Feeling the Physician Tax Burden? You’re Not Alone. See How I Found Freedom

There’s nothing quite like running your own business. For starters, you get to be the change you've always wanted to see in an industry. You have the freedom and the flexibility to do things the way you want and the way you feel they should be done.

But the freedom and flexibility of running your own business comes with a price, and that price is our expenses. The biggest culprit of all? Taxes.

I'm a hospitalist in Michigan, and I also do a fair amount of work in emergency medicine as well. Right now, I'm transitioning into a leadership position at a local hospital as my full-time job. On the side, I do independent contracting for hospital medicine at other entities and in emergency room environments. 

It's a unique opportunity to get out and see other places, see how different organizations do things, and participate in the emergency room setting that I wouldn't otherwise get to do. It's a whole different side of the field that is interesting and quite different from my typical day.

When working in the ER, I participate in a lot of front-line activities. It's a logical step to take, as hospital patients tend to transition over from the ER to the hospital side and there is a lot of overlap in the discipline required for treatment. Beyond all that, I enjoy the fact that I can make my own schedule when doing independent contracting work, and the extra income is always much appreciated.

But it isn’t all rosy. No matter how much you like that domain and how good you are at it, taxes get everyone in the end.

Tax Headaches

Other than accountants, I don't think I've ever met someone who enjoyed taxes. I've always found them a struggle, particularly in the beginning of my independent contracting career. One of the reasons I ran into trouble is because I was trying to do everything myself. I realized that I'm an expert in healthcare, not financials, and I never should have assumed otherwise.

There are also a lot of complications you have to think about when you do independent contracting for any field. My travel is usually covered, but not always—and I have to keep track of that on the tax side. Different states also have different rates, and keeping track of everything as an independent contractor is nightmarish under the current regulations. Even though there aren't many expenses in my line of work—it's typically just travel—keeping up is difficult on the best of days.

If you get sloppy, it's easy to fall behind on your payments. When you get into the discussion of back taxes, it's almost like dealing with the mafia. The interest rates are so high that by the time they tack on penalties and compound the interest daily, you feel like you aren't making a dent in what you owe. This can make it hard to keep running your business in the way you always wanted. Suddenly, that benefit you thought you were giving yourself is gone and you're not sure what happened.

This sums up my situation over the last few years. I hired an accountant so that I could have an extra set of eyes to keep track of things for me, but that's yet another expense. Unfortunately, this was only enough to stop the bleeding. For the back taxes I'd fallen behind on, it wasn't enough to finally solve the problem.

I had searched for a viable solution for a long time—some type of alternative to traditional banks for lending that understood my profession and how I actually work. Wouldn't you know it, I never found one. Instead, it found me.

A Better Lender

The first time I heard of Bankers Healthcare Group (BHG) was when they sent me some literature in the mail. I checked them out to see if they were the real deal. By all accounts, they were, so I contacted them to discuss their proposition in more detail. I was immediately surprised to find out that they knew quite a bit about the healthcare space. They seemed to understand the business issues we have as physicians.

It was the opposite of my experience with traditional banks in the past. There, I quickly found I was wasting my time. That process could take weeks or months, and the bank representatives were not at all helpful. The last time I explored that avenue was after the Great Recession, when things were particularly bleak and they were hardly worth even talking to.

BHG, on the other hand, didn't just understand, but also sympathized with what I was saying. They understood that I can ramp up or ramp down my income at will. They also knew from experience that physicians have very good repayment records, so the way things look on paper may not be 100% accurate in terms of determining our abilities to repay.

The first time I got a loan from BHG was in 2011. From start to finish, the process was easy, and I had every cent exactly when they said I would. Not only did this financial injection help me decrease my tax burden, but it allowed me to consolidate debt. I was able to ramp up my business and generate a significant amount of additional income once the loan began and ramp down again on the other side. All told, BHG helped me get my head above water for the first time in what felt like an eternity.

But of course, Uncle Sam came calling once again. 

Death and Taxes

Even after my original BHG loan, taxes were an issue. I was still trying to handle everything myself and, before I knew it, things had piled up like last time. I was once again feeling the pressure of that insurmountable tax liability when my solution found me for a second time.

As fate would have it, BHG called me up to talk about restructuring and refinancing what I had left on the current loan. It's something that I had already considered, but somehow BHG beat me to the punch. At the end of our discussion, we took the amount I had left and coupled it together with my tax liability and consolidated that into one total. From start to finish, the process took about a day. When you work with BHG for the first time, the process could not be more straightforward. If you're fortunate enough to work with them a second time, somehow things get even better.

On top of it all, BHG has even given me a credit card to use. I charge all of my business finances to that card, which is something that my accountant is certainly thankful for. 

Whenever I’m in need, BHG has been fast to get back to me. I know that I can call if I want an update on my current loan status, and their responses are always immediate.

For the second time in a few short years, BHG has enabled me to do incredible things. I was able to take a vacation, which is something that I felt at times I'd never be able to do again. Being able to get away for a few days and not have to think about the mountain of debt waiting back at home has been a joy. I was able to dial back my output again to a more comfortable level, so I didn't feel like I had to hit the ground running at 100 miles per hour every morning.

But more than anything, I'm finally in a position where I can work on my own terms again. I'm still in the throes of my leadership position, which will remain for some time. In the not-too-distant future, I want to get involved in the independent contracting side of my business full time. BHG is going to allow me to do that without much difficulty.

There are some new advancements that have become available to people in my field, with telemedicine being perhaps the most notable example. Tasks I used to need to go into the hospital for, I can now do from home, all while providing the same level of care and assistance I always have.

BHG will be an invaluable help throughout all of this because they're such a great source of quick, easy capital. If I need it, they understand why and how that's important. That alone makes our relationship valuable.

Getting Some Help

In the end, there are two key pieces of advice I would gladly give to anyone in my situation. First and foremost: get an accountant. If nothing else, they can allow you to stop focusing so much on taxes (and getting them wrong) and start devoting all of your attention back to your business. They can also help fix a small problem today before it becomes a much bigger (and more expensive) one over time.

You might not think you need one. There was a time when I didn't, either. You do—take my word for it.

Secondly and most importantly, if you ever find yourself in a situation like mine, where your financials seem overwhelming and your debt-related issues are getting worse every day, stop yourself and take a deep breath. This isn't a problem that will eventually crush you under its weight. The partner you need to tackle all of this exists. You don’t have to do all this alone.