You must create a separate legal entity before operating your own practice. Most individuals go with the limited liability company (LLC) for this purpose due to its simplicity. There are different types of corporate structures out there that are beyond the scope of this article, so we will just be discussing the LLC.
An LLC is a pass-through entity. That simply means that your practices profits are passed onto your personal income tax return. This makes the LLC simple for accounting purposes and is a great way to lower your tax obligations.
Getting started
First and foremost, decide what address you will use. Do not use your home address for heaven’s sake, it completely throws your privacy out the window. Either use your practice locations address or get a P.O. box or UPS box. It doesn’t matter either way.
So how does a business inspiring nurse practitioner create an LLC? There are two chief ways.
- Pay a 3rd party to do it. Most people go this route. They utilize services like Legal Zoom and other LLC creation companies to start the LLC for them. The advantage of going with this route is its relative ease. You simply choose a name and pay. Usually you receive the final LLC in 2-4 weeks. These services will typically provide you operating agreements and the legal documentation for the LLC so you can hit the road running.
- Create it yourself. It is EASY and cheap. Most states have online services on their Secretary of State’s website respectively. All you do is go to the site, create an account, and fill out a few simple forms. That’s it! Most of the time they provide the articles of organization within 24-48 hours. I have done this multiple times.
I advocate doing it yourself. It is significantly cheaper. You are probably asking yourself where do you get the legal documentation for the LLC then? Find it online for free. All you need is a simple operating agreement and a simple Google search can provide you this.
There are so many templates online where you can input the LLC’s name and your personal name as the manager into them. That is all these larger LLC creation services do. They have templates and input your information onto them. There is no lawyer creating a special operating agreement just for you. Don’t be fooled. That would be very expensive and total overkill on their part.
So, once you have your articles of organization from the Secretary of State and your operating agreement, you now need to file for a federal tax ID or the FEIN. Very simple to do! Google FEIN registration and select the link from the IRS. It is free and takes 5 minutes. DO NOT PAY PEOPLE TO DO THIS FOR YOU. It is FREE!
Once this is all complete, go open a business checking account and now you are ready to rock and roll. THAT’S IT! It is not complicated…
Depending on if you have employees or not, you might need to register with your state’s respective employment/revenue department as well. Your accountant can assist you with this.
The above steps are the easiest way to start an LLC and should not take you more than 2 days and $100. If you are wise and want to protect your ASSets, you should register an LLC in the state of Wyoming or Nevada to be your parent company. These states offer 100% anonymous LLC’s. Consequently, if your operating LLC (your practice) is owned by a parent LLC in Wyoming or Nevada, then it would be difficult for anyone to actually find out who owns the practice unless you tell people. Having a Wyoming LLC is just another way to maintain your privacy and cover your ass.
I would advise utilizing a service to create this parent LLC in Wyoming or Nevada because often times they provide you an address in that state. It usually only costs $100-200 a year to maintain as well. I like the “Wyoming LLC Attorney” for this.
The benefits of an LLC are numerous but the top two are:
- Liability protection. When you operate under an LLC as a nurse practitioner, it provides you an additional shield of protection. If the LLC is owned by another parent LLC, this even further increases the layers of protection. I personally have 4 layers. I know some individuals who have elaborate structures and own upwards of 20 different LLC’s and trusts. You worked too hard to get here, so protect yourself from frivolous lawsuits. USE AN LLC!
- Tax advantages. You need to learn how to maximize the tax benefits an LLC provides. Every single expense you have that relates to business needs to be run through your LLC. This decreases your personal expenses and tax obligations SIGNIFICANTLY. If you operate at a loss, then the tax advantages are even better! There are business owners out there that generate $700,000 a year in revenue as a single employee business and pay as little as 15% in taxes legally. Those are HUGE savings. Talk with an accountant or financial planner for more details or shoot me a message. Remember, this is LEGAL tax reduction, not tax evasion.
The main thing to remember when you have an LLC is to ensure that it is treated as a business entity. Do not commingle business and personal finances. If you were sued, the “corporate veil” could be pierced, which means you personally could be liable. The good new though, is that if you base your parent company in Wyoming or Nevada, piercing the “corporate veil” is practically impossible to do. Which is another reason you should have a parent LLC in WY. I discuss this in all of the Elite Nurse Practitioner Courses in more detail in the business creation section of all the courses.
Listen, do not pay a lawyer to create an LLC for you. They are SHARKS and will rip you off. It is very easy to do on your own with a little research and due diligence. You will need every dollar you have when starting your business. For this reason, do not waste it on things you can do yourself. Remember this... I have wasted thousands of dollars on useless business-related services that I could have easily done myself; cheaper and often times done better!
48 Responses
Hello Justin,
May I seek your advice on a very controversial topic. I have mobile medical house call in NH. My husband advise me to go as a sole proprietor. I wanted to go LLC but eventually succumb to his decision.
I am now 3 years operating and joined the entrepeneur group, reading your post. Should I change from SP to LLC. I am just completed my Psych NP. I am thinking of doing most psych with very little primary care. Any words of wisdom. I worried about the change in medicare with all the insurances etc.
CREATE A LLC IMMEDIATELY. You are totally legally liable right now as a sole proprietor. I hope you have protected your assets. In terms of insurance goes, check out my post about being an insurance slave: https://elitenp.com/being-an-insurance-slave/
Thank you so much for this. So I did everything you said not to do like putting my home address because I was working from home. Is there a way to change my LLC and change my home address to a PO Box and adding the parent company in Nevada?
You should be able to simply go to your secretary of states website and update that information. In terms of adding a parent company, you need to first create the LLC in NV and WY, once you do that you might need to update the owner through the secretary of states website. In your LLC’s operating agreement you need to change the owner to your operating LLC and have you as the “manager.” Pretty simple.
Your blogs are awesome. I already have an LLc, then a DBA in Maryland. Is it too late to open one in Neveda and then make the Neveda LLC the owner of my Maryland LLC?
Also, is it true it that it doesn’t matter how many layers of LLC you have, people will go for your personality anyways since we’re medical professionals?
Nope, it is simple. Just change the owner in your operating agreement to the Nevada LLC. You need to check though to see if you need to update who the owner is to the Maryland Secretary of State. Ensure that if someone does a LLC lookup on your entity that your name doesn’t come up.
In terms of the LLC protecting you. It depends. If you are sued personally for medical negligence then it doesn’t really matter who owns the LLC. When it matters is is when your LLC is directly sued. Check out the asset protection post Malpractice? No, Asset Protection. If you really want to cover your ass, put all your assets into separate LLCs and a trust. That way if you are sued, you look poor on paper and the plaintiffs lawyer will just drop the case or you make it a wild goose chase that takes years and years. That is the idea with it.
Can you explain more about what you mean to “put all your assets” into separate LLC’s? Do you mean like if I personally have a savings account with my husband and one for myself that I should put those into an LLC or a trust? If so, how do I then go about getting that money in case of an emergency?
Assets that are a liability need to be placed into LLCs such as automobiles, rental properties, etc… A savings account is fine in your name as long as you have <$50,000 in it. No one is going after $50k. If you want to really dig deep into asset protection, then yes you can create trusts to shelter your assets. How do you get the money out? You name your husband as the beneficiary and you can give him the money as the Trustee. These are more advanced asset protection topics.
I definitely need to consult with you. I like your no-BS approach to matters. I have just registered an LLC in Maryland, working on practice location.
I would be happy to assist you getting your practice off the ground, shoot me a message.
I’m just venturing into a new NP position that’s a 1099 salary. I’m in California. I’ve read online that in California, we aren’t allowed to create an LLC, but would have to do an incorporation. Is this true?
If so, it sounds like creating an LLC in Nevada would be my best bet?
I have no idea what California law is in terms of creating a LLC. With that, you should create your LLC in Nevada or Wyoming anyways for the corporate protections those states provide. Double check with your accountant though to make sure you do not need to file for a foreign LLC in California if you are practicing there.
Justin,
Thank you for answering my question on SP to LLC.
I like to chat more with you. So I have now have my company’s name LLC in Wyoming (Parent) but I live and operate in NH. Can I also have same company’s name LLC in NH? or should say company’s name Healthcare LLC?
Thanks a bunch
Tai
Hi Tai. It can be the same name in NH as well, it really doesn’t matter.
Impressive, you answer every question people asks. Thank you very much.
I notice that you didn’t opt of S-Corp. any reason?
Electing as an S-corp is only beneficial if you are actually paying yourself a salary through the LLC. You pay yourself, and then you can take the rest out as a dividend. This is only applicable if you are making a significant amount of money. If you follow The Elite NP model, you should have multiple small businesses spinning off handsome incomes, nothing crazy though. It is better to pay yourself as a DRAW from the LLC vs pay yourself a salary. Paying yourself a salary incurs employment taxes, which really eats into your profits. Check out this article here.
Hi There,
I just opened my PLLC, have the bank account and federal ID TAX (ARIZONA) already completed. You mentioned that it would be advisable to create a parent company and that we should pay someone to do plus paying the annual fees, how/where do I find this person/organization to help me create the parent company. Also, I used my personal home address for everything, I am assuming I could change it to PO box, correct?
Lastly, where could I find business help as to guide me how to obtain scripts and the DO and DON’Ts of a business.
Clara,
Check out the step by step guide to start a business, it includes the link to the service I use in WY for the parent company.
Yes, never use your home address. Change that to a PO box or your actual business location.
Obtaining prescription pads is simple (if that is what you are asking), check out rxpads.com.
In terms of “dos” and “don’ts” of a business, just read this blog, go through every article, I cover everything I have went through with business. The “dos” and “don’ts” is a very subjective request, every single business is different.
Hi Justin, I am new to The Elite NP and I am so addicted to it!!! Thanks. This is what I needed and it came right in time. We are opening a family practice with the set day of 10/1/2021. It is a group practice with me being the only family practitioner and 2 the PMHNP’s. I realize opening a family practice is way harder than a psych practice. However, I already have some patients in group homes and ALF who want family service. I will e going to their homes to see them. Do i bill as office visit or I need to do it as home visits?
Secondly can i have another LLC for home calls and another for say a testosterone clinic if i have to have those down the line as I am looking at adding those to my practice in the next 6 months. Thanks
Hi Jane! Thanks for reaching out.
It is my understanding that you can bill either one but billing a home visit reimburses more. You just have to document appropriately to get it covered. More of that is discussed in the house call/mobile course.
Yes! You can have multiple LLCs and different businesses for different services. It spreads your liabilities out and actually allows you to take cash while being credentialed with insurance: https://elitenp.com/accepting-cash-payments-while-being-credentialed-with-insurance/
Hello
I am new to Elitenp, and so glad I found it. I will be reading this website in it’s entirety. I am interested in opening my own practice down the line, but right now I am working for two doctors independently and was wondering if I should open a LLC? Please let me know what you think.
Absolutely! If you are 1099, you should definitely have an LLC!
Thank you very much. Is there anyway I can touch base with you because I have a few questions? Also, I am a fairly new FNP, and have not reached my required 3600 hrs as of yet? Do I have to wait until I reach the required hours before I open a LLC?
No you can form an LLC and start your own practice now if you want. You would just need a collaborator until you reach your 3600 hours. Feel free to message me through the “Have Questions?” button at the top of the page!
I live in Michigan, which is restricted, and would like to do Telehealth from in a state that has full practice. Should I form a PLLC or LLC?
Thank you in advance for all of your your elightening information!
I would just form a Wyoming LLC if you are going to be practicing in multiple states. Its a solid LLC with great protections.
I have an LLC in MT that was initially set up for other reasons, now it is just an active entity name, could I use it as a parent if I were to look into setting up practice in Indiana? TIA
I wouldn’t unless MT maintains LLC anonymity.
Thanks again for all of your advice. I used the company that you suggested for setting up the LLC and they were fast and great. My question now is as I am going to apply for the EIN, it is asking where the business is physically. Do I put Wyoming or the actual state of the business?
Just use the LLC address with WY for that. It doesn’t make much of a difference.
Hi Justin,
I am in the process of starting my first LLC in the state of Idaho, but I do not currently have a holding company in a state like Wyoming. Do you recommend having a holding company even if I do not operate multiple LLCs? Also would it be beneficial to start my business LLC in a state like Wyoming or do I want to keep the operating LLC in the state I intend to operate in? Thanks
If you are just starting one LLC, then just operate out of the Idaho LLC. Keep an operating LLC in the state you operate in.
Hi Justin,
I am in the planning phase of creating my own business. If I create a parent LLC in Wyoming and then another LLC in my home state, do I pay taxes in both states then since I will be funneling the profits into my Wyoming bank account ( located in my state hopefully)?
There are no taxes to be paid in WY in this regard. You would just pay taxes in your home state.
I’m starting my telehealth business in KS. I live in MO. Can my PO BOX for my LLC be in MO or does it have to be in KS?
If it is a KS LLC it needs to be a KS address in most instances. If it is a MO LLC and you are just filing for a foreign LLC in KS, then should be fine
Hi so i am an Adult NP in new york state and am trying to create a name however i am hitting my roadblocks. I see “insert name here” aesthetics opening up all over however when i call the NYs department of education i was told i cannot use the word aesthetics or wellness i was also advised to open a S corp instead of LLC is an LLC better to open?
You will just file as an s-corp with the IRS for tax purposes under your LLC.
I worked as a 1099 NP and travel RN in 2022, the taxes I will owe for 2022 are absolutely ridiculous. After meeting with my CPA, I asked about creating an LLC or S-corp to be able to write off “business expenses” for 2023 since I now have two 1099 NP jobs (no more RN travel). He recommended against this because he said it would be too much work to be a W2 employee of my own LLC and very costly at the end of the year because I would have to file two taxes (one for LLC and my personal one). I’m concerned about this year (2023) because I’m making more and know I will end up owing a lot more taxes since I don’t have many write offs other than education and license fees. If I pay legal zoom to create an LLC, can I get both created by them (WY and IL)? Would you recommend this for 1099 employment? Please help!
Just operate a 1099 position out of a WY LLC for a couple hundred dollars if you use our vendor in your GPO (link at the top of this page).
The only way you are going to be able to lower your taxes in any meaningful way is to start a legitimate business. Be sure to check out our tax course as we walk you through a variety of ways to lower your taxes… we discussed things most CPAs don’t even know about. Tax lawyers do though 🙂
This is my first time visiting this website. there are amazing useful information. Thank you.
question.. PLLC VS LLC as a NP, dose it matter or not?
I am in TEXAS.
Texas it doesn’t matter, I would just stick to an LLC.
Do you have any wisdom on registered agent? Since I am a telemedicine business, I don’t have a physical place (I travel a lot and use a VPN)
Should I have a registered agent w/ the worry free (WF) package that ZenBusiness offers ? ($199/first year, $398 to renew). This is what they offer in their WF package:
Registered Agent: We will handle all correspondence with the Secretary of State or other agency overseeing business formations in your state to ensure all of your legal and tax documents are properly managed and communicated.
Online Document Access: You have 24/7 online access to a personalized dashboard that puts everything you need at your fingertips. The dashboard allows you to track your order status, view and print your business documents, and add new services as your business grows.
Expert Support: Our business formation experts are here to answer your questions. We are available via phone, email, and chat during normal business hours.
Annual Worry-Free Compliance: Our Annual Worry-Free Compliance service sends alerts for important compliance and filing events, supports your annual filings and up to two yearly amendments, and provides expert support should you miss a filing event and need to regain your good standing with the state.
Or should I get their stand-alone RA:
You are purchasing Registered Agent services. We will take care of any change of agent paperwork, but this purchase only includes this service and does not include any foreign qualification filings.
Anyone can be a RA… don’t complicate this. You just need someone to receive official mail if they can’t contact you, nothing more. Just go with stand alone services. You don’t need anything else.
Hi Justin,
I am planning on opening an LLC in the state of Nevada to open a telehealth business. I live in the state of California. Do I need to file of a Domestic LLC or for a Foreign LLC? If I need to file for a foreign LLC…. do I also need to file for a Domestic LLC in the state of California? I am planning to live in California while seeing patients by Telemedicine in Nevada. Thank you so much !
Do not get CA involved if you are not seeing patients there…. avoid that regulated hell hole as much as you possibly can
I was planning on opening an LLC in Wyoming as you recommended, but live in Maryland where I will be doing telehealth. You mention in the telehealth course to open an LLC in Wyoming unless your state taxes services which I think Maryland does. Is there anyway around this?
Nope, just form it in Maryland and be done with it