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Let’s talk about one of the most confusing, rarely discussed parts of private practice ownership:
How do you actually pay yourself?
When you’re an associate, it’s simple. You work, you get a paycheck, and taxes are withheld automatically. When you’re the owner? You are the payroll. And figuring out what to pay yourself (and when) can feel like you’re making it up as you go.
That’s normal. But there’s a smarter way to think about it — one that balances personal stability with long-term business growth.
Here’s how I approached it in my own practice.
1. I Didn’t Pay Myself a Lot in the Beginning — On Purpose
When I first opened, I operated as an LLC, not an S-corp. I wasn’t focused on tax optimization or aggressive income — I was focused on surviving.
My goal in Year 1 was simple: break even.
I kept overhead lean, did most of the work myself, and reinvested every dollar I could into the practice. I paid myself enough to get by, but I wasn’t looking to cash out.
Instead, I used that time to learn the business, build a patient base, and refine my systems.
2. Year 3: The Business Grew — and So Did My Strategy
Now in Year 3, I’ve elected S-corp status. This allows me to:
- Pay myself a reasonable salary (subject to payroll taxes)
- Take owner distributions for the rest (which avoids FICA)
- Reinvest profits more strategically
I still plan to pay myself modestly, but not because I’m not earning. It’s because I want to retain flexibility — and invest in the business while it’s growing fast.
3. Reinvesting in What Matters: People and Marketing
The biggest shifts in my budget this year?
- Employee wages: I’ve given multiple raises — not just to reward performance, but to retain great people. I believe that the culture of your clinic is your best marketing.
- Advertising: As I move into a more competitive area, I know I need to boost visibility. So I’ve started investing more in digital ads, SEO, and content.
I’m not just trying to increase patient volume. I’m building brand presence, referral relationships, and long-term market share.
That doesn’t happen when you pull every dollar out of the business.
4. Understand the Three Parts of Owner Compensation
When you own your own practice, your “income” doesn’t come from just one stream. It comes from three:
A. Clinical Salary
This is what you’d make if you were an employee. It’s based on your patient load and procedure mix. Even in solo practice, it helps to pretend you’re paying yourself as an associate — it clarifies your margins.
B. Owner Profit
This is what’s left over after expenses — the true net income of the business. As an S-corp, this can be distributed without self-employment tax (after reasonable salary is met).
C. Equity Growth
This is the long game. Every month you run a profitable, growing clinic, you’re increasing the value of your business. You may not “see” this on a paycheck, but it’s real — and often worth more than your salary.
5. Pay Yourself — But Don’t Starve the Business
Too many new owners either:
- Take nothing for months, which leads to burnout and resentment
- Or take too much early, and undercut their ability to hire, market, or expand
Here’s the middle ground:
- Pay yourself something consistent, even if it’s small at first
- Base increases on performance and profit
- Leave room for strategic reinvestment
The goal is to build a machine that runs smoothly — and makes you money in the long run.
6. My Advice? Be Patient, But Be Smart
In the early months, you’re not just building revenue. You’re building:
- Systems
- Brand equity
- Staff loyalty
- Local reputation
Those things take time — and they don’t show up on a P&L sheet.
So if you’re wondering whether you can afford to pay yourself yet, ask:
- Have I covered all fixed overhead?
- Am I setting aside money for taxes?
- Is there profit left after expenses?
If yes — start paying yourself. If no — stay lean, stay focused, and know that the reward is coming.
I didn’t pull a big paycheck in Year 1. But in Year 2, I earned more than I would’ve as an associate in a PE-backed practice. And in Year 3, I’m building something with real momentum.
Final Thoughts
The freedom to set your own income is one of the best (and most intimidating) parts of ownership.
But remember: you’re not just your salary. You’re building wealth through profit and equity.
Pay yourself enough to live. Reinvest enough to grow. And play the long game.
Next Up: Using Debt to Grow — Not Drown
We’ll talk about good loans, bad loans, and how to use financing to grow faster without sacrificing control.
