Many dentists are deciding to branch out and start their own practices from scratch. Starting a dental practice can be exciting, but the formation of a new practice can be a complex process. To form your own dental practice, you’ll need to purchase or lease a location, choose a legal structure, and protect yourself from liability.
Reach Out to a Dental Practice Formation Attorney
If you are in the dental business formation process, hiring an attorney is one of the most important things you can do. An attorney can help you form your dental practice efficiently and effectively. Additionally, a dental attorney will help you understand the pros and cons of which type of entity you should form, based on your location and situation. Contact Mahan Dental Law today to schedule a free case evaluation.
The Dental Practice Formation Process
The dental practice formation process involves establishing a new dental practice. For some, the process will involve establishing a brand new practice. For others, forming a dental practice may include working with another dentist to form a partnership or purchasing an existing dental practice. Government regulations and legalities can make starting a new business challenging. As a result, working with an attorney to navigate potential legal issues can be beneficial. There are several important steps involved in the process, including:
- Choosing the best legal structure (whether you’re interested in starting a solo practice or group practice)
- Selecting a business name
- Registering your business name in your state with the dental board and local authorities
- Filing the necessary paperwork
- Paying taxes and fees
- Finding a location for your dental practice, if you are forming a start-up
- Renting or buying your business location, including drafting agreements and contracts
- Hiring staff members and/or other dental associates
- Drafting and filing paperwork regarding the hiring of staff members and/or associates
Why You Need to Choose the Right Business Structure
If you’re in the process of opening a new dental practice, you’ll need to consider how to structure your dental practice carefully. How you structure your dental practice will help you protect the hard-earned fruits of your labor. When considering which type of legal entity to choose, you will need to ask yourself the following two key questions:
- What business entities are available for dentists in your state?
- Of the available options, which option is the most beneficial for you?
Sole Proprietorship (DBA)
A sole proprietorship means that you are in business as yourself. You and your dental practice are the same entity for legal purposes. It’s rare for private practices, but sole proprietorships can be more common for dental associates who are working as independent contractors. Taking advantage of any losses on your personal 1040 tax return in the early days of your practice can help your personal tax situation. However, sole proprietorships do not offer you the same type of legal protection as other types of business entities.
Professional Limited Liability Company (PLLC)
The professional limited liability company structure is available in some states. This type of business structure includes a group of licensed dentists who would like to form a Limited Liabiltiy Corporation (LLC). A PLLC offers all of the protections that an LLC offers, but only businesses in which all of the managers are in the same licensed profession can form a PLLC. Many attorneys recommend PLLCs for new dental practices because they offer the tax and liability advantages of a corporation.
PLLCs will impose less of an administrative burden on business owners, meaning there is less paperwork to file. The tax burden will likely be higher with an LLC or PLLC than with a sole proprietorship because self-employment and medicare tax liability is based on the profitability of the dental practice, not on the dentist’s personal income.
Professional corporations are corporations for licensed professionals, like lawyers or doctors. This type of legal structure can be appealing for single dentists forming a practice because the dentist’s income is separate from the dental practice’s profits and income. Corporations can also offer health insurance for employees and deduct the cost as a business expense. There are limits, or caps, on self-employment taxes. However, personal corporations require more paperwork and formal annual meetings. The corporation will also need to pay franchise taxes.
Protection Against Liability in Dental Acquisitions
Preventing liability is one of the most important aspects to consider when forming a dental practice. For most dental practices, choosing a limited liability or corporate structure will help you protect yourself and your businesses. Without liability protection, you can be held personally liable if your dental practice is sued, or if significant debts need to be collected against your business. An LLC is an appealing option because it protects dentists personally should their practice face a lawsuit.
Working With a Dental Practice Formation Attorney to Understand Your Legal Options
Choosing a legal entity is an important decision when forming a dental practice. The attorneys at Mahan Dental Law will evaluate your goals for your dental practice. We will consider the regulations and business entity options available for you in your state, discuss the pros and cons of each type of legal entity, and answer any questions you have. Once you’ve decided on a business formation, we will complete the required paperwork and ensure that you comply with all local, state, and federal laws.
Schedule your Initial Consultation with a Dental Practice Attorney
When you work with Mahan Dental Law, you can rest assured that your dental practice will start on the right track. You’ll be working with an experienced attorney who will guide you through the dental practice formation process. Taking the time to set up your dental practice correctly will help you avoid preventable legal issues in the future, potentially resulting in significant financial savings. Contact Mahan Dental Law today to discuss how we can help you with your dental practice formation and structuring needs.