One of the companies which I’m consulting for is interested in offering me a more permanent position. They want to offer me a package worth $200,000 per year.
I have expressed in the past that I have little interest in any full-time work, not only do I not need the income but I also don’t care to give up my time freedom.
In this post, I want to talk less about whether this is a good move for me since that won’t apply to my readers and instead focus on what the best way is to structure such an income. Tax planning is critical when you have more than just an option to be an employee.
Think like a business
I love the idea of making your household into a business. Sure, it sounds cold and capitalistic but in fact, a sustainable business often can make better moves for the owners, employees, and society as a whole.
As the CEO of this sustainable business that is your household, you are in a fortunate position to decide how this income should flow through. Flow through, which refers to essentially how this money will be taxed based on the entities of interest involved.
Chief Executive Office, CEO. As the CEO I don’t want to be shortsighted and just think about what’s going to put the most in my pocket. Many such businesses aren’t around a few years after starting. The CEO should have the vision.
Chief Financial Officer, CFO. As the CFO it’s important that I make sure that the income matches the expenses and work on optimizing this balance in order to leave room to reinvest that money into the business and set some aside into external investments.
Chief Medical Officer, CMO. My job is to perform righteous clinical work, take care to not burn out, leverage technology and further education to make my work more effective and marketable.
There are other roles such as marketing, sales, operations, and probably the most important, the shareholders. (Proudly stolen from the awesome book, The E-Myth)
The shareholder is the little Dr. Mo who wants to look at his bank account and see lots of zeros because he’s an insecure little guy and zero’s make him happy.
Set your own terms
It’s not easy to walk into a large medical group and demand your own terms. And though you may not get your company Bentley from your first gig, it’s important to realize that the market will pay what you’re worth.
Even in a large HMO such as Kaiser Permanente, I commanded a higher salary than my colleagues because I was able to bring more value to my organization.
Not all organizations will recognize this. KP in SoCal (SCPMG) had toxic leadership, they were rough when they should have been soft and soft when they should have been tough.
I always thought that the best thing to do is to start with one group and stick it out. I bought into the seniority concept, thinking that it actually was more profitable for a clinician as opposed to moving for better wages and better conditions.
In hindsight, the error lay in the concept of loyalty. Misplaced loyalty, that is. A clinician should be loyal to their patients, that’s all the loyalty that’s needed. Beyond that, their financial value should be based on their performance. Not because of how well they bill but how effective of a clinician they are.
Perhaps the first medical group is just your springboard where you build your calluses. Maybe you’re just another subpar clinician and are fine escaping under the radar, happy with your hourly wage and your workload. In which case, you’re not reading this blog.
As you gain the expertise, the efficiency, master dealing with management and can effectively communicate with subordinates, it’s time to market these skills, advertise them, take a little risk in return for higher pay.
Every household is different
There is no one-answer for how one should get paid. For some, it’s most efficient to get all income in form of a W2. For another household, setting up a LLC might be better for asset protection.
An S-corp might be ideal for another household who wishes to squeeze the most out of the income and is comfortable managing the paperwork.
For another, the income isn’t as important as the lifestyle. Their focus is on how to generate the most income with the least amount of effort.
Finally, for a household which is already financially independent, there is no need for the income, it’s a nice perk, but they would rather have the upside of equity in the business they are working in.
The $200k offer
This company which is about to make a run for series-A funding will need to demonstrate that they have full-time, contracted physicians in their company.
The workload likely won’t be full-time which is why the pay is a lower than what a traditional clinician would make.
I had a recent phone meeting with the business owners and they gave me various options such as equity (shares) in the business, up to 1% in return for a lower pay.
They made it clear that they are very guarded when it comes to their equity and would rather not give it up. In a previous post, I talked about the advantage and disadvantages of equity.
Their mistake was that they didn’t provide options which would force my skin in the game. Yes, the equity option was valid, but I’m not naive enough to believe that 1% would equate to all that much half a decade later. Nor would I want to commit to the vesting which they undoubtedly would stipulate.
Without having any responsibilities outside of seeing patients on their platform, I am able to demand my own terms as far as how this money will be paid out to me.
Curiosity, Guilt, Greed
The reason I am even throwing this post up is because the $200k has whet my appetite. That’s a take-home of $11,000/month – not easy to pass up.
I am curious because I enjoy telemedicine work and would love to be part of this startup and see them through to their desired success. Would they be able to make a big impact on medicine? Could they advance the AI technology so much that the work becomes even more rewarding for clinicians?
There is guilt when passing on an easy $11k/month, especially when it’s thrown in your lap. It’s almost as if I’m ungrateful but I understand that’s not the real situation.
Finally, greed. That’s easy, I’m a greedy little mofo who wants an easy job combined with a solid income and hoping to land a higher up position in the company so I can do less work. It sounds so bad saying it but it’s true.
This company has banked on me accepting a full-time position with them and I’m not sure if I’ve misled them but based on the current workload and their aspirations, I have in the past expressed interest.
I wouldn’t abandon them regardless of my decision. I will stay on and help out for as long as necessary until they find a solid replacement if I decide to not accept the full-time position.
In the next week I should receive the full-time offer, that’s when I can evaluate the real time commitment and decide if it’s the right thing for me. I don’t want to be glued to my phone nor to a laptop screen. And I absolutely won’t do a dedicated 8 hour work day, 5 days a week – shoot me!
In the end, I don’t feel that they made this job offer very enticing. It could be that I didn’t bring the appropriate value to the table or that they don’t have the expertise necessary to retain a solid employee.