DENTAL BUSINESS FORMATION AND STRUCTURING
Dental Business Formation and Structuring in Texas, Washington and Nationwide
Starting a dental business is an exciting and rewarding endeavor. However, navigating the legal aspects of setting up a new practice is quite challenging. Creating business structure and formation documents ensures your dental practice complies with all applicable laws and regulations. Understanding legal matters properly, like self-employment tax implementation for an S-corporation or C-corporation, contractual items with other dentists, and setting up a business entity, can save you time and money in the long run.
If you’re in the process of dental business formation and structuring, one of the most important things that you have to do is to hire a law firm that can help you do it effectively and efficiently, and know what type of entity to form, based on the state you live in and your situation. As you’d probably imagine, these processes require an abundance of legalities.
What are these Processes?
Dental business formation and structuring involve starting up a dental business from scratch. You have your license to practice dentistry, but you need a vehicle to practice out of and to protect your liabilities and optimize your tax structure. There are several processes involved including the following:
- Choosing a legal structure (whether you’re going on a solo practice or group practice)
- Identifying a business name
- Registering your business with state and local authorities and the dental board
- Filing the necessary paperwork
- Paying fees and taxes
- Finding a location for your practice (if a start up)
- Buying or renting said location (including putting together contracts and agreements)
- Hiring people (staff members and/or associates)
- Drafting and filing the paperwork regarding the hiring of said staff members and/or associates
These are just some of the processes that are expected of you but you can already see how they can be overwhelming, especially considering the fact that there are legal implications if they are not done properly. This is why it’s important that you hire a firm that concentrates on dental business formation and structuring like Cohen Law Firm.
Common Business Formations and Structures
Understanding the different types of business structures is key to forming your new dental business. The following are common business formation types:
Sole Proprietorship
If you want full business control and are not concerned about personal liability, a sole proprietorship may be the best option. This business structure is considered self-employment, and the business owner is personally liable for all debts and legal judgments.
Limited Liability Company (LLC)
Like a sole proprietorship, a professional Limited Liability Company (LLC) provides full business control and does not require the same paperwork as other business structures. However, it does offer the benefit of limited personal liability. This means that business debts and legal judgments are separated from your finances.
Partnership
A partnership is an agreement between two or more individuals who will share profits, losses, and responsibilities. Each partner has a stake in the business and can be held personally liable for debts or legal judgments.
S-Corporation
This is one of the most popular business structures among new dental practices. It offers personal liability protection and allows for tax deductions. With this business structure, you don’t have to pay self-employment tax on your business income. However, this structure requires more paperwork and compliance with state laws than other structures.
C-Corporation
A C-corporation structure is more complex than other business structures and requires additional paperwork. The corporations are taxed as separate entities, meaning that profits and losses are reported on a corporate tax return. It also offers the benefit of limited personal liability. However, it involves handling extensive record-keeping and compliance with more state laws than other business structures.
The Importance of Choosing the Right Structure
You may not know this yet, but choosing the right structure for your practice is one of the most important decisions that you’ll have to make for your business. In fact, your choice can dictate what’s going to happen in the future when issues arise.
You have to know that there’s no single specific structure that’s going to fit all dental practices. It’s on a case to case basis depending on several factors including:
- The number of owner/s
- The finances of the owner/s
- How the practice will conduct business
- Whether the owner/s will be actually practicing or using the practice as an investment
- What state the practice is in
Once these factors are considered, that’s the only time when you can choose whether your practice will be a sole proprietorship, partnership, corporation, limited liability company, or professional entity . Of course, it’s best to consult with a firm that focuses on dental business formation and structuring like the Cohen Law Firm.
Choosing a Structure can be Overwhelming
You have to know and understand the different pros and cons of each structure, both from a compliance standpoint to a tax standpoint, which vary on a case to case basis. For example, a limited liability company may not be legal for dentist in one state, while it may be the optimal structure in another state. You may think that you’ve already made the right choice, only for you to second guess your choice later on as you explore the other structures.
This is especially true if it’s your first time to set up a practice. The process can be pretty confusing and you may do a lot of second guessing. Once you recognize a structure’s importance, you should do it the right way and hire a firm that concentrates on dental business formation and structuring. This way, you can be guided accordingly on which structure to choose so your practice can get the legal entity that it needs.
What Happens Next?
Once the structure is chosen, a reputable law firm focusing on helping dentists, like the Cohen Law Firm, can help you with the formation of your business. As listed above, there are many things that need to be done. A lot of dentists make the mistake of trying to do everything on their own, realizing later on that it actually requires more time, effort and money to do everything on their own.
By hiring the Cohen Law Firm, you can just sit back and relax while you let the experts do what they do best , dental business formation and structuring. You can rest easy knowing that your practice is starting on the right track and will soon have an entity that will work best for it. Future issues will be avoided because your practice has the right structure and was formed the right way. You can also save a lot of money down the line because choosing the right structure can also help your practice save money later on.
Contact Cohen Law Firm today and take advantage of its expertise when it comes to dental business formation and structuring.