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Legal Structure of New Medical Practice

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  • Legal Structure of New Medical Practice

    I am starting a medical practice in Virginia as a solo practitioner, but may add an associate doctor in the future. What is the best legal structure to set up this business as? From my research it seems that filing as an LLC or PLLC with an S corp tax option is best. Any other opinions?


    Is there a difference between the LLC and PLLC in terms of liability or maintenance or taxes or is the only difference in the title?


    Why not opt for S corp taxation?


    Finally, what is the best way to find an attorney/tax advisor on issues like these?

  • #2
    For now, as long as you have appropriate and adequate medmal ins, a sole proprietor will be the simplest and most cost efficient way of doing business if you have no other employees (such as an office manager). When your net profits get up to around $300 - $350k and/or you add your associate or employee, you should form an S-corp.

    The reason not to opt for S-corporation sooner is that it will cost you more than you save. A sole proprietor files the results of business operations on a schedule C that is attached to her personal tax return (1040). To operate as an s-corporation, you must be licensed with your state and pay an annual fee. You also must file a separate income tax return (form 1120S) in addition to filing your personal income tax return. You also must pay yourself and any employees via payroll checks and file all related income tax returns (941, 940, unemployment, state, and local). You'll have to hire a payroll service for this - more ka-ching.

    You should not skimp on an experienced, proactive CPA for advice and tax filing. Ask your CPA for attorney referrals. Make sure s/he has no exchange deal for those referrals.

    Read How to Find a Great CPA for advice on finding a great CPA. If you're open to virtual, Laura Clifford, my partner, is a WCI-vetted tax strategist who advertises on the WCI blog and works almost exclusively with physicians. The article will help you get started on a local search.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087