One reader was preparing his business plan and wondered about the difference between an LLC and a Professional Corporation (PC). Here's my response:
This is a complicated subject and that there are many factors to consider in deciding what form of practice to use. First, note that the reason most businesses use a form like an LLC or a corporation is to limit their liability for the debts of the business and for negligence and malpractice.
An LLC is a Limited Liability Company. It's not a corporation, but it provides basically the same protection from liability from certain debt It is set up with "members" (you can be a single-member LLC). There are several ways an LLC can be taxed, but most commonly a single-member LLC is taxed like a sole proprietorship (on your personal income tax return); an LLC with several members is taxed like a partnership.In many states, you can also set up a Professional LLC, which restricts membership to people licensed in that profession (so your spouse could not be a Member). In an LLC (or PLLC), your liability is limited to your investment.
A PC is a Professional Corporation, which only certain types of professions (like chiropractors) can form. The benefit to a PC is that you (one of the owners) aren't liable for the negligence or malpractice of one of the other owners. If you are the only chiropractor in the PC, there really isn't much benefit.
Most attorneys will try to get you to incorporate, since it is usually
best to get an attorney to be sure you have followed all the rules.
Incoroporation can cost $500 to $1000, depending upon what part of the
country you're in and how your attorney works. Attorneys will also try
to get you to pay them $500 to help you set up an LLC, but you can do
this yourself for under $100 in most states. Just go to the website of
the Secretary of State in your state, find the business section, and
download the form.
You can also get a book on LLC's from nolo.com and get more information. As usual, it's a matter of deciding whether you want to take the time to do it yourself and save money or pay someone to do it and save time.
As I always say, I'm not an attorney, so listening to your attorney's opinion would be good. I'm just offering an opinion.