So, you’ve decided to purchase or restructure a dental or medical practice. Congratulations! One of the very first steps that you will have to take as you start down this new path is to decide upon a legal entity for your business. If you will be working alone or in a small office with one or two other practitioners, then you may be inclined to choose a sole proprietorship or a partnership when structuring your business. These options, however, place you at risk of having your personal assets used for business debts. Therefore, to protect yourself, you should create a business entity for legal purposes.

Most businesses are able to function as a regular corporation or an LLCs (limited liability company); however, some professional businesses are different. While some states allow dentists to function under these entities, all states allow dentists to form a professional corporation. California, for example expressly prohibits licensed professionals from operating as an LLC or PLLC, leaving professionals such as doctors and dentists to form professional corporations.

Forming a separate legal entity such as a professional corporation, “PC,” can protect your assets by establishing an entity that is separate from yours as an individual. The amount and type of paperwork required in order to create this entity varies from state to state, but the peace of mind is well worth the time and expense. A healthcare transition attorney can assist you with questions as to which legal entity may be best for your needs.

Frequently Asked Questions

Q: Why is choosing a legal entity important when purchasing or restructuring a dental or medical practice?
A: Selecting a legal entity is crucial as it determines how your business will be structured and the extent to which your personal assets are protected from business debts.

Q: What are the risks associated with operating as a sole proprietorship or partnership in a dental or medical practice?
A: Sole proprietorships and partnerships expose individuals to the risk of having personal assets used to cover business debts, potentially jeopardizing personal financial security.

Q: What options are available for structuring a dental or medical practice as a legal entity?
A: While many businesses can operate as regular corporations or LLCs (limited liability companies), professional businesses like dental practices often must choose a professional corporation (PC) due to state regulations.

Q: How does forming a professional corporation (PC) protect the assets of dental or medical practitioners?
A: Creating a professional corporation establishes a separate legal entity distinct from the individual practitioner, thus shielding personal assets from business liabilities.

Q: What assistance can a healthcare transition attorney provide in selecting the appropriate legal entity?
A: A healthcare transition attorney can offer guidance on the best legal entity for your specific needs and assist with the necessary paperwork involved in forming a professional corporation or other entity.

About the Author

At Dental & Medical Counsel, we've been instrumental in realizing the practice goals of countless healthcare professionals. Whether you're looking to purchase, launch, or sell a healthcare practice, our expertise is your guide. Beyond the initial stages, we're committed to ensuring your healthcare practice remains legally compliant.

We provide comprehensive support, including employment law protections, healthcare contract reviews, and assistance with healthcare employment agreements. Additionally, we specialize in incorporating healthcare practices and securing trademarks. And for long-term planning, our services extend to helping healthcare professionals with succession and estate planning. Trust us to be your partner in every step of your healthcare practice journey.

About Ali Oromchian, Esq.

Your Healthcare Lawyer

Ali Oromchian, JD, LL.M. is the founding attorney of the Dental & Medical Counsel, PC law firm and is renowned for his expertise in legal matters

Ali Oromchian, JD, LL.M., is a leading legal authority in dental law and the founding attorney of Dental & Medical Counsel, PC, with over two decades of experience. His deep connection to dentistry comes from his wife's nearly two-decade-long career as a pediatric dentist.

This personal insight fuels his dedication to empowering dentists to navigate their legal challenges and achieve their practice goals. In doing so, Ali has helped thousands of doctors open their practices while maintaining legal compliance.

Ali is frequently quoted and contributes articles to dental publications, including the California Dental Society, Progressive Dentist, Progressive Orthodontists, Dentistry Today, Dentaltown, and The New Dentist magazines, further showcasing his commitment to the dental community.