Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

How to retain more of your hard-earned money

Tod Stillson, MD
Finance
April 19, 2022
Share
Tweet
Share

I have never known a doctor who wasn’t interested in bringing more money into their home. There are so many reasons for this that can range from paying off large loans to the costs of having children (nannies, sitters, private schools, college, weddings, etc.) to the growing sense that your employer undervalues you.

Regardless of your reason, most of you will attempt to fill this void by working harder or by adding a side gig. This response is a result of the work ethic that has been instilled into you during your training and has been further entrenched by employment-based compensation models that reward increased productivity. If you want more money in your home, your mindset is that you have to earn it.

Your employer understands these needs and is prepared to address them. The subject of compensation most commonly comes up with your first or second contract extension, whose timing correlates with your enlarging household financial needs. First, your employer will note that they are constrained by federal laws to keep your compensation within a fair market range and thus can’t change your productivity-based compensation formula. It would be unfair to your fellow employed doctors, and it would place both of you at risk of penalties for breaking federal laws about physician compensation.

But in anticipation of this conundrum, they will offer a menu of extra income options in exchange for additional professional services that you perform for their corporation. These can include productivity bonuses, quality bonuses, medical directorships, mid-level supervision, hospital call, research, and leadership-governance roles. Each of these additional opportunities will help support your employer’s enterprise and will be added to your current patent care workload. This is the easiest route that most of you will take for adding income to your home. It’s convenient and simply channels the additional income through your current paycheck. Having done this myself, I can warn you that the additional W-2 income will net you less than you expect after you account for the higher federal and state taxes.

In considering the subject of adding more dollars to your household, it’s important to organize your opportunities into three groups. There is active income (main job and side work), passive income, and retained income. The first two are the most common sources for doctors to “earn” more money. There are many experts and professionals who are dedicated to helping you grow your household income in these ways. This blog post is not about providing you with another version of active or passive income that requires more of your time and energy.

Rather, I want to illuminate the most important and most neglected option, which is retained income. This approach will preserve your time and energy, which is an important distinction.

Driven physicians often overlook this because you have a work more-earn more mentality. The power of retained income is that you don’t have to add any more work to your load; rather you simply have to pro-actively manage the flow of your hard-earned dollars. When you do this, your household magically can keep more of what you have earned.

Since nearly 95 percent of you receive your pay as a direct deposit, you have no idea what happens to your earned income as your gross compensation is gradually reduced through a series of government, corporate, and personal filters that ultimately lead to your take-home pay. All you see is a large deposit, and the rest is fuzzy math that you would prefer to leave to someone else.

There is a space between the dollars you earn from any source and the money that ultimately lands in your household. This is the world of retained income. Retained income represents the dollars you can put back into your household after you manage the flow of your earned dollars.

Doctors who own their own business (PC) are very familiar with this space, but the growing legion of employed doctors are unaware of it. I want to change that because I believe keeping more of what you earn is far better for your well-being than working harder.

Your first step is to understand that if you are employed, you can hold onto your small business superpowers like doctors who are in private practice. There is now a version of a professional corporation that does not involve private practice; rather, your PC can serve as a business envelope for your professional services that can be parsed out to any employer in a professional services agreement, otherwise known as employment lite. This progressive employment model will allow you to receive your earned income through your PC-small business while continuing your employment in the same job.

Choosing which entity will receive your income is the most important decision you will make regarding retained income. Receiving it through a PC multiplies your options for income retention, while receiving it as an individual (W-2) significantly reduces your options by relegating them to a shrinking menu of tax-advantaged individual programs that include tax-deferred investments like IRA’s and 401(K) plans or tax-free accounts such as Roth IRA and Roth 401(K) plans and 529 education plans. Owning a small business-PC opens the door for forming tax-wise individualized benefits, tax-advantaged retirement accounts with larger ceilings, and combined individual and business cash-flow strategies.

If you believe your decision to be employed keeps you from forming a PC, you are wrong. The wise modern doctor can both form their own small business-PC and remain employed via an employment lite contract that helps you hold onto more of your earnings.

ADVERTISEMENT

This progressive approach to modern employment helped me retain over $70,000 of income annually and can do the same for you. As you seek to grow your income, working smarter is much better for you than working harder.

Tod Stillson is a family physician, entrepreneur, and Amazon best-selling author of Doctor Incorporated: Stop the Insanity of Traditional Employment and Preserve Your Professional Autonomy. He can be reached at SimpliMD.  Follow him on Facebook, Instagram, and X @DrInc9, or join his Facebook community for doctors, Every Doctor Is A Business.

Dr. Stillson is the founder of SimpliMD, an exclusive physician community that supports doctors on their journey to micro-business competency through community, courses, content, coaching, and consultation. At SimpliMD, he inspires and informs doctors about the benefits of micro-incorporation through his content and regular blog posts titled The Truth.

Schedule a business consultation meeting with Dr. Stillson to discuss how micro-incorporation can help you.

Image credit: Shutterstock.com

Prev

A bad death: the importance of truth-telling at end-of-life

April 19, 2022 Kevin 8
…
Next

Divided loyalties: A physician testifies against a colleague

April 19, 2022 Kevin 2
…

Tagged as: Practice Management

Post navigation

< Previous Post
A bad death: the importance of truth-telling at end-of-life
Next Post >
Divided loyalties: A physician testifies against a colleague

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

More by Tod Stillson, MD

  • Systemic collusion: How big business and government herd physicians into traditional employment

    Tod Stillson, MD
  • Rewriting the rules: Achieving a million-dollar income in family medicine

    Tod Stillson, MD
  • Dismantling the mythical dichotomy of physician career options

    Tod Stillson, MD

Related Posts

  • Improving drug adherence will take more than money and technology

    Skeptical Scalpel, MD
  • Patients turn to GoFundMe when money and hope run out

    Mark Zdechlik
  • Physicians: Take back the title you have earned through your training

    Michele Luckenbaugh
  • Money will be lost in health care. This is true no matter how we describe it.

    Edwin Leap, MD
  • Medical error disclosure programs: Old habits die hard

    Gail Handley
  • Aduhelm and how money and politics supersede science

    Wes Campbell, PhD

More in Finance

  • The hidden impact of denials on health care systems

    Diana Ortiz, JD
  • Why physicians are unlike the “average” investor

    David B. Mandell, JD, MBA
  • Signing bonuses and taxes: What physicians should know

    Shane Tenny, CFP
  • 5 steps to ride out a non-compete without uprooting your family

    Stanley Liu, MD
  • What every physician should know before buying into a medical practice

    Dennis Hursh, Esq
  • Navigating your 457 plan: key steps for physicians changing jobs

    Shane Tenny, CFP
  • Most Popular

  • Past Week

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • A world without antidepressants: What could possibly go wrong?

      Tomi Mitchell, MD | Meds
    • Make cognitive testing as routine as a blood pressure check

      Joshua Baker and James Jackson, PsyD | Conditions
    • Rethinking patient payments: Why billing is the new frontline of patient care [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why the words doctors use matter more than they think

      Erin Paterson | Conditions
  • Past 6 Months

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • Internal Medicine 2025: inspiration at the annual meeting

      American College of Physicians | Physician
    • The silent crisis hurting pain patients and their doctors

      Kayvan Haddadan, MD | Physician
    • What happened to real care in health care?

      Christopher H. Foster, PhD, MPA | Policy
    • How the CDC’s opioid rules created a crisis for chronic pain patients

      Charles LeBaron, MD | Conditions
    • Are quotas a solution to physician shortages?

      Jacob Murphy | Education
  • Recent Posts

    • Rethinking patient payments: Why billing is the new frontline of patient care [PODCAST]

      The Podcast by KevinMD | Podcast
    • The dreaded question: Do you have boys or girls?

      Pamela Adelstein, MD | Physician
    • Make cognitive testing as routine as a blood pressure check

      Joshua Baker and James Jackson, PsyD | Conditions
    • Reimagining diabetes care with nutrition, not prescriptions

      William Hsu, MD | Conditions
    • Why funding cuts to academic medical centers impact all of us [PODCAST]

      The Podcast by KevinMD | Podcast
    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

Leave a Comment

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

  • Most Popular

  • Past Week

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • A world without antidepressants: What could possibly go wrong?

      Tomi Mitchell, MD | Meds
    • Make cognitive testing as routine as a blood pressure check

      Joshua Baker and James Jackson, PsyD | Conditions
    • Rethinking patient payments: Why billing is the new frontline of patient care [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why the words doctors use matter more than they think

      Erin Paterson | Conditions
  • Past 6 Months

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • Internal Medicine 2025: inspiration at the annual meeting

      American College of Physicians | Physician
    • The silent crisis hurting pain patients and their doctors

      Kayvan Haddadan, MD | Physician
    • What happened to real care in health care?

      Christopher H. Foster, PhD, MPA | Policy
    • How the CDC’s opioid rules created a crisis for chronic pain patients

      Charles LeBaron, MD | Conditions
    • Are quotas a solution to physician shortages?

      Jacob Murphy | Education
  • Recent Posts

    • Rethinking patient payments: Why billing is the new frontline of patient care [PODCAST]

      The Podcast by KevinMD | Podcast
    • The dreaded question: Do you have boys or girls?

      Pamela Adelstein, MD | Physician
    • Make cognitive testing as routine as a blood pressure check

      Joshua Baker and James Jackson, PsyD | Conditions
    • Reimagining diabetes care with nutrition, not prescriptions

      William Hsu, MD | Conditions
    • Why funding cuts to academic medical centers impact all of us [PODCAST]

      The Podcast by KevinMD | Podcast
    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Leave a Comment

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...