you should be doing financially in your private practice
- Get a bookkeeper!
- Have an emergency fund for both your business life and your personal life because you don’t want a concern on one end to impact the other.
- Get your personal finances in order so that you know how much you need to earn to cover your base salary. Invest any overflow back into your business where you can.
Stock-picking can become like a second job. It may become time-consuming, and it is probably one of the worst ways to go about your long-term investing strategy.
After about 10 years, 90% of [professional stock-pickers] who are paid to do this underperform the basic index fund. Not only that, if you add in fees, it’s even less, and then on top of that you would have to know which stock-picker is actually successful before you begin picking stocks. (Ryan Derousseau)
It’s stacked against you from the beginning if you work with picking stocks. So, if you are looking for help, look for a financial planner or advisor who is looking at your entire financial picture and not just your investment window.
S-Corp and tax structures
When you work for yourself, you have “self-employment tax” which is essentially social security and medical tax. You are both the employee and the employer, so you have to pay 15.3% in totality, your employment tax. The S-Corp tax defines you as both the employer and the employee. The S-Corp allots what your salary is and the profits or returns above and beyond the salary.
One rule that the S-Corps give is that it has to be reasonable to your professional … depending on the state you live in, depending on what your average returns are, and that’s where working with a CPA is very important. (Ryan Derousseau)
Additionally, if you have a partner in your private practice, you both need to be on the same page. You can be filing with them because that would change the scope of your tax picture. Furthermore, invest in your retirement plan almost like a second business.
If you want to create a beautiful side business, [then] invest in retirement, because not only is that going to create a very big portfolio for you down the line that makes you feel more financially secure, more safe, and more willing to take risks in the business, it also creates tax savings today when you’re using the right tax structure. (Ryan Derousseau)
Ryan’s advice to private practitioners
Be proactive with your finances! There is so much more that you can do with your money when you address it before any major problems arise. So when you are looking at your finances and you feel good about them, see a professional to put a structure in place so that you can reach your 10-year goals even sooner!
Sponsors Mentioned in this episode:
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- Learn more about building a thriving private practice with Alma at helloalma.com/joe
Useful links mentioned in this episode:
Check out these additional resources:
- Apply to work with us — a decision-making matrix for your next steps
Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners who are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
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