Tweet
Hi all, new poster to WCI though I've tried to read some of the prior posts related to this topic. Still very new to this. Hopefully posting in the correct sub-forum.
Scenario: I am a physician (Pathologist) practicing and licensed in California. Currently a W2 employee looking to create an entity for part time consulting projects (low revenue at the moment, <75K annually but may increase later). For the foreseeable future I would be the only employee. These consulting projects (with the exception of medico-legal below) do not involve direct patient care activities. I am not seeing patients nor am I rendering diagnoses, though the projects typically exist within the healthcare sector; for example providing recommendations to other groups trying to streamline laboratory operations or creating new service lines.
Some of these consulting projects could, in theory, be completed by an experienced non-physician, though realistically my MD is a contributing factor to being selected as the consultant. However, the activities I would be undertaking do not require a specific license in the state of California.
The second type of consulting work would be medico-legal, where I am asked to provide expert witness or second opinion review for legal cases in with pathology clinical diagnoses have been rendered.
At the moment my primary reason for forming a corporation is to isolate consulting activities and shield assets related to those so my personal assets are not at play; favorable taxation is definitely a benefit but not the primary driver of this decision given low revenue at the moment. Since none of these consulting activities requires me to directly offer patient care services to patients, I believe (hopefully correctly) medical malpractice suits are a non-issue.
Questions:
- Given the above, what type of entity, if any, would you recommend within the state of California? I was told that physicians must create a California Professional Medical Corporation (CPMC) but does this apply regardless of whether or not I am directly offering medical services which do not specifically need a license (scenario 1)? Medicolegal work would make no sense without a license and thus probably requires a CPMC, which raises the point that perhaps I am better off playing it safe and opening one of those.
- If I do need to form a CPMC, I’ve been told they default to C-corporations with fairly high tax structures. At the moment I would prefer a pass-through system such as an S-corp. I’ve read conflicting information regarding whether I can create a CPMC and then convert its tax structure to an S-Corp at the first meeting. Is this true?
- I’ve read a few posts in the WCI archives suggesting that asset protection benefits of S-corps in California are minuscule. Given that my primary reason for doing this is at the moment is having a corporation sign the consulting agreements to shield my personal assets, is this entire process not worth it?
Thanks very much for everyone's assistance. Happy to provide clarification about any of the above.
Scenario: I am a physician (Pathologist) practicing and licensed in California. Currently a W2 employee looking to create an entity for part time consulting projects (low revenue at the moment, <75K annually but may increase later). For the foreseeable future I would be the only employee. These consulting projects (with the exception of medico-legal below) do not involve direct patient care activities. I am not seeing patients nor am I rendering diagnoses, though the projects typically exist within the healthcare sector; for example providing recommendations to other groups trying to streamline laboratory operations or creating new service lines.
Some of these consulting projects could, in theory, be completed by an experienced non-physician, though realistically my MD is a contributing factor to being selected as the consultant. However, the activities I would be undertaking do not require a specific license in the state of California.
The second type of consulting work would be medico-legal, where I am asked to provide expert witness or second opinion review for legal cases in with pathology clinical diagnoses have been rendered.
At the moment my primary reason for forming a corporation is to isolate consulting activities and shield assets related to those so my personal assets are not at play; favorable taxation is definitely a benefit but not the primary driver of this decision given low revenue at the moment. Since none of these consulting activities requires me to directly offer patient care services to patients, I believe (hopefully correctly) medical malpractice suits are a non-issue.
Questions:
- Given the above, what type of entity, if any, would you recommend within the state of California? I was told that physicians must create a California Professional Medical Corporation (CPMC) but does this apply regardless of whether or not I am directly offering medical services which do not specifically need a license (scenario 1)? Medicolegal work would make no sense without a license and thus probably requires a CPMC, which raises the point that perhaps I am better off playing it safe and opening one of those.
- If I do need to form a CPMC, I’ve been told they default to C-corporations with fairly high tax structures. At the moment I would prefer a pass-through system such as an S-corp. I’ve read conflicting information regarding whether I can create a CPMC and then convert its tax structure to an S-Corp at the first meeting. Is this true?
- I’ve read a few posts in the WCI archives suggesting that asset protection benefits of S-corps in California are minuscule. Given that my primary reason for doing this is at the moment is having a corporation sign the consulting agreements to shield my personal assets, is this entire process not worth it?
Thanks very much for everyone's assistance. Happy to provide clarification about any of the above.
Comment