How to start an LLC Healthcare Business

Starting a healthcare business can be a daunting task, but choosing the right business entity can make all the difference. A limited liability company (LLC) is a popular choice for healthcare businesses because it offers personal liability protection, which safeguards your personal assets. Additionally, LLCs offer pass-through taxation, which means that the profits of the LLC pass through to its owners, called members, and are reported on members’ personal tax returns. The LLC itself pays no taxes.

 

As the sun set on the bustling city, a healthcare entrepreneur embarked on the journey of starting their LLC, guided by careful steps and expert advice.

How to start an LLC Healthcare Business

If you’re considering starting an LLC for your healthcare business, here are the steps you need to follow:

 

Select a Registered Agent:

A registered agent is a person or company authorized to accept official correspondence, such as legal or tax documents, on behalf of your healthcare business. You can choose to be the registered agent yourself, but many entrepreneurs turn to a registered agent service instead. A national registered agent service will accept correspondence for your healthcare business, notify you of its receipt, and make it available to you online.

 

Choose Your Management Structure:

You’ll need to decide if your LLC will be member-managed or manager-managed. In a member-managed LLC, all members are actively involved in the management and operations of the business, and no non-member managers are hired. In a manager-managed LLC, not all members are necessarily involved in management but may instead be silent partners. Most small businesses choose a member-managed structure unless they have an investor who is a member but not involved in management.

 

File State Documents:

You’ll need to officially form your LLC by filing a document with the state. The document is usually called the articles of organization but may be called a certificate of organization or a certificate of formation, depending on the state. The forms are generally very simple, and in nearly all states can be filed online on the Secretary of State’s website in just a few minutes.

 

Draft an Operating Agreement:

An operating agreement is required in California, New York, Missouri, Maine, and Delaware, but is critical to have no matter where your healthcare business is based. An operating agreement contains many provisions and details about your LLC, including the ownership percentages of members, how profits are allocated and distributed, the voting rights of members, and how disputes are resolved. It’s best to have your operating agreement drafted by an attorney to make sure that your healthcare business and all members are protected.

 

Obtain Business Licenses and Permits:

Your healthcare business is likely required to have various business licenses and permits, possibly at the federal, state, and local levels. You’ll need to do some research to find out what is required for your specific business type.

How to start an LLC Healthcare Business

Obtain an EIN:

If your business will have employees or if your LLC has more than one member, you’re required to obtain an Employer Identification Number (EIN), which allows the IRS to identify your business for tax matters. It’s easy and free to apply for an EIN on the IRS website.

 

Open a Business Bank Account:

Keeping your personal and business finances separate is important and will make your accounting and taxes much simpler. Most banks offer business bank accounts which may come with nominal fees.

 

Annual Reporting:

Most states have a reporting requirement, either annually or biennially. The report is generally very simple and just verifies that you’re still doing business. It’s important to keep up with reporting requirements in your state.

 

Starting an LLC for your healthcare business is not difficult, but it can take some time to complete all the steps. Be sure not to skip any of the steps and take time with each one to ensure they’re done correctly. If you need help, turn to your attorney or a business formation service to ensure that the process goes smoothly.

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