What side gigs are and why do them
Monetize your time and build wealth.
Most professionals have a primary form of employment, and some work in private for themselves. Those that are employed over the years many have started side positions or side businesses to produce income. There are several reasons and advantages as to why this happens. I would also recommend obtaining a skilled CPA when making these moves.
If you are in an employed position generally that comes with benefits and retirement accounts. These retirement accounts usually include a 403b plan or 401k plan and a 457b plan. Generally, will not have access to both a 401 K and a 403b. Those 2 plans are similar except the 403b planned generally only let’s to invest in annuities and mutual funds and the 401 K has more options for investment. Generally, he will also get a certain percentage of contribution from the employer if you contribute herself a certain percentage of your income. I would always recommend maximizing the percentage that you can get from employer matching. That is just free money for you. These types of plans may have a certain amount of vestment; that is, you would have to stay with the employer for certain specified amount of time usually 2-5 years to get the employer contributions. At some companies they may increase the percentage that he would receive over time. For example, he would receive 20% of the employer contributions after working 1-2 years versus 100% after working all 5 years or more. The 457b plan is a deferred compensation plan that is money were not taxed on but will be taxed on later after taking disbursement. This reduces how much you are taxed on currently but could increase it later if you end up in a higher tax bracket after you start taking money out. Companies generally do not contribute to this plan. To know the current limits of contributions to these plans please look those up as the change every year. Companies can contribute a much higher amount upwards of more than 50k but usually only contribute about 6-7% of salary.
If you are a physician in private practice, you will be providing your own health insurance and salary as well as have certain business expenses that can be written off. In general, private practice is more lucrative. You would also have much more control over the day-to-day activities of the business and be able to have complete control over your schedule and other aspects.
Some would argue that private practice is the best way and others would say a mix of employed and private practice is best.
When discussing a mixture of private work and employed work we get into a discussion about side businesses. These would probably be the most profitable based on medical training. Your employer will not give you contract work.
Examples of side businesses based on Physician skill:
Moonlighting/contractor (1099 tax) or consult work (expert witness/advising/chart review/insurance reviews/pharmaceutical)
Contracting work is a diverse group that could range from weekend or holiday coverage in a clinic or hospital, starting a part-time private practice, urgent care work, cosmetic work, supervising at an outside facility, telemedicine, writing test questions, etc.
Consulting work could include being an expert witness for legal cases that involve medical expertise, advising facilities on how to best manage certain patients or patient care and coming up with administrative ideas, chart review for improvement areas in clinical care, working for an insurance company to assess necessity of hospitalization or medical treatments, working for pharmaceutical company evaluating agents, etc.
Example: Physician is employed full time by a hospital or clinic making 250k per year working 5 days a week with no weekend work. This individual could start doing a side clinic on Saturday as a contractor making $100-$500 per hour.
Why would someone want to do this?
To work less in the future. This occurs by having the ability to start a self-employment IRA in which you can contribute about 20% per year contractor income tax sheltering it until you retire. This improves the ability to save and eventually retire. Without the contractor income this individual will be completely reliant on the employed plans. Additional benefits come from being able to reduce expenses and the tax you pay as business expenses: car/rent/insurance/membership dues/food/travel/car mileage/electronics/office space/office supplies/phone/medical equipment/other items needed.
Example: Physician makes 40k working the Saturday clinic in a year. This person can put 8k into the SEP IRA. That is 20% of the 40k. This person also had business expenses of 5k(phone/home office/car/insurance, etc.). This results in them being taxed on 27k. Total savings of at least 8k. Likely this person would have had these expenses anyway but without the additional income. Say they do this for 10 years and earn a 10% yield on that SEP IRA. That is compounded and is $148,313.09 more than they would have had tax free growth.
If you do end up doing this type of work keep in mind that you will pay tax each quarter estimating with your tax rate. As a contractor no one is taxing this money yet. The government will still want a slice of the pie.
Side gigs that have nothing to do with Physician skill (limitless possibilities):
The following is a list of investment possibilities in no particular order. Feel free to google them to find more detail.
In a brokerage account:
Mutual funds
Exchange traded funds
REITs
Individual stocks
Bonds
Precious metals and commodities
In your community:
Local businesses
Entrepreneurial pursuits (various types of businesses including coffee shops, restaurants, bake, sew, make something, etc)
Real estate investments
Writing a Blog
Writing a book
Writing educational content
Composing Board review questions
Side jobs
Rent your home or vacation home
Rent your car out to others
Public speaking
House sit
Pet sit
Collector items
Online:
Peer to peer lending
Real estate crowdfunding
Business crowdfunding
Buy a blog
Buy music rights
Investing in the stock market
Buying a business
Renting your home
Renting your car
Investing in a crowd fund
Investing in a business
Teaching
Invent something
Try writing down the problems you see every day and then evaluating if there is a solution you can provide as a business idea.
There are many more ideas out there too. As Physicians or any other profession we do not have much free time so usually, I am looking for things that provide the highest payout with least amount of time needed. My mix is: educational content, private contractor, test question composer, blog writer, stock market investor, options trader, business investor, and employed position.
Hopefully, this was helpful to you. Please check out my other articles.