Financial Success Guide

Business entities

As a therapist in private practice, there are three types of business entities you can set up. Entities do not provide safety for personal errors, but a PLLC or PC will protect you against the misdeeds of others.

Regardless of which entity you choose, we strongly advise against doing work in your individual name. Using your social security number for tax purposes leaves you vulnerable to identity theft, and it is very easy to set up an EIN to protect against this risk.

Professional Limited Liability Company

• It costs about $2,000 to establish a PLLC and can take up to 12 weeks.
• A PLLC may deter litigation as the business entity is held liable, rather than you personally.
• A PLLC is recommended for those making at least $50,000 through private practice and anyone working with employees.
  • If your net profits exceed $200,000, consider registering as a PC.
• To establish a PLLC...
  • Register online or through an expediter (recommended) for about $600.
  • Following the registration, some states, like New York, may require that PLLCs and LLCs be published. The cost may vary according to the location within a given state.
    • For example, publishing in New York City costs about $1,000. If you have a physical address elsewhere in New York, you can publish to that address for less money and file a change of address for free at a later date.
• If a PLLC is registered but not published, it is considered invalid.

Professional Corporation

• A PC is best for those making at least $200,000 in net profits.
  • Under a PLLC, if net profits exceed $200,000, a self-employment tax of 4% is incurred; there is no self-employment tax under a PC for profits.
• A PC may deter litigation as the business entity is held liable, rather than you personally.
• You must file an S election by submitting a Form 2553, otherwise the entity will be subject to double taxation.
• Under a PC, you will have to file separate individual and corporate tax returns, even if you are the sole member.