In this video, financial advisor Ben Yin explains four common myths about LLCs. Watch to better understand the benefits of LLCs for independent contractor physicians.

Myth #1: An LLC Will Eliminate Legal Liability

While forming an LLC can protect personal assets from business debts, it doesn’t shield a physician from personal liabilities, such as malpractice claims. Courts can pierce the corporate veil if the LLC is not operated properly.

Myth #2: You Need an LLC to Enjoy Tax Write-Offs

LLCs are not required for tax deductions, which can be claimed by sole proprietors using IRS Schedule C. However, forming an LLC and electing S Corporation status can offer additional tax benefits beyond what a Schedule C can provide.

Myth #3: You Need an LLC to Put Money into Retirement Accounts

As a Sole Prop filing under Schedule C, you’re still eligible for a SEP IRA or Solo 401k. An LLC is not required. 

Myth #4: You need an LLC to put a spouse or kids on the payroll.

 If you’re thinking of adding family members to the payroll, you might be better off not having an LLC. Ask your CPA to calculate both scenarios.