Flat-fee medical and professional practice formation for physicians, dentists, mental health practitioners, physical therapists, and other licensed providers. Professional Corporation (PC) and Professional Limited Liability Company (PLLC) formation, operating agreements adapted for healthcare practices, and the entity structure that fits how regulated healthcare practices actually operate in New York.
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Licensed healthcare practices in New York don't form as standard LLCs or corporations. Most regulated healthcare professions in NY must operate through specialized entity forms — Professional Corporations (PCs) or Professional Limited Liability Companies (PLLCs) — that have specific ownership and operational requirements designed to keep professional practice in the hands of licensed practitioners. The rules vary by profession and have evolved over time, and forming the wrong entity creates substantive compliance problems that are harder to fix later than to handle correctly at formation.
The core New York rule: most regulated professions require that all owners (shareholders of a PC, members of a PLLC) be licensed in the same profession the entity is practicing. A medical PC can only be owned by licensed physicians. A dental PC can only be owned by licensed dentists. A psychology practice PLLC can only be owned by licensed psychologists. There are some exceptions and some professions where multi-disciplinary ownership is permitted (and the rules have evolved — the NY Education Department has issued guidance allowing certain multidisciplinary professional practices), but the default rule for most healthcare professions is single-profession ownership. Non-licensee investment in a professional practice through the entity itself is generally not permitted; investment structures that route around the ownership rules (management services organizations, MSO structures) require careful legal design to avoid running into NY's corporate practice of medicine doctrine.
The entity structure also affects how the practice operates day-to-day: tax treatment (most healthcare practices elect S-corp or partnership treatment), how owners are compensated (the practice can pay owners as employees, distribute profits, or both — with implications for self-employment tax and benefits), how new owners are admitted (buy-in structures, capital contributions, voting rights), and how owners exit the practice (mandatory buyouts, valuation methodologies, retirement provisions). Practice formation work addresses all of these in coordination with the practice's tax advisors.
Scope note: We handle practice formation and ongoing entity-level legal work as a transactional flat-fee service. We don't handle medical malpractice litigation, licensure defense before professional licensing boards, or regulatory enforcement matters — those areas require specialized litigation counsel and operate differently.
The first decision is which entity form is appropriate. The default for most NY healthcare professions is a Professional Corporation (PC) or Professional Limited Liability Company (PLLC). The choice between them depends on the specific profession (some can use either form, some are restricted to one), the tax treatment desired, the number of owners and how they want to govern the practice, and various business considerations. We work through this analysis with each formation client based on their specific situation.
Healthcare practice names in NY require approval from the NY Department of Education's Office of the Professions before formation can be completed. The name must conform to NY's rules for professional entity names (typically including the words "Professional Corporation," "P.C.," "Professional Limited Liability Company," or "PLLC," and not including deceptive or misleading terms). We handle the name approval process as part of formation.
Once the name is approved, formation involves filing the certificate of incorporation (for a PC) or articles of organization (for a PLLC) with the NY Department of State. The filings include specific provisions required for professional entities — statements that the entity will be operated by licensed practitioners, restrictions on ownership, and various other professional-entity-specific terms. We handle the filings with attention to these requirements.
The internal governance document — operating agreement (for PLLC) or shareholder agreement (for PC) — addresses how the practice is actually run. Standard provisions: ownership percentages, capital contributions, profit and distribution arrangements, management structure, decision-making rights (which decisions require unanimous consent vs. majority vs. management discretion), admission of new owners, voluntary exit provisions, mandatory buyout provisions (death, disability, retirement, termination of license), valuation methodology for buyouts, restrictive covenants, dispute resolution, and various other provisions specific to healthcare practices (provisions addressing licensure issues, professional liability insurance, billing arrangements with payers).
The practice obtains an EIN from the IRS and elects its tax treatment. Most healthcare practices elect S-corporation treatment (for tax efficiency on owner compensation) or partnership treatment (for PLLCs with multiple members where partnership treatment fits the structure better). The election timing matters — S-corp election must be made within specific deadlines after formation. We coordinate tax elections with the practice's tax advisor.
Practice operational setup goes beyond the entity formation. Key items: separating business and personal finances (business bank account, business credit card, separate accounting), establishing the practice's professional liability insurance, addressing employment for any staff (employees vs. independent contractor practitioners), establishing relationships with billing services and electronic health records vendors, and addressing the various initial business decisions that come up when a practice opens. We coordinate the legal items and identify operational items the practice needs to address even if we're not handling them directly.
After formation, ongoing entity governance involves annual filings (biennial statement with NY Department of State), annual or periodic ownership meetings (documented in meeting minutes), and ongoing maintenance of the operating or shareholder agreement as the practice evolves. We provide ongoing entity governance support for practices that engage us beyond the initial formation.
All work is flat-fee, set in writing before any work begins. Standard single-practitioner practice formation prices predictably. Multi-owner practice formation with substantive operating or shareholder agreements prices higher with the additional work scope. Multidisciplinary practices, practices with unusual ownership structures, or practices involving MSO/management services arrangements price as defined-scope project engagements.
For ongoing entity governance and practice operational support, we sometimes structure ongoing relationships with predictable pricing for routine work and project pricing for larger matters.
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New York requires that licensed healthcare practices operate through specialized professional entity forms — Professional Corporations (PCs) or Professional Limited Liability Companies (PLLCs) — rather than standard LLCs or corporations. The professional entity forms have specific ownership and operational requirements designed to keep professional practice in the hands of licensed practitioners. Forming a standard LLC for a medical practice creates regulatory compliance issues and doesn't provide the entity protection healthcare practitioners typically expect. We handle PC and PLLC formation for healthcare practices specifically.
Generally, all owners of a NY professional healthcare entity must be licensed in the same profession the entity practices. A medical PC must be owned entirely by licensed physicians. A dental PC must be owned entirely by licensed dentists. Some exceptions exist — certain multidisciplinary professional practices are permitted under specific guidance from the NY Education Department — but the default rule is single-profession ownership. Non-licensee investment in a professional practice typically requires careful legal structuring through Management Services Organizations (MSOs) or similar arrangements that comply with NY's corporate practice of medicine restrictions.
Both are professional entity forms with similar core characteristics — owned by licensed practitioners, operating to provide professional services. The differences are technical: PCs are corporations with shareholders, board of directors, and more formal governance requirements; PLLCs are limited liability companies with members and operating agreement-based governance. Most professions can use either form in NY. The choice depends on tax treatment preferences, governance preferences, and the specific practice's circumstances. We discuss which form fits each formation.
Generally not as a direct owner of the professional entity itself. Most NY healthcare professions require all owners be licensed in the same profession, which means a non-licensee can't be a direct shareholder or member of the practice entity. Non-licensee involvement in a healthcare practice typically requires alternative structures: employment as a non-clinical role (practice administrator), Management Services Organization (MSO) arrangements where the non-licensee owns a management entity that contracts with the practice, or some forms of profit-sharing arrangements with non-owner status. Each structure requires careful legal design to comply with NY's corporate practice of medicine restrictions.
Worth considering for liability protection and tax efficiency, even for solo practitioners. The professional entity provides separation between practice business assets/liabilities and personal assets, and the tax treatment (typically S-corp election) can save substantial payroll taxes once the practice generates meaningful income. Some solo practitioners operate as sole proprietors initially, then form a professional entity as the practice grows; others form at the outset. The right approach depends on the practice's current and expected income, liability concerns, and various other factors.
Flat fee set in writing before any work begins. Single-practitioner formation prices predictably; multi-owner formations with substantive operating agreements price higher. Get a free quote in under an hour by submitting the contact form.
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