Your Professional Advisors
Attorney
Business oriented but able to handle personal matters: real estate, contracts, business matters, trusts. Ask around.
Accountant
Needs business experience and must be familiar with all business structures. It helps if they know your attorney.
Banker or Financial Counselor
Cash is king. Lines of credit, financial advice, retirement and investment accounts.
Insurance Agent
Malpractice, liability (nose and tail), disability, health, home, and auto.
Business Entities & Taxes
- The four structures: sole proprietor, LLC, S corp, C corp.
- Sole proprietor: no liability protection. You file taxes as an individual on Schedule C, business options are limited, and everything is in your name — there is no company, other than a possible "dba."
- LLC: usually the best option for a medical practice. A pass-through entity that is not itself taxed — Schedule C as an individual, Schedule K as a partnership.
- Tax implications: corporate taxes versus no corporate taxes, filing status, and quarterly taxes due April 15, June 15, September 15, and January 15.
- Forms to know: W-2, W-4, W-9, 1099.
Finances & Operations
- Income: patients, through copays and direct billing for medical and clerical services, and insurance providers, which make up the majority of income.
- Accounting: cash basis is most common for most businesses; accrual basis is the alternative.
- Cash is king. You either earn it or borrow it. Know your options for loans, lines of credit, and credit cards.
- Keep business and personal finances separate. Do not share financial information with employees — a good reason to outsource billing and payroll.
Payroll, billing, and human resources are all candidates for outsourcing — even in a small office.
Insurance
Professional Liability (PLI / Malpractice)
Two types: claims made and occurrence. Understand acts of commission, acts of omission, and vicarious liability.
Business Insurance
Protects your property from damage, loss, and theft, from being taken away, and from lawsuits other than professional liability.
Health Insurance
You need a good agent. It renews every year, and your agent should give you options annually. Coverage is arranged by class of employee — decide who is covered and at what cost.
Other Coverage
Claims against you by employees, auto for company cars, unemployment insurance, and personal disability — weigh the pros and cons of carrying it as a business expense.
Space, Equipment & People
- Office space: own or rent, each with pros and cons. Account for real estate expenses and plan on roughly 1,200–1,500 square feet per provider.
- Equipment: buy or lease, expense or depreciate. Know the tax implications of each.
- Employees: clinical staff — providers, RN, LPN, MA — and non-clinical staff in reception, clerical, and custodial roles. Decide what to outsource and what to employ.
- Policies: you must have them, so everyone is on the same page and there are no gray areas. It sounds harsh but it is necessary even in small offices. Cover seniority, vacation, work hours, and benefits.
- Hiring and firing: understand at-will employment. Another reason for a business lawyer, and a reason to outsource HR. Caveat emptor with friends, relatives, and spouses.
- Treat employees well.
Patients
You need them and you want them. How do you get them? Word of mouth. How do you keep them? Word of mouth.
Full Presentation
Business 101
What you need to know before you graduate from residency