Dental Partnership Legal Structure

Summary:

In this episode, we explore the financial and legal intricacies of dental partnerships. Learn about the pros and cons of various legal structures, including S corporations and partnerships, and why selecting the right setup is crucial for tax efficiency and liability protection. Our host also shares tips on payroll, 401(k) planning, and navigating IRS requirements. Plus, discover how PracticeOrbit.com simplifies dental practice sales and connects you with expert advisors.

Key Points:

1. Importance of tailored tax planning for dental practices.
2. Understanding 401(k) plans and payroll management.
3. Legal structures for dental partnerships: S corporations vs. partnerships.
4. Why dentists should avoid C corporations due to double taxation.
5. Role of the K-1 in S corporation tax filings and FICA tax savings.
6. Legal setup advice: consulting dental-specialized attorneys.
7. Selling a dental practice through PracticeOrbit.com.

#DentalPartnerships #TaxPlanning #DentalPractice #SCorporation #PracticeOrbit #DentalBusiness #401kPlanning #TaxEfficiency #SmallBusinessTips #FinancialFreedom

Transcript:

Wes Read: [00:00:00] Welcome everybody to another episode of the Dental Boardroom podcast. Sorry everybody. It's been a little while. December is a very busy month for us over at Practice CFO. We are doing a lot of year end planning for our clients. It's so important for all of our advisors and our full team here that we dot our i's and cross our T's with getting the most tax deduction as possible for our.

Clients, all of whom are dental. And so we sort of know the specific nuances of the tax deductions for a dental business. And we spend a lot of time making sure the payroll is designed right. We make sure that the 401k and if there's a defined benefit plan, a cash balance plan and the practice that that also.

Ends off exactly where we need it to be. It's almost like you've got these 30 different levers and you want all of the levers to be positioned in just the right way to [00:01:00] maximize the output financially for the year and minimize the taxes for the year. We've got a great tax team here and they are working so hard right now, getting ready for the launch of the 2025 tax season.

Doing the 2024 tax returns and also our 401k department is also busy at work, working on the annual testing and all the requirements for those darn complicated 401k plans. We really do take off all the complication from our clients and handle that ourselves as much as we can. Alright, so I am carrying on the thread of.

Partnerships, specifically dental partnerships. We've covered the pros and cons of dental partnerships, some of the risks with dental partnerships. We've covered how dental partnerships are valued when a new partner is joining. In this one, I want to talk about the legal structures of a dental partnership.

Now, let me [00:02:00] caveat. That I am not an attorney and I am not the one as a CP and financial advisor who will actually set up the legal documentation with the Secretary of State to register you as a live business. That is generally what you will get from an attorney. Now, some dentists will DIY this, they'll do it yourself.

This, I don't recommend that. I think it's such a minimal. Cost for the value to have it properly set up by an attorney, specifically a dental attorney would be great, although any attorney should be able to do the basic setup work, uh, for you. Now, some of you may know that every state. Has different rules around the type of entity that you can operate as a dental practitioner, as a dental owner, a dental business owner, some states require you to be set up as a corporation or what's called a professional corporation, California being one of them.[00:03:00]

Other states allow you to be set up as an LLCA limited liability. Company and those are much more easy to administer from a regulatory standpoint. However, LLCs do not exist to the IRS, the IRS. Does not even have an LLC Tax return doesn't exist. An LLC when it files its tax return has to decide is it going to file as what's called a sole proprietorship or is it going to file as a corporation?

And if it's a corporation, is it going to be an S corporation or a C corporation? You can drop kip. The C corporations, you should not be under any circumstance. A C corporation. You should be either a sole proprietorship or an S corporation, or preferably in virtually every case, an S corporation for single doctor owners.

When there's multiple owners that changes things, and that's what we're gonna get into [00:04:00] today. Now, in addition to the sole proprietorship tax return, which goes right on the 10 40. And the corporate tax return, which files a separate return separate from the 10 40, that files what's called an 1120 tax return.

If it's an S corporation, it files an 1120 S tax return. So there's one more though, and that is the partnership tax return. Yep. It's literally called a partnership tax return. And sometimes we think of the term partnership as just a few people going into business together, and that's true. You can use it colloquially speaking in that manner.

However, to the IRS partnership has a very specific terminology and a very specific meaning to it. A partnership is a specific legal structure from a tax standpoint that determines how taxes are recognized across. Those [00:05:00] business partners. Now two people can go into business as a partnership and run as a corporation.

That's totally fine. But in this podcast episode, as I use the word partnership, I am referring to the IRS stated terminology of what a partnership is. Alright, let's dive into this now. Going one more comment back on the states. Uh, any state allows you to be set up. As a corporation or a partnership, all states allow that, and depending on which one you choose, you would file with the IRSA corporate tax return or a partnership tax return.

Some states, as I mentioned, allow LLCs and the LLC can file as a sole proprietorship as a corporation, but also, and this is why I'm bringing up the LLC, again, it can also file as a partnership. It can choose any one of those. So depending on your state, you're gonna want to talk to a, an attorney, a legal advisor, preferably, I'm always a fan of the, the dental [00:06:00] specialty service providers in the accounting space, in the tax space, in the financial advisory space, and in the legal.

Space as well. So find that dental attorney on my tech company, practice orbit.com. If you create a free account login, there's a directory there at the top and in the directory you can choose attorneys. I have a great list of some vetted wonderful attorneys who can help you set up your entity structure in your state.

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Let's not dive into Le Legal structures, and if you're watching this on YouTube, I've got a PowerPoint, which I'm [00:08:00] showing right now, and I'm gonna kick off by talking about what are the pros and cons of setting yourself up with another partner as a corporation. So whether it's one partner you have, so there's two of you total or more partners, you can set yourself, yourself up as a corporation.

And typically the corporation is what I recommend for a single doctor. We recommend the S corporation for partnerships. We don't, and I'm gonna get into why, but I want you to understand how a corporation works and how it is different from a partnership. Because the more that you can understand this, the more intelligently you'll be able to communicate with your advisor, your CPA, and even understand your cash flow and your tax planning.

And as much as. I want you to delegate financial decisions to your team, like your practice, CFO advisor, or your CPA or your practice management consultant. There are certain aspects of being a great business leader [00:09:00] as a CEO that I, that I do not believe you can delegate. I think you have to be intelligent around your numbers.

I think you have to review your numbers, and I think you have to understand them. Very well, and in order to be effective in understanding those numbers, there are certain key points about the legal structure that you are set up as that I think you need to understand. So let's talk about a corporation.

First of all, a corporation files its own tax return separate from you, and it can be a C corporation or an S corporation. Think of S as like small business. C corporations generally are for larger businesses. C corporations allow, all public businesses are gonna be C corporations where there is endless shareholders, so to speak, trades on public stock exchange, et cetera.

You could be a C corporation as a dentist. But the reason why you don't want to be a C corporation is because the C corporation pays taxes as its own taxpayer. And then it issues its [00:10:00] income, its net income, out to its shareholders, the owners of that corporation as dividends, and the shareholder will then pay taxes on those dividends as income.

They call that double taxation, taxes at the corporate level, and taxes at the individual level. Double taxation, not good. That's a lot of money getting routed to the IRS and we want to avoid that. So as a dentist, you can control this. You're not planning on having investors. Most likely. Maybe if you're going DSO, eventually you create a, um, a central organization, a management entity, and that could be a C corp generally.

Those are even partnerships though too, but I do not recommend it because of that double taxation. So I'm just gonna kick that. Outta the conversation. We're not even gonna talk about C corporations. Please don't be as a small dental practice owner, you know, sub 5 million, even sub 10 million, whatever.

Don't be a C corporation. Alright, let's talk about the S corporation then. Now S corporations. [00:11:00] Don't pay taxes like a C corporation? Yes. They are a separate entity from you, the individual. Yes. They have their own tax ID called an employer identification number or EIN. And yes, uh, that tax return is gonna spin out profits on the return that goes to the IRS.

But guess what? The IRS does not make you pay taxes on your profits of an S corporation. Instead, what happens and, and try to follow this, if you've been around as a business owner for a long time, you probably already get this. But what happens is those profits in your S Corporation roll out to you and they land on your personal 10 40 tax return and they're added to your W2 income to sum up to what is your total taxable income.

So if you don't have any other sources of income, spouse doesn't have any income, you don't have any rental properties, you don't own any stocks with dividends and interest, no other. Investments and all you have is your dental [00:12:00] practice. As a corporation, you're gonna get that rollout of profits. It's called a flow through.

The profits flow through on this document called a K one. K one is a big terminology. It's a big, it's a big kind of, um, yeah. Term in the tax space. Every entity that's not set up as a C corporation, whether that's a partnership, whether that's Nest Corporation, is gonna issue out or flow out this document called the K one.

And it's gonna share, show your share of profits that you're gonna be taxed on as a individual owning shares in that. Entity and so it avoids double taxation. Now it's taxed at ordinary rates where dividends from a C corporation are taxed at lower. Uh, ca long-term capital gain rates. Generally, however, the single taxation at the individual level is, is, is almost always lower than the double taxation when you combine the corporate tax with the dividend income tax.

Alright, hopefully this isn't [00:13:00] too complicated for you. You can rewind it. Listen again, I think this is important to understand how these C corporations work and why they're not a great idea for partnerships. And so let's go. Let's go back to the C corporation, this S corporation for a minute. On the S Corporation, as a corporation, you are required to pay yourself as an employee of your corporation.

And so if you don't have an uh, uh, a payroll to yourself as the owner, you're gonna get audited. Almost guaranteed you're gonna get audited and then the IS is gonna get their nose in the tent and they're gonna wanna open up everything sometimes, and then it gets nasty. Insufficient. W2 wages is the number one reason why small businesses get audited by the IRS, and that's their foot in the door.

You don't wanna get on their radar, so make sure you pay yourself a sufficient wage, which I think should be at least 40 to 50% probably of what is the combined total profit of that S corporation. The second thing that rolls out to you, as I mentioned, is [00:14:00] the K one. So you got these two things rolling out.

These two pieces of paper, they roll out into your 10 40 tax return, the W2 and the K one, and you add those up and that is your total income. Alright, now let's go through the pros and the cons of corporations as they relate to partnerships. So let's say you and I decided to form a dental partnership together and we decide to do it in the formation of an S corporation.

Here are the pros. Corporations have better liability protection than partnerships do, and also this one's try to follow me on this, on this next benefit. One of the benefits of S Corporations is that you have two forms of income flowing out. As I mentioned, you have W2 income and whatever's left in profits.

Is K one flow through income. Think of it like a teeter totter. If your total profits before paying you a W2 outta your corporation are $500,000, [00:15:00] and you pay yourself $200,000 as a W2 through your payroll company and you have $300,000, therefore left, your total is 500,000, 200,000 as a W2 300,000 as a partnership, guess what?

You only pay FICA taxes. On the W2 as of right now, and there's been discussion for many years of applying FICA taxes to your K one flow through income. You get to save a little bit in FICA taxes. What are FICA taxes? That's Social Security and Medicare, which is a total of 15.3%. It's 7.65% employee and 7.65% employer, and so it ends up being 15.3%.

That can be a lot of money. However, keep in mind that the social security caps at around $160,000, and that changes every year. And so after that, you're only paying Medicare and the Medicare tax is 1.45% each, and [00:16:00] that's 2.9% total. Therefore, so the difference between if, if you're paying yourself more than 160,000 W2, and if you're a bigger practice doing, you know, $1.52 million, you should probably be paying yourself a couple hundred thousand.

And W2, you could probably get away with 150,000 just fine. But the more you get above the 160,000 social security cap, the less of a benefit is to pay yourself. Uh, a lower W2 and have the rest issue out to you in the K one flow through profits. So, but it can be a benefit. And if your corporation's a little bit smaller, your business is a little bit smaller, maybe you can get away with paying yourself a hundred thousand dollars W2, and then you're saving 15.3% on the next $60,000.

That's a lot of money. And then of course, for, uh, one, uh, 2.9% on anything above that. So what we typically do with our clients who don't have 4 0 1 Ks is we try to get 'em as low as a W2 as possible. However, when you have a [00:17:00] 401k or DB plan, then you typically want to raise your W2 to allow you to fund more into your retirement plan.

So going over a lot of key financial topics here as a dental practice owner. Okay, so those are the pros. Now, the cons are that. Profits must be distributed on the K one pro rata with ownership. Lemme say that again. Profits must be distributed to the owners pro rata based on ownership in corporations. So if you're a 50 50 owner with a another partner in your corporation.

Meaning that you want 50% of the shares and your partner owns 50% of the shares, and let me emphasize, shares relate to corporate stock corporations. You have ownership through share ownership. Just like shares in Apple, you have shares in your corporate stock. If it's a 50 50 split of the share ownership in your S corporation between you [00:18:00] and your partner, no matter how much each of you produces, no matter how much one of you works over time.

And one of you doesn't. It doesn't matter if one person works one day a week, it doesn't matter if one person doesn't work, period. They're completely passive. Whatever the profits to the corporation are, those profits are split 50 50. Now, you're gonna have to perk up your ears a little bit on this one.

With these flow through entities like an S corporation, you have the profits are required to be split 50 50. Between the two partners. In that case of a 50 50 ownership, if it's 75, 25 profits are gonna be split 75 25 on the K one. But keep this in mind. The K one is just a document. It's like the W2 you get at the end of the year.

It's just a document. It doesn't matter if you ended up taking 90% of the cash and transferred that into your own checking account outside of the corporation, [00:19:00] or if you took 10%, it doesn't matter, you're gonna be taxed. On 50% of the profits, generally what you do is you align the actual cash distributions out of the partnership checking account to the personal account in the same manner that you do on the K one.

So if you're 50 50, every dollar that comes out at a profit distribution should be allocated. 50 50, so 50 cents each. Otherwise you start to have problems. One, one partner is gonna be taxed for more than they received in cash, and you don't want that. And here's the other thing. Let's say you had a hundred thousand dollars of net profit in your corporation, but you did not distribute a single dollar.

It's just sitting there in your corporate checking account. Guess what? The, that a hundred thousand dollars is still gonna flow out on the K one paper and it's gonna show $50,000 to partner A and $50,000 to partner B, and you're gonna pay taxes on it. So the benefit of the S [00:20:00] corporation is you don't pay double taxes, but the disadvantage is that you have to roll out the profits on paper and pay taxes on it, whether or not you actually took the cash out of the corporation.

So there is a decoupling of the cash flow with the tax reporting for purposes of taxation. This is why it's very important to be intentional with your CPA. Or your advisor to meet with them during the year to project out cash distributions and taxable distributions. And caveat, if you get a loan in your corporation that puts cash in your corporate checking account and you pull out more cash, then you have in actual profits, taxable profits, you may end up paying a penalty on that.

The IRS does not want you to pull out more cash than your income, your taxable income on the K one. If you do, you're gonna have what's called excess distributions, penalty tax. You wanna avoid that. That's why that's, and that happens a lot, [00:21:00] especially for young dental practice owners who buy a dental practice.

They have very low taxable income on their K one because they're depreciating all the goodwill and equipment that they bought. They're deducting all of that. And so they have a very low taxable income, but they pull money out because the bank gave 'em a hundred thousand dollars of working capital and they use that to live on, and then they have excess distributions and that's not a good thing.

So you gotta plan around this stuff. Now coming back to partnerships, summing this up, if you're a partnership and if you have a partner and you're set up as an, as a corporation, you have to take distributions based on your corporate ownership. Regardless of how things play out in who produces what and who produces more value, and so that's one of the disadvantages.

There's no flexibility in how you allocate the taxable income and indirectly how you allocate the cash. You've gotta do it based on ownership. The other thing too is that dentists like to and should run a certain perks through the [00:22:00] corporation to give more tax deduction. Things like your car expenses, things like certain meals.

Certain travel, maybe some ce, you know, we get a little bit aggressive sometimes with that kind of thing to reduce your taxes. What if one part partner is doing a lot of that and the other one isn't? What if one partner just bought into Tesla, put it in the corporation, and the other one didn't buy a car, and yet each doctor is getting the tax effect of that decision, of that financial decision.

And so it ends up being skin off one partner's back to benefit the other partner, and it's very difficult. And so what a lot of times partners will do who are set up as corporations is at the end of the year, they sort of have a ledger of how much personal money, personal expense was run through the corporation versus the other, and the issue a W2 to one partner to true them up or make them whole from the other partner.

Now, visually, you're probably struggling to conceptualize that in your mind. But just know that's a sticky thing at the every year, at the end of every [00:23:00] year to true up who ran more personal expenses through the corporation through this W2, which then you can't control your W2 because your W2 is being controlled by other factors, and I don't like that.

I like my W2 to be controlled purely on tax planning and 401k planning and personal financial planning. A lot of reasons then to not be a corporation as a partnership. Alright, let's go on to the next option, which is a partnership. Now, when I started the podcast, I said this is actually a legal entity with the IRS.

It's called a partnership. And the pros with partnerships which file, what's what's called a 10 65 tax return. The pros with the partnerships is that profits can be taken in any way partners agree. So let's say you're a 50 50 owner in this partnership and one partner is completely passive. Now, that's generally never the case, but I'm gonna use that as an extreme.

Just to punctuate my point, you can say that a hundred percent of the profits [00:24:00] flow out to one partner, the partner that's working, even though ownership is held 50 50 and the passive partner may only be in it for the equity. Eventually when it sells, they will cash out equity, almost like a stock, for example.

And you can do anywhere in between. You can do 99%, 1%, you can do 50 50. Whatever you want to do, you can do. And I love that flexibility of partnerships. It sort of unstrap us from the ownership allocation of 50 50 or whatever that ownership allocation is. And it lets us be much more, it lets us distribute profits and cash in a way that's much more con uh, commensurate with the input of value.

And so we generally recommend partnerships. Now by way of terminology, you don't have shares in a partnership like you do have shares in a corporation. Instead, you have what's called partnership interest. You have interest in a partnership. Interest is to partnerships as shares is to corporations. Just a little [00:25:00] education there.

Alright, what are the cons of dental partnerships? They don't have the same level of liability protection as corporations do. And, and that I don't like, and most attorneys don't like that either. So that's number one. Number two is that, let's say you're 50 50 and you're both in the practice, by and large, the same amount of days.

One of the issues still is if you wanna get extra tax deductions for things like your travel and CE and car and putting your kids on payroll, for example, or a spouse on payroll to fund the 401k for your spouse and all, a lot of these tax planning strategies. You still have the challenge of having to true it up at the end of the year.

And again, that's just a sticky, complicated Excel spreadsheet based exercise that you gotta go through the ledger and make sure you have all of that. Now, sometimes you may have a CPA who, who keeps track of those throughout the year, and at the end of the year they sort of do a troop. Now you can do that, but it's still [00:26:00] a bit sticky and usually not gonna be done perfectly right.

The other thing too is that it sort of creates this fluffy inaccuracy in the true profitability of the practice when you cloud it with those personal expenses. And that is a con that I don't like about partnerships. So now lemme go to the next one. Actually, before I do one more comment about the partnerships.

Just like S Corporations, partnerships are also flow through entities. So whether or not you keep the profit cash. Inside of the partnership or distribute it during the year, it doesn't matter. The net profits that are calculated on the tax return are gonna get pushed out on a K one, just like the S corporation, and it's gonna be added to your 10 40 tax return, and you'll pay taxes at ordinary rates on that.

But again, it's a flow through. So the partnership does not pay an income tax, and so it does not have double. Taxation. One other comment on partnerships. Unlike S [00:27:00] corporations, partners of partnerships do not pay themself. A W2 compensation instead, a hundred percent flows out on the K one two, the partner.

Now, as a partner, you can pay yourself what's called a guaranteed payment. Think of that as like your salary. Think of that maybe as like 33% of your own production as if you were an associate. And you would call that a guaranteed payment, not a W2 A guaranteed payment, but the guaranteed payment flows out on your K one.

And then once you, after the guaranteed payment and after all your employee expenses and after your Labor lab supplies, facility, marketing admin, after all of that overhead, whatever's left. Is then distributed as profit, and so your K one would have two boxes filled. It would have one for your guaranteed payment, and it would have one box for your flow through profits.

I think it would be really valuable to pick up a a K one and look at it and understand that. Okay, let's now move on to my preferred legal structure. Most dental attorneys that I work [00:28:00] with also recommend this. It's almost universally accepted among those. Who understand dental to structure it this way, and it's called a partnership of corporations.

And a partnership of corporations incorporates both the corporation and the partnership together. And here's how, instead of you owning that 50% partnership interest in the 10 65 partnership, you own a hundred percent of a of an S corporation. And in turn, your S corporation will own your partnership interest.

So you own the interest in your partnership, but you own it indirectly through this layover called your own. I usually call it your own personal corporation, and then your personal corporation. That middle entity between the partnership and you personally will receive a hundred percent. Of your guaranteed payments and distributions from the partnership, it'll receive a hundred percent.

And then from there, here are some of the [00:29:00] benefits. You can be as aggressive as you want in your corporation and it's no skin off the back of your partner. You can put kids on payroll, spouse on payroll, run your trip to Hawaii. You wanna get that aggressive and say you had a dental CE event while you were there.

All of all of that stuff. You can run through your own corporation and it doesn't cloud the true profitability of the partnership. The partnership is where the true all the true operating income and expenses of the dental practice. Run through and then once a month for our clients that we do partnership work for, and we have somewhat of a specialty here at Practice CFO in dental partnerships.

Once a month we give you a statement and it tells you how much you can distribute out of that dental partnership into your S corporation. And then from there. We structure your own W2 payroll, we structure your family payroll, we direct you on what to run through the business, what not to run through the business, et cetera.

And that way we get a lot of these benefits of S corporations without the disadvantages that partnerships create. And so that's [00:30:00] just such a great option. If you have four partners, you could have. A partnership. And then each partner has their own personal corporation that they own a hundred percent, and they get their monthly distributions Here at practice CFO, for example, I'll be a little open book with you.

I've got five partners and each month we pay each other a guaranteed payment, which is essentially salary, and then once a quarter. When we run the numbers, we determine how much we want to keep inside of practice. CFO's checking account, we take any surplus above that and we distribute it pro rata based on ownership.

And that's a profit distribution right there. And it goes into our own personal S corporations. And then from there, we all do our own thing for tax planning, W2 and 401k purposes. Now on the note of a 401k, in that example, you've got various entities, one partnership, multiple S corporations. Those all are what are called affiliated groups and all subject to the same 401k plan.

Same with a medical plan. You can't just carve out [00:31:00] your employees and do a 401k in your personal corporation to the Department of Labor. It's all one entity. And so for testing purposes, it all runs or flows together for purposes of these government sponsored benefit plans like health insurance plans or flex spending accounts, or 4 0 1 Ks or defined benefit plans.

So keep that in mind as well. Okay, so to summarize, never be a C corporation if you're a partnership. Don't be an S corporation for the lack of flexibility. Be a partnership, but own your partnership interest through your own. A hundred percent owned personal S corporation. And that is the best structure.

Now, if you're watching this on YouTube, here's a little diagram of how this would work. If you're listening, I'll try to explain this, just what I'm looking at. In the middle, you have a circle, that's your partnership, and up on the top right and top left, you have a two corporations owned a hundred percent by owner one and owner two.

And, uh, [00:32:00] distributions are made out of that central partnership entity up to the corporations every month. And then from there. In the corporations, the owner one and owner two can respectively run their own perks, their own W2, and they can take draws out of those corporations to themselves personally as well as their W2 and that.

It is called a partnership of corporations and what I recommend for dental partnerships. Alright, lemme close up by just stating that in these, in these partnerships, you have what are called partnership agreements. In corporations you have what's called operating agreements, but partnerships have partnership agreements.

Now, I'm, I know I'm delving into the space of an attorney right now, but I think this is pretty basic, so I'll just go ahead and share my thoughts on this. It's extremely important. When you set up a partnership of corporations or just a partnership, now in that partnership you have a partnership agreement that outlines how that partnership is going to be run.

Who [00:33:00] has voting rights, who has res certain responsibilities, how profits are gonna be allocated. So if you're on YouTube watching my screen right now, um, make sure that in the partnership agreement you clearly define responsibilities. And I mentioned this before and I'll mention it again in my next podcast on.

Profit distribution methodologies of a partnership. But define responsibilities. Who's handling the financial matters? Who's handling marketing? Who's handling hr, who's handling a, um, facilities and or negotiating or working with the insurance companies or, uh, training your team or looking at your, uh, analytics like dental, intel, all of that stuff.

Who is going to be doing each of those? Really define that out. Have a clear, what I call accountability chart set up on what you're doing and what each partner is doing, and that should be stipulated in the partnership agreement. Number two, define decision making, meaning voting rights. Are the voting rights [00:34:00] 50 50?

Are there certain unique aspects to the voting rights? So one partner has more voting control than the other partner? Be sure to have that well delineated and understood by all parties going into the partnership. Number three, define profit allocations More to come on this in my next podcast. There's various ways.

To allocate that dollar that flows in once it lands into the corp, into the partnership checking account as it flows through its expenses and whatever's left, how does that get distributed to each owner? And number four, including non-compete provision. So if one partner pulls the eject lever, wants to go out on their own, maybe they're mad, whatever, you don't want them going down the street.

And being able to pull the patients of the practice and leaving the existing partner with all of the overhead potentially and struggling financially. So including non-compete provision in the partnership agreement. Other things not on my screen, would be things like buy, sell [00:35:00] provisions. What trigger.

Would cause or force a partner to sell their interest, perhaps disability. Obviously, death should be a trigger so that the remaining partner can buy them out, and you may wanna attach insurance to that. Buy, sell, disability, buy, sell life, such that the remaining partner has the capital needed to buy out the other partner practice.

CFO can help with all of those items. As well. This was a very, very heavy. I would say technically heavy podcast one. Maybe you want to listen to a couple times. If you can watch my YouTube version of this, maybe that would help as well. If you are a client of practice CFO, you know, in all of our meetings that we are always putting this in Excel, projecting out mapping cash flows to get all those levers lined up, just the right way to stick to landing every year and ultimately accelerate growth financially speaking for you.

Thanks everybody for listening. [00:36:00] Hope you can tune in next time.