Expert Advice When You Need It Most
As an orthodontist purchasing an existing practice, should I be a sole proprietor, LLC, or S corp?
What sort of liability protection is afforded to me if I form an LLC or S corp? I will have commercial general liability, professional liability and worker's comp insurance, so will forming an LLC or S corp be overkill as far as liability protection is concerned? I want to keep my costs in check, but be protected at the same time. Any thoughts would be greatly appreciated.
Attorney answers (3)
Reputation Level 15
Answered over 2 years ago.
Business Attorney in Boulder, CO.
An entity is one of various asset protection strategies which are of considerable importance in health services. If you wanted even greater protection there are various offshore trust and other strategies. In short, you must have all the insurance but this is just one means to reduce risk and protect assets. You should speak with a local business lawyer with expertise in your field about entity selection and asset protection.
DISCLAIMER—This answer is for informational purposes only and discusses general legal principles, trends, and considerations and is not intended as specific legal advice regarding your question. This answer does not establish an attorney client relationship.
Add comment
Reputation Level 7
Answered over 2 years ago.
Employment / Labor Attorney in Dallas, TX.
You don't want to be a sole proprietor, because you have unlimited personal liability, much like a general partner in a partnership. With a LLC or S corp, at least you have a corporate shield protection for contractual liabilities. However, they won't protect you for tort liability (such as negligence) since you can be sued in your individual capacity for torts committed by you. I like the LLC over the S corp, because a third party creditor is limited to a charging order on the LLC interest, while stock ownership could be seized if a judgment is obtained through a writ of execution or turnover proceeding.
Reputation Level 20
Answered over 2 years ago.
Corporate / Incorporation Lawyer in Philadelphia, PA.
The prior attorneys have given you great advise. From a tax perspective, you should note that there may be some advantages of an S corporation over an LLC. You would have to balance these tax advantages against the liability protection afforded with the LLC and the charging order concept previously discussed.
Hope this helps. LEGAL DISCLAIMER Mr. Fromm is licensed to practice law in PA. The response herein is not legal advice and does not create an attorney/ client relationship. The response is only in the form of legal education and is intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency. Related Questions5 Attorney answers: 
Asked by a user in South San Francisco, CA - 11 months ago. 4 Attorney answers: 
Asked by a user in Los Angeles, CA - almost 2 years ago. 3 Attorney answers: 
Asked by a user in Boston, MA - 7 months ago. This Week's Top Corporate ContributorsView all lawyers on the Corporate LeaderboardFind Corporate Lawyers |
