Hi all. I'm going to be going into small solo private practice and wondering about the usefullness of incorporating or LLC? I'll actually be subletting staff and space from another practicing physician, don't believe there are any particular tax benefits versus just filing schedule C. Does it really add any additional liability protection, or will it just make my tax returns more complicated?
When I opened my practice I did it as an LLC because it was easier and cost less. My accountant tells me that the decreased costs benefit will apply until I up to about $250,000 of gross income and then after that, an S corp will be more beneficial. From what I could gather, they both offer protection from business liability and the taxes for both carry through to your personal income tax.
Complicated stuff so I'd definately ask an accountant and an attorney, but that's my experience here in Virginia.
Agreed. I went to both an accountant, and a lawyer who specializes in healthcare. The lawyer said that being incorporated protects a business owner from business liability (i.e., somebody slips and falls in your office), but not from your professional liability (medical lawsuits, hence one still needs to buy professional liability coverage). He recommended a PLC (or PLLC) for my little start-up practice in Virginia. My impression from talking to these advisors was that incorporation did not necessarily impart greater tax benefits, at least not for the scale of my small practice, but it was a good thing to do from the perspective of protection from business liabilities.
Also FYI, once you've decided whether or not to incorporate, and what the structure of the corporation is, you can, if you are inclined and have the time to, file the incorporation papers yourself. It costs something like $75 dollars a year, vs. the $300 dollars filing fee that the lawyer has his secretary fill out for you.
Hmmm...I've been reading that in California, doctors must choose a professional corp? I will definitely need to get some legal and tax advice. I've read that being incorporated will protect me from liability in other doctor's cases (ie the guy I'm subletting office space from) - and that seems like the best argument for it.