Private Practice Checklist

Your private practice checklist

• Register as an LLC or a Sole Proprietor
• Set your fee
• Purchase malpractice insurance
• Establish your policies and procedures
• Organize your documentation
• Obtain an EIN from the IRS
• Understand your tax filing status
• Apply for an NPI number

Limited Liability Company (LLC) or Sole Proprietor?

When deciding whether to register as an LLC or a sole proprietor, one isn’t necessarily better than the other. It all comes down to your needs and preferences as a clinician. Below is a high-level summary of what each means for your taxes and your business.

LLC

Must register with the state as a company and pay the accompanying fees, both for initial registration and re-registration to maintain good standing.

Creating a limited liability company (LLC) means that your practice will be held responsible for debts or lawsuits, rather than you as the individual owner. This impacts how you’ll be taxed, 7 As an LLC, you can decide to be taxed as a corporation, partnership, or sole proprietor, which will determine the rate you’re taxed at, what you can deduct as a business expense, and more.

Sole Proprietorship

Typically less expensive to establish than an LLC

Your tax status will be that of a self-employed individual. Any revenue your practice makes is viewed as personal income by the state.

You are responsible for the debts and liabilities of your practice (i.e. business), which means that your personal funds and your practice funds are seen as the same by the law and state.

Obtain an EIN from IRS

In order to file your taxes as either an LLC or Sole Proprietor, you’ll need a federal tax identification number, known as an EIN, which you can apply for online at irs.gov.

Completing the application takes about 15 minutes (just keep in mind that you’ll need to complete it in one setting, as you won’t be able to save and return to a partially completed application). Once you’ve submitted the application, you should receive your EIN immediately.