Top 5 Reasons Why Your Medical Practice Should Use an Attorney When Choosing a Business Form
If you’re just getting started setting up your medical practice, you may or may not be familiar with some of the more specific business aspects, such as choosing a business form. When establishing a business, there are a number of different forms to choose from. A new business can be a:
· Sole Proprietorship – solely owned by one person alone
· Partnership – shared ownership between two or three people
· Corporation – considered a separate legal entity with its own rights independent of ownership
· Limited Liability Company (LLC) – a company where shareholders are not responsible for paying more of the debt than their original investment
While the answer as to which form your medical practice should take may seem obvious, it is strongly recommended by business and insurance experts that you meet with an attorney before making any final arrangements regarding a business model.
The following is a list of the top five reasons why medical practices should consult an attorney before settling on a specific business form:
1. Liability – this is the most important reason why medical practices, or any new business, should consult with an attorney. The laws vary when it comes to personal liability for business debts based on which business model is in use. Attorneys can help you select a business model and will offer guidance as to which type of professional or general liability insurance will be needed.
2. Contracts – it’s important that all relationships, including employment agreements, are clearly spelled out to prevent any future lawsuits. A lawyer will ensure that all relationships, between partners, investors, shareholders and employees are clear and legally sound.
3. Taxes – there are different tax requirements and laws that apply to different business forms. An attorney will provide guidance as to which tax laws apply to your practice and the different tax breaks and requirements depending on the business model.
4. Control – who do you want to be in control of the medical practice? Do you want to share that control with anyone, and if so, with whom? Different business models exhibit different levels and types of control for investors.
5. Autonomy – similar to control, who will be making all the decisions and what will they be based on? An attorney will explain to you that different business forms have different decision making protocol that you may not have previously known about.
These are only some of the big reasons. Businesses should typically have an attorney familiar with their field readily available anyway. This is because the laws are ever-changing and an attorney will be able to provide you with sound legal advice.