I am a physical therapist. I treat patients with injuries like back and neck strains, tendonitis, post surgery patients like knee surgery or something like that. My hands-on treatments (massage, joint mobilization etc) are billable as are other activities such as therapeutic ultrasound, electrical stimulation, therapeutic exercise, etc.
I would start the business without employees, other than myself, but would likely hire within (weeks or months) 1-4 other employees as aides and/or administrative. It is likely that I would outsource my billing.
My main source of income would be insurance payments with co-pays and some cash patients, liens and work comp claims. I would have very little overhead, some supplies mostly. In the beginning, I would possibly work in a fitness facility with the "owner" of the fitness business who owns most of his own equipment and machines. He leases a space and then subleases to other businesses. I would likely be paid on a percentage of collections basis that would increase as revenue increases.
My questions are the following:
Can I create a corporation for this business and not use it for awhile? My situation is a little unsettled right now. The gym owner and another Physical Therapist who owns his own business have both gone with S-corporations. This is where I was leaning.
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Who should help me setup my corp. or can I do it myself with little pain and suffering?
Should I create this corp with the situation unsettled or should I wait? The economy could unravel fairly quickly leaving me to look for other employment and likely unable to start my own business any time soon.
What are the major pros and cons of S-corp vs. LLC? I don't see myself getting big enough for a C-corp.
What would I need to do with each structure in the future? I have read that in some instances I might need to be holding yearly stock holder meetings or other such corporate stuff. I am looking for as simple as possible with as little personal exposure to liability as possible as well as tax benefits, which I do not know how to take advantage of nor do I understand them very well.
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Thank you for any help you can give me.
Posted by Steve Anderson
Wednesday, July 2, 2008
Physical Therapist Looking to Start a Business
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Steve,
ReplyDeleteThese are questions better answered by your CPA or attorney as they can give you specific legal and tax advice. For the record I am not a CPA or attorney so none of what I am going to say constitutes legal advice etc. You know, all the disclaimer stuff.
Based on my experience in owning a handful of companies I have always liked going with the LLCs. They are easy to use, easy to set up, and easy to administer over time. For tax purposes the LLC can do a lot of the things that an S-corp can do, you can even elect to be taxed as an S-corp if you want to.
The LLC gives you many of the same tax deductions but with a much more flexible structure. Since an LLC is comprised of members rather than shareholders the requirements are slightly different for things like corporate meetings and minutes. The LLC is easier to maintain in my opinion.
The biggest reason I have seen for people choosing the S-corp is to avoid the FICA tax by paying themselves a small wage (FICA taxable) and taking the rest as dividends (not FICA taxable). Depending on how you will be making your money and paying yourself this may be worth doing the S-corp.
Since it sounds like you will be running one business only, rather than a structure of several entities, you can't really go wrong with either one. Just take a look at the features of each and make a decision and go with it.
You can set up either one pretty easily (I am assuming you live in Utah)by yourself on the state website www.corporations.utah.gov. A really good way to go when it is just you running your business. As you hire employees and begin to grow you will want to sit down with an attorney to go over the articles of incorporation and operating agreement. There are specific issues they will help you go through that the 'do it yourself' version does not address.
One thing you may not have considered is buying an already existing company that has been around for several years rather than starting a business from scratch. Go to www.stewardshipbrokers.com to learn more. (disclaimer: Stewardship Business Brokers is a company I own so this is somewhat of a sales pitch) There are several advantages to getting an older company rather than starting from scratch and it doesn't cost a lot to do.
If you are going to seek business credit lines this will be huge, but even just for the sake of reputation and credibility with vendors and clients being able to say that your company was established in 2005 or 2004 as opposed to last week is a big advantage.
Best of luck in your new venture.
Jerem Eyre
Steve,
ReplyDeleteMy name is Lisa Ingo and I am a speech therapist living in Washington. I opened a private practice in Feb of this year and my accountant recommended and S-corp. I set it up with SmallBiz.com, but our attorney (Andrew Howell in SLC) said he suually finds these online corporation set-ups inadequate so you may want to either go straight through a business structure attorney or at least get it reviewed by one after setting it up online.
I've gone from one client in Feb to 25 as of now with very little marketing. I have one part time employee and am looking for a second one. I don't know how the market it Utah is, but I would assume you would grow just as fast, but I agree unless you intend to get BIG you probably don't need a C-Corp.
I wouldn't suggest waiting to set up a corp. It's not all that expensive and it will allow more flexibility with the kinds of clients you can take on. you're in a different situation in your intentions to lease from another business owner, but in my case I couldn't contract with insurance unless I had an office outside my home. Hope this helps a little bit. Lisa