What Kind of Business Entity Do You Need as a Therapist?
Determining What Kind of Business Entity to Own as a Therapist
So, you want to run your own private practice, but how do you register that business with your government? How do you decide which type of business is the best fit for you?
When determining what kind of business entity to own, there are a couple of things you need to consider:
Tax Strategy - Each business entity has an effect on your taxes. Sometimes, there are even certain benefits for different types of business entities.
Liability - You can protect your personal assets by separating your business into its own entity. In the event of a lawsuit, when you have a corporation, those personal assets are less likely to be taken into account.
Your State - Every state is different. It is essential that you follow both state and federal rules when making the decision about which business entity is best for you. In California, you can’t have an LLC — you must have a professional corporation — whereas other states allow LLCs.
Sole Proprietorship
When starting out in private practice, many business owners begin as sole proprietors and do not form separate business entities until they are profitable. We recommend consulting with an accountant and attorney to review your assets and taxes to figure out when it makes the most sense to incorporate.
LLC or S Corp
If you're considering establishing an LLC or S Corp, or if you've already established one and are a little foggy on all the details, we have a FREE webinar just for you! Join David Frank, Financial Planner for Forming an LLC or S Corp: Is it Worth It? located in our free training library.
We'll cover the myths, the facts, the options, and the requirements of business entities, and the S Corp tax election.
After attending this training, you'll understand:
The true benefits of forming a business entity and which are just myths!
Business entities that are available and which might make the most sense for your business.
How an S Corp could reduce your tax bill and how much you need to earn for it to work.
Your ongoing obligations to keep your business entity and S Corp in good standing.
