Medicine is a profession, but in order to practice medicine, one must take into account business considerations. One of the most important such considerations is how your practice will be legally organized.
For many of those wishing to set up a medical practice, a professional limited liability company is the preferred business form. A Texas professional limited liability company, known as a PLLC for short, can offer practitioners many distinct advantages.
Liability shield, pass through taxation and flexible management structure
A PLLC under Texas law is nearly identical to an LLC. The difference is that the PLLC designation is for those types of organizations that offer professional services from practitioners who must be licensed by the state. For example, medical practices, law firms and accounting firms are all organizations that may be formed as PLLCs in Texas.
So what is the advantage of a PLLC over say, a general partnership or a corporation? LLCs, and by extension PLLCs, were created to combine some of the best features of other business forms into one type of entity.
One of the greatest advantages of a PLLC is limited liability for members. Like shareholders of a corporation, members of a PLLC cannot be held individually liable for the debts and other obligations of the PLLC. For instance, if one owner of a PLLC is sued, the other cannot be automatically held responsible to pay any resulting court judgment. By contrast, in a general partnership, partners bare liability together, and may be liable individually for any financial obligations of the partnership.
A PLLC also offers the benefits of pass through taxation. In a corporation, profits are taxed once at the corporate level, then again as personal income if and when they are passed on to shareholders as dividends or in some other manner. PLLC profits, on the other hand, are simply counted as income to the PLLC members.
Finally, the management structure of a PLLC may be tailored to meet the needs of the individuals forming it. There are not rigid managerial formalities that must be adhered to as there are for corporations, and members of a PLLC have a greater freedom to contract their designated roles and responsibilities compared to those operating under some other business form. Keep in mind, however, that setting up a PLLC for a medical practice does require a few special steps in Texas, like securing approval from the Texas Medical Board.
Get help from a Texas business formation lawyer
Forming a PLLC can get your medical practice off to a great start, and can set you up for many long years of success. Yet, organizing your PLLC in a way that meets your unique needs can require legal assistance. The right business formation lawyer can not only help you set up a PLLC, but can assist in navigating the complex framework of health care regulations affecting medical professionals as you build your new practice.
If you are looking to set up a new medical practice, get the legal help you need. Contact a business formation lawyer today, and you will soon be caring for your patients under an effective, efficient business structure.