Physicians may form professional medical corporations. California law restricts how professional medical corporations may be owned. All medical corporations must have one or more physician owners, and licensed doctors must hold the majority ownership.
Can a business owner deduct medical expenses for an S Corp?
Specifically, S-corp owners can take a personal income tax deduction on the health insurance premiums paid by the business. For S-corp owners to qualify for the deduction, their health insurance policy must be established by the business and not by the S-corp owner personally.
Is S corp owners health insurance taxable?
Just like other business structures, S corporations can offer health insurance premium coverage for their non-owner employees as a tax-free fringe benefit. The employee doesn’t get taxed for it, and the company can deduct the contributions on its business tax return.
Can a physician form a C-corporation in California?
Unlike many other states, California does not give physicians the option of forming a standard C-Corporation or other common professional corporations such as an S-Corporations or an LLC (Limited Liability Corporation). Physicians who incorporate must create a California professional medical corporation.
What do you need to know about California medical corporations?
The corporate by-laws dictate how much the spouse or family receives. Control issues are spelled out which should make the transition much smoother. California Professional Medical Corporations can also be used to provide tax deductible health insurance, life insurance, and disability insurance.
How is health insurance taxed as a S corporation?
An S corporation that provides its shareholders with health insurance can deduct this cost as a business expense, but it is taxed at the individual level as part of shareholder compensation. Many small businesses opt to form an S corporation because of the tax benefits and limited liability protection this structure offers.
How is a professional medical corporation taxed?
A Professional Medical Corporation can elect to be taxed the same way as an S-Corporation is taxed. Taxes in S-Corporations can be passed through to the shareholders so that there isn’t a double taxation like there normally is with an C corporation.
