Incorporating your Medical/Chiropractic Practice


By all means you will need to incorporate your business.  Many publications state that it is fine to run as a sole proprietor, but you run many risks when doing that.  Particularly the risk of losing everything you own if a patient comes after your business.

GOLDEN RULE:  Never mix personal and business expenses.

AWESOME TIP:  You can structure your business so that you could have investors and reduce the amount of bank loan you need!

It costs about $150 a year to be an LLC in Florida.  This is a cheap price to pay for the piece of mind that comes with it.  If my business goes bankrupt, my personal assets are okay.  If a patient sues the business, my personal assets and family are okay.  (Except in cases of fraud, but I hope that anyone using this guide is going to be ethical).

LLC, S-Corp, C-Corp

Armor and Shield your Medical or Chiropractic Practice from Litigation

Photo used under Creative Commons from ellenm1

There may be tax benefits to chosing different organizations.  We are currently an LLC taxed as a disregarded entity.  I thought this would be great since it this basically means I can file taxes as a sole proprietor would on my personal tax return.

Remember the Golden Rule above.  What I would like to be is an LLC taxed as an S-corporation.  This gives us the slight tax advantage of an S-corp should we make oodles of money in a year, but we dont have to hold an annual meeting (not that holding the meeting is difficult).

All of the organizations protect you personally from liability should your business make a mistake.  The biggest difference is whether you can have shareholders(S and C-Corps) and when the money you earn is taxed.

If you are planning on having relatives invest in your business then you should probably form an S-Corp, but if you are putting up the money or taking out a loan then an LLC might be simpler.

Keep in mind that once your business is flourishing you can hold that “Annual Meeting” in a luxurious mountain resort . . . Who cares if you are the President, secretary, and treasurer . . . just make sure you record the minutes of the meeting and file them appropriately.

Watch out for scams!

Be prepared for an onslaught of marketing to appear in your mailbox, your inbox, and on your voicemail.  Incorporating is public record and many companies use this information to start sending you information on credit card processing, accounting services, lawnscaping, etc.

IGNORE ALL OF THESE.  You don’t need to make most of these decisions now.  If one catches your eye, put it away in a file and consider it when you are ready to research that service.

Conclusion

Business structure can be changed later and during the first year, there likely wont be a difference in taxes.  It can be costly to change over though and you might have to change your EIN which would be an insurance nightmare.

Talk to everyone you know and trust that has business knowledge and find out what is best for you.

What did you form your business as?  Are you happy with that choice?

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