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We always get the question “What should I set my base compensation at?” As an owner DVM, there can be more than one way to pay yourself – payroll, production, and through profit distributions. Although our answer may change with your goals, let’s look into two different scenarios:

Scenario 1:

One client is the solo owner of a new veterinary practice. She wants to know how much to pay herself. She just got married and is looking to purchase a bigger home to start her family in.

Scenario 2:

We have one client who has two owner DVMs. Both doctors have different levels of contribution to the clinic. The first doctor is a very high producer, but does not contribute to the management responsibilities of the clinic. The second doctor does not produce to the same levels, but takes on all of the management responsibilities. We would advise this clinic to set a base compensation ($120,000) for the doctors with production bonuses. Since the second doctor isn’t meeting production, but working the same hours doing management duties, they will get an additional pay in the form of a “management fee”. This is typically paid out monthly and a percentage 1-3% of overall revenue.

Overall, we can structure owner DVM to best meet the needs of the individuals. Whether you’re saving for a house, you hope to compensation based on disparity of efforts, or you want to maximize your retirement contributions, there are ways to structure compensation to achieve these goals. Excess profitability in the company can be distributed to increase cash flow to the owners and save on payroll related taxes.