PBMares Accounting Blog

Form of Practice Considerations

Posted by Bradford Jones, CPA, CVA, CMA, CFF on Sep 29, 2016 8:30:00 AM

 

The form or business entity a physician or other professional choses to practice under has important implications that may last the life of the practice. This first and foundational decision needs to be considered with regard to legal, operational and tax perspectives.  This Articles reviews the most common business forms of practice: sole practitioner, general partnerships, corporations, and other limited liability entities.  There are advantages and disadvantages to each form.

Legal considerations include state law restrictions on permissible forms of practice applicable to certain professionals as well as the personal licensure requirements required of owners. Within the confines of such state law restrictions, legal considerations pertain principally to the extent to which a practitioner’s personal liability may be limited for the general obligations of the practice and a practitioner’s personal liability for errors and omissions of colleagues and employees.  Sole proprietorships and general partnerships are very easy to form but provide no liability protection, while corporations and limited liability entities, which require formality, can provide general protection.  Typically, state law prevents corporate and limited liability entities from shielding personal liability for a practitioner’s own professional malpractice.

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Topics: Medical Practice Consulting, Professional and Technical Services