Private Practice Pain Doc

Going from a salaried, W2-employee to setting up a business can be daunting for a physician. There are several steps required to legally form a business entity recognized by the Internal Revenue Service, and then set up accounts and services to efficiently run the business. Luckily, it’s really not hard to get this done properly and quickly – with the right help.

In order to set up a business, one must create a business entity. At least for physicians, the most common business entities are a limited liability company (LLC) and an S-corporation. Unlike a company, a corporation has “shares” that can be owned by and transferred between shareholders. Because my intention was to open a business with a physical office that might eventually attract partners or even buyers, I decided to elect an S-corporation as opposed to an LLC. I hired an attorney to create my business entity, which I highly recommend. Such legal services typically cost about $2,000 up front, and $500 annually to maintain.

Once I had my S-corporation set up, I had to apply for an employer identification number (EIN) by the IRS. Again, this can be done for you by an attorney. An EIN is required for a business to apply for various types of accounts and services, such as:

• bank accounts
• credit cards
• small business loans
• payroll
• accounting
• corporate tax filing

I personally found learning about and choosing the different accounts and services that companies offer one of the most enjoyable parts of setting up a business. Regardless of your choices, these accounts and services are key to maximizing the tax benefits of operating a business. With the right set up and a savvy accountant, physicians can save tens of thousands of dollars in personal income taxes every year. There are a lot of options to choose from, and I will review my choices in future blog posts!