If you’re thinking about starting a business of your own as a medical biller and coder, should you structure it as a sole proprietorship, a general partnership, a limited liability company (LLC), or a corporation?
That’s a question you should discuss in depth with an attorney and tax advisor, because each structure can present different liability protection, tax liabilities, and reporting requirements. But according to “The Basics of Business Structure,” an article on Entrepeneur.com, here are some basic concepts you need to know:
- A sole proprietorship simply means that you are an individual doing business as yourself. (You can use your own name as the company’s name, or operate under a different company name you create.) Setting up a sole proprietorship is simple, though you might need to register your business with your municipality. The disadvantage is that there is no distinction between you and your company, and you could be personally liable for business debts.
- A partnership means that you and one other person are doing business together – it is essentially a sole proprietorship operated by two people. It’s easy to set up too, but both partners can be liable for debts. This is one reason that Entrepreneur.com advises potential partners to retain an attorney to draft a partnership agreement ahead of time.
- A Limited Liability Company (LLC) is a relatively new kind of business structure that offers the simplicity of a partnership with the liability protection of a corporation. To set one up, you may need to file legal forms with state agencies and pay registration fees.
- A corporation functions as a legal person in the eyes of the law. It can protect its owners from liabilities, and it can sell stock to raise funds. However, corporations are generally required to pay annual fees, hold stockholder and board meetings, and file reports.
So, what is the best structure for you? That’s a rather complex question. So if you’re going out on your own, meet with your attorney and tax advisor to weigh your options.
This is great! I have the information i’ve been searching for. Thanks for sharing!
Posted by clint herman | February 14, 2011, 7:12 amThis is a vital part of the research you need to do before taking the decision whether to set up your own medical billing and coding business – doing this part of the process properly really can make the difference between success and failure in your chosen profession. Don’t just be tempted by the actual billing and coding work and possible financial rewards, take the time to get good advice and make a proper decision for you. Thanks for the info
Posted by Jane | February 15, 2011, 9:50 amGetting the right business structure for your business is important! A sole trader and partnership take on personally the risk for the business, on the other hand a limited company is a separate entity and takes on the business risk. Also get clear about how taxation will affect your business depending on the business structure you choose.
So get business advice and training and choose wisely!
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Posted by Nnenna Ugo | February 19, 2011, 6:53 am