The pros and cons of EHRs
Starting or upgrading your therapy practice? Here are a few expert tips on choosing the best EHR for your needs.
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The pros and cons of starting a private practice
Headway vs. BetterHelp: Which is best for your practice?
Starting a practice
Do you need an LLC or PLLC for your practice?
If you’re starting a practice, you’ll need to figure out the tax and legal structure that makes the most sense for you. Here are the steps you should be taking.
If you’re starting your own therapy practice, congratulations! You’re well on your way to supporting more people’s mental health. You’ve also probably realized by now there’s a lot of work involved in launching a practice, including deciding how to structure your business.
Along with receiving a license to practice therapy, if you’re starting a practice, you’ll need to figure out the tax and legal structure that makes the most sense for you. Read on to learn more about your options for establishing a business entity, and what steps you should be taking.
What is the best business entity for a private practice?
There’s no one business entity that meets every therapist’s needs. The route you go depends on your goals and the amount of time and money you want to invest. You have several options to consider:
- Sole proprietorship: The default entity for a business owner is called sole proprietorship. This means you, as an individual, are not distinguishable from your business entity.
- LLC: A limited liability company, or an LLC, is an entity that offers a bit more legal protection than a sole proprietorship. With an LLC, you and your business are two separate entities.
- PLLC: Some states, such as California, don’t allow therapists to be LLCs. Instead, you can consider a PLLC, or a professional LLC. It’s the same as an LLC, but the standing is meant to distinguish you from other types of businesses.
Depending on where you live and your business goals, any of these business entities could be a valid option. If in doubt, check in on your state’s laws and link up with an expert who can help you make the best decisions for your business.
Many Headway providers choose to partner with Heard, an all-in-one financial solution for therapists with services that include bookkeeping, taxes, payroll, and more. Check out Heard’s checklist for registering an LLC/PLLC.
What does PLLC stand for?
PLLC stands for professional LLC, a business setup for professions requiring a state license (such as medical providers and attorneys). These states may require said professionals, including therapists, to be PLLCs rather than LLCs. PLLCs follow the same laws as standard LLCs, and the tax setup is the same. The main difference is PLLC owners may be held personally liable for malpractice or other lawsuits.
Do I need an LLC?
Maybe! Here’s an overview of what an LLC can do and why you might choose one.
- Liability: LLCs are designed to carry the legal burden for business owners. That means if a client gets injured on your property or accuses you of malpractice, your business would be sued — not you as an individual. Similarly, if your practice doesn’t work out, your business could go bankrupt, but you personally would not.
- Taxes: Under the default tax classification, your LLC is a “pass through” entity. This means the business won’t file an income tax return to the IRS; instead, you’ll report the profit or loss of the business through your individual tax return, and be responsible for the resulting taxes. That may mean your annual filing process is simpler, but it also means if you accrue debts, creditors can require you to pay out of your own pocket.
Another consideration: You can register your LLC with a different tax classification. Depending on your business’ revenue, your accountant might recommend you set up an S-Corporation, which separates your profit and loss as a business owner from your actual business.
With an S-Corp, your business has its own EIN (employer identification number) and pays its own taxes. You pay yourself a determined salary from the business, so you may end up saving money on self-employment taxes. Not sure if an S-Corp is right for you? A service like Heard can help you decide and assist you with filing, if needed.
Next steps: LLC for Private Practice Counseling
Not sure where to start, or if you should even be considering an LLC? It’s always a good idea to enlist a qualified professional when starting a new business. A lawyer and a certified public accountant is your best bet—ideally, ones who have worked with therapists before. Consider asking around your network for recommendations—the more support, the better!
This is not legal or tax advice. This information is for educational purposes only. You should consult with an attorney and a CPA to determine which type of business will best meet your needs.
Headway makes it easier and more profitable for therapists and psychiatrists to accept insurance.
Starting a practice
The pros and cons of EHRs
The pros and cons of starting a private practice
Owning your own practice can be rewarding, but it’s important to consider the benefits and drawbacks.
Headway vs. BetterHelp: Which is best for your practice?
Whether you’re a seasoned provider or just starting your practice, our analysis provides transparency so you can make the decision that works best for you.