Do you know what type of corporate structure is best for your medical practice?
From S-Corps and C-Corps to LLCs, deciding how to structure your business is no small task
The right choice will provide substantial tax benefits and protect you from certain liabilities, while the wrong choice could result in higher taxes and responsibilities you don’t want.
Here are the benefits and drawbacks of each type of medical business structure:
A sole proprietorship is an unincorporated entity that is cheap and easy to start with. However, this business structure provides next to no protection in terms of liability.
A general partnership is also easy to set up, but both partners can be held liable regardless of who’s at fault.
A Limited Liability Partnership protects your personal assets from your partner’s mistakes, but your business is still at risk if you get sued.
A C-corporation lets shareholders buy stock in your practice, but any profits gained from shares are taxed twice by the government.
The profits generated by an S-corporation aren’t double-taxed, but you’re not allowed to write off the full amount of any benefits you provide to your employees.
LLCs offer the protection of a corporation with the tax benefits of a sole proprietorship. However, most tax attorneys recommend medical practices operate as S-corporations, which have a better proven track record of liability protection.
Every corporate structure has benefits and drawbacks. Only you can decide which structure is right for your medical practice.
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