Retained Income: The “Lost Money” Doctors Are Leaving Behind

Today’s Micro-Business Tactic: Retained Income: The “Lost Money” Doctors Are Leaving Behind

Imagine sitting on your couch and finding a forgotten $20 bill between the cushions. You didn’t earn new money, you just found what was already yours.

For most physicians, this same opportunity exists inside their income. It’s called retained income, the portion of your earnings you’re already making but “losing” to inefficient tax structures or employment models. This isn’t about earning more. It’s about keeping more of what you already earn.

Over my career as a physician turned entrepreneur, I’ve discovered that most doctors are unknowingly forfeiting 10–15% of their annual income simply because of how it’s structured. In my case, that lost money added up to $70,000 per year.

Today, I’ll show you how I found it—and how you can, too.

My Journey from W-2 Employment to “Employment Lite”

A decade ago, I was a full-time W-2 physician, working long hours, following my hospital’s schedule, and watching my paycheck disappear to taxes before I ever saw it. My wife and I budgeted, saved, and gave generously, but our take-home income never seemed to match the effort I was putting in.

I knew there had to be a smarter way.

That’s when I approached my employer about a new idea—a Physician Services Agreement (PSA) model that allowed me to remain affiliated with the hospital while functioning as an independent contractor under my own professional micro-corporation. I called it “employment lite.” Download my primer in employment lite here.

It changed everything.

Instead of being taxed as a W-2 employee, my income began flowing through my corporation as 1099 revenue. That simple shift unleashed a cascade of benefits, business deductions, retirement plan flexibility, and better control over how and when I paid myself.

By transitioning from W-2 to 1099, I retained $70,000 per year that had previously gone straight to the IRS. And I didn’t see a single extra patient.

You can read more about this transition in my best-selling book that goes into all the details, the landing page can be found here: Doctor Incorporated: Stop the Insanity of Traditional Employment and Preserve Your Professional Autonomy

Retained Income: The Hidden Gem in Physician Finances

What’s so beautiful about retained income is that it doesn’t require a lifestyle overhaul. You don’t need to moonlight, buy rental properties, or learn day trading. You just need to understand the structure of your income.

Many employed physicians assume they’re “stuck” because their income is W-2. But there are pathways to begin shifting, especially through job stacking:

1. Add 1099 work alongside your W-2 – telehealth, locums, consulting, expert witness work, or medical directorships.

2. Reduce your W-2 hours slightly – open time for 1099 income streams.

3. Run all 1099 income through your micro-corporation – leveraging deductions and tax optimization.

You can read more about Job Stacking in from free eBook here: Job Stacking For Your Preferred Lifestyle

Each step increases the portion of your income that you retain rather than surrendering to inefficiencies.

For a deeper guide, download Four Strategies for Doctors to Retain More of Their Earnings, a short, actionable e-book that complements today’s tactic.

How to Start Retaining More Income Today

Here’s your roadmap to start capturing your own “lost money”:

1. Establish Your Professional Micro-Corporation

Even if you’re still employed full-time, forming your own PC or PLLC allows you to collect and manage any 1099 income independently. You’ll immediately open access to tax deductions and create a legal foundation for wealth retention.

📘 Want a deeper dive? Check out my free e-book Why Every Doctor Needs a Virtual Business Structure for step-by-step guidance.

2. Job Stack Strategically

Identify 1099 opportunities aligned with your expertise, telehealth shifts, medical writing, or legal consulting. Use your micro-corporation to invoice and collect payments. This blends the stability of employment with the advantages of entrepreneurship.

Download my free eBook on Job Stacking

3. Maximize Your Deductions

Business owners can deduct:

• CME, licenses, and professional memberships

• Home office expenses

• Travel and communication tools

• Health insurance premiums

• Business meals and continuing education

These deductions alone can reclaim thousands of dollars per year in retained income.

Download by free eBook The Ultimate List of Business Deductions For Professional Micro-Corporations

4. Align with the Right Advisors

Don’t go it alone. Partner with a CPA and attorney familiar with physician micro-business structures. They can ensure you’re compliant while maximizing your efficiency.

Need help finding professionals who specialize in this? My team at PEA-SimpliMD connects physicians to vetted legal and tax partners. Book a Business Strategy Consultation to start.

Lessons from the Field

“This week, one of my clients—a family physician in Ohio—realized she was overpaying $24,000 a year in taxes simply because she hadn’t incorporated. Within 30 days, she formed her micro-business, started job stacking with a telehealth contract, and reclaimed that money into her retirement account.”

Physicians often think the only way to increase income is to work harder. But in reality, it’s often about structuring smarter.

Take five minutes today and complete the PEA-SimpliMD Retained Income Assessment. You may be shocked at how much you can keep without adding a single patient encounter.

Doctors Need to Be Empowered, Not Employed

This entire concept of retained income is really about empowerment, about reclaiming autonomy over your professional and financial life.

Doctors don’t need to abandon employment altogether to experience the benefits of self-employment. Instead, we can occupy a “third space”, a professional middle ground where we act as our own business entities, collaborating with health systems rather than being consumed by them.

That’s the philosophy behind Doctor Incorporated and the foundation of the Physician Entrepreneur Academy (PEA)-SimpliMD community.

If you’re ready to take control of your professional life, explore our PEA Builder Membership for step-by-step guidance in business formation, contracts, and micro-corporate optimization.

The Power of Retained Income: Diversifying Your Income Channels

The retained income mindset naturally leads to diversification. Once you’ve optimized your structure, you can start building multiple revenue channels. That’s when your financial independence truly accelerates.

In my own life, retained income led to passive income streams through real estate, online courses, and intellectual property licensing, all built on the same micro-business foundation.

To explore this next step, download Diversifying Your Income Channels: The Why and How —a free e-book that will help you turn retained income into long-term wealth.

And for those thinking beyond income, toward protecting that wealth, read Physician Asset Protection: Safeguarding Your Future

Tool of the Week

Retain More, Grow More: The Hidden Wealth of Micro-Businesses

This downloadable e-book will help you execute today’s retained income strategy in under 10 minutes.

📘 Download the Free E-Book →

Scale with Coaching

Want personalized guidance to uncover your hidden retained income? Our coaching programs help you design your micro-corporation, structure your income, and negotiate better contracts.

👉 Book a Strategy Consultation Session →

👉 Get Started With 1:1 Business Coaching Today →

Closing Reflection

Doctors are extraordinary earners, but too often, poor retainers. The goal of this week’s micro-business tip is simple: stop losing money that’s already yours.

You’ve worked too hard to let inefficient structures drain your wealth. Form your micro-business. Reclaim your retained income. And remember, your career, your income, and your future are yours to control.